The implementation of the agreement is another area that requires vigilance and supervision on the part of companies. Although a dispute settlement mechanism is in place, some chapters are exempt from tax until review by RCEP members two years after the agreement enters into force. There are three different types of trade agreements. The first is a unilateral trade agreement, which happens when one country wants certain restrictions to be enforced, but no other country wants them to be imposed. It also allows countries to reduce the number of trade restrictions. It is also something that does not happen often and could affect a country. The RCEP agreement is important not only for its scope, but also for its timing, as it comes amid a global economic slowdown and rising populism and protectionist sentiments, as well as ongoing trade tensions between the US and China. As this is the first multilateral trade agreement involving Asia`s first, second and fourth largest economies – China, Japan and South Korea – it is likely to further consolidate China`s position as an economic center in the region and offer China the opportunity to further influence the region`s trade rules and trade agenda. From a broader perspective, the agreement reflects Asia`s positive view of multilateral trade and the growing ability to set trade standards independently of U.S. participation, and could facilitate the growing shift of production to Southeast Asian markets. The second advantage is that it increases trading for each participant. Your businesses benefit from low rates.
This makes their exports cheaper. The third drawback is common to any trade agreement. Some companies and regions of the country are suffering from the disappearance of trade borders. Multilateral agreements oblige all signatories to treat each other on an equal footing. No country can offer better trade agreements to one country than to another. This is similar to the conditions of competition. This is particularly important for emerging markets. Many of them are smaller, which makes them less competitive. Most-favoured-nation status confers the best trading conditions a nation can obtain from a trading partner. .