Ministry of SMEs and Startups "RCEP Signing Accelerates Expansion and Diversification of SME Export Markets"

Launch of 'RCEP', a Multilateral FTA Involving 10 ASEAN Countries + 5 FTA Partners with ASEAN

[Asia Economy Reporter Kim Jong-hwa] The expansion and diversification of the export market for small and medium-sized enterprises (SMEs) is expected to accelerate. This is because the markets of these countries have been further opened following the final signing of the Regional Comprehensive Economic Partnership (RCEP) by Korea, ASEAN (Association of Southeast Asian Nations), and five countries that have free trade agreements (FTAs) with ASEAN.

The Ministry of SMEs and Startups announced that the 15 countries including the 10 ASEAN countries, Korea, China, Japan, Australia, and New Zealand, have finally signed the RCEP at the 4th RCEP Summit held on the 15th. RCEP is a multilateral FTA involving ASEAN countries such as Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, as well as five countries including Korea that have FTAs with these nations.

Amid the contraction of global trade due to the COVID-19 pandemic, the launch of the world's largest FTA?accounting for 30% of the world's trade volume of $5.4 trillion, GDP of $26.3 trillion, and a population of 2.26 billion?is raising expectations.

According to the Korea International Trade Association, Korea's RCEP export volume reached $269 billion last year and $120 billion in the first half of this year, indicating that it will significantly contribute to the expansion and diversification of the export market for domestic SMEs.

ASEAN has additionally opened its markets not only for Korea's core items such as automobiles, parts, and steel but also for SME products like textiles and machinery parts. The service market, including games and movies, has also been significantly liberalized, improving conditions for the spread of the Korean Wave (Hallyu). Beyond trade and economy, comprehensive exchanges and cooperation in social and cultural fields among regional countries will accelerate, greatly aiding domestic SMEs in entering the ASEAN market.

RCEP has improved the convenience of utilizing FTAs for domestic SMEs by integrating rules of origin and improving certification procedures. It also recognizes material accumulation across all RCEP member countries, enabling the formation of regional production value chains and strengthening links with regional industries, thereby enhancing the competitiveness of domestic SMEs.

The SME sector has been introduced, acknowledging the significant contribution of SMEs to economic growth, employment, and innovation. Regional SMEs can enhance their capabilities through mutual information sharing and cooperation via RCEP. The e-commerce sector has also been newly introduced, creating a stable e-commerce environment in the COVID-19 era, expanding protection of Hallyu content through improvements in intellectual property rights, and strengthening investment liberalization, thereby raising overall regulatory standards.

Notably, the conclusion of RCEP marks the first FTA with Japan, but sensitive domestic industries such as automobiles and machinery were excluded from concessions to protect national interests.

No Yong-seok, Director of Global Growth Policy at the Ministry of SMEs and Startups, said, "The conclusion of RCEP will reduce uncertainties in global trade and enhance regional liberalization, which is expected to greatly benefit our economy that is highly dependent on external markets. We will actively support competitive domestic SMEs to smoothly enter the more open ASEAN market on this occasion."

This content was produced with the assistance of AI translation services.