Who benefits? Global supply chains and the regional comprehensive economic partnership

Abstract

The Regional Comprehensive Economic Partnership (RCEP) promises to expand trade substantially for businesses in the agreement’s 15 members countries, but who will be more likely to capture the gains from trade liberalization? Drawing on insights from the emerging research program on the politics of global production networks and value chains, this study unpacks the differential benefits of free trade agreements as a function of a firm’s degree of supply chain linkages with partner countries, thus moving beyond traditional theories of trade that draw the distinction primarily between import-competing and export-oriented firms. Leveraging an original survey of more than 500 firms in China, the empirical analyses show that the more backward and forward supply chain linkages with RCEP countries a firm has, the greater its likelihood of anticipating positive impact from the RCEP, even among exporters. These findings enrich our understanding of the political economy of preferential trade liberalization and global supply chains and offer policy suggestions for member countries hoping to maximize benefits for their businesses from the largest trade agreement in the world today.