Before delving deeper into the Regional Comprehensive Economic Partnership (abbreviated to RCEP), here is an overview of the agreement.
The RCEP was signed on November 15, 2020, and having been signed by fifteen member countries, all of very varied levels of development. It is the biggest trade cooperation in history and was signed by:
Initiated by Indonesia, it is a free trade agreement in which the countries listed above have realised that it will be successful if everyone brings different benefits to the table. There are some exceptions to this and flexibility has been offered to certain countries including Vietnam, Cambodia, Laos and Myanmar, as they are the least developed countries on the list. Under the RCEP agreement, technical cooperation and capacity building are included to support the agreement’s commitments. It’s designed so that businesses of all sizes and various levels of development, and stakeholders can all benefit from the RCEP agreement.
The highlights of the RCEP agreement
Listed in the Trade in Goods Chapter are the commitments to achieving a top level of trade liberalisation about the countries who signed into the agreement. It showcases the key elements that will govern the implementation of these commitments, including giving national treatment to the goods from the other countries, reducing or eliminating customs duties, offering duty-free admission temporarily for goods, committing to the WTO Ministerial Decision on Export Competition, and finally, eliminating export subsidy entitlements primarily for agricultural goods. Tariff treatment is also laid out in this chapter and non-tariff measures that go hand in hand with the traffic liberalisation outcomes. These include eliminating quantitative restrictions, applying fees where needed for importation and exportation, import licensing procedures and more transparency in regards to non-tariff measures. There is also a process listed for technical consultations, describing how to conduct these on non-tariff measures, which may lead to work in the future on sector-specific initiatives to increase trade.
The parties have committed to grant residence and visa facilitation for a certain period of time to commercial personnel, including investors, contract service provides, corporate workers and their accompanying family members and partners. This is a big development from previous agreements, as it is including all categories of people who might move across borders under the RCEP, exceeding the terms laid out in FTAs currently.Benchmarking against international high-standard free trade rules – what is the RCEP like in terms of this?
The free trade rules from prior FTAs has been expanded with the RCEP and incorporates e-commerce, intellectual property, government and competition procurement, while still benchmarking against the international high-standard rules. It provides the grounds for small and medium companies to experience strength cooperation from both an economic and technical perspective. The agreement covers patents, trademarks, copyrights, industrial design, and much more as far as intellectual property. It enhances the protection of intellectual property, while still considering the various countries’ development levels who signed the RCEP.
Regarding competition procurement, the RCEP strives to promote consumer protection and antitrust. The countries on the RCEP reached a consensus reading government procurement in regards to cooperation, the active exchange of information, technical assistance, and capacity building. Discussing cooperation, the RCEP mentions the role of the FTAs in supporting the SMEs, and the cooperation needed both economically and technically so that the RCEP will benefit developing economies.
The RCEP also covers e-commerce, providing electronic signatures and authentication, personal information protection online, cybersecurity, protection for consumers online, and much more. We also see China included for the first time in an FTA for information storage and flow of data. For trade remedies, the RCEP forms provisions for countervailing, safeguarding and anti-dumping measures, and also includes the prohibition of zeroing, which appears for the first time on an FTA. It keeps in mind the high-standard rules internationally and helps to make investigations in these areas more professional thanks to an extensive list of best practices.
Regarding a consensus from the RCEP regarding the rules of origin, it primarily focuses on regional accumulation, allowing the cumulation of value content of the origin of a product within the fifteen listed countries. The value content from any of these countries will be considered, increasing the use of the preferential tariff rates listed in the RCEP. Many goods that were not counted before in bilateral FTAs may now be recognised and enjoy these tariffs.
More flexibility will therefore be allowed within multinational companies while creating an industrial layout, and it will help to encourage more refinement and organisation with the division of labour, which will, in turn, reduce the cost of the final product. This should increase intra-RCEP trade and also encourage more development and integration within regional supply and value chains. In comparison to the prior “10+1” agreement, the RCEP accepts more certificates of origin, such as an approved exporter’s declaration, shifting to a credit-based declaration coming from businesses themselves. This will help to reduce administrative costs and create a more efficient process for clearing customs.
Enhancing the level of intra-regional trade facilitation – what provisions are in place? In regards to trade facilitation, the RCEP mainly lists customs procedures to facilitate trade, technical regulations, sanitary and phytosanitary procedures, measures of standards, and the conformity assessment procedures. In regards to technical regulations, standards and conformity assessment measures, the agreement asks for the countries included to minimize technical barriers to trade under these standards, encouraging standardisation bodies of the countries to improve cooperation on these areas and the exchange of information. In turn, this should improve the level of intra-regional trade for goods, decrease the time spent on logistics, reduce the cost of trading and help to promote the forming of a regionally integrated market.
Regarding trade facilitation and customs, the customs clearance procedures are much simpler, with efficient tools to manage and promote these procedures such as pre-arrival processing, applying IT to the process, advance rulings, and attempting to release perishable goods or express deliveries within six hours, which is essential for fresh produce deliveries. These trade facilitation levels are far higher than those listed on the WTO Agreement on Trade Facilitation previously.
Finally, in regards to sanitary and phytosanitary measures, these measures aim to protect animals, humans, health and plants alike, while they are not trade-restrictive and do not discriminate against the other RCEP countries. Further to the WTO’s SPS Agreement, this area looks to encourage further audits, certifications, risk analysis, checks for importation and measures for emergency situations.
The Trade in Services Chapter
Within this chapter there are three annexes in regards to professional services, telecommunications services, and finally, financial services. The Professional Services Annex encourages cooperation for recognition of professional qualifications throughout the parties. The other two annexes include high-level and comprehensively laid out commitments.
Arranging for exchanges between RCEP countries in regards to professional qualifications is the focus of the Professional Services Annex. It aims to improve communication between the bodies recognising these qualifications and encourage further negotiation in this area for mutual interest. Standards in areas such as experience, education and examinations should be developed to offer similar levels of consumer protection, professional development and scope of practice.
A framework of rules is established within the Telecommunications Services Annex, in regards to services in telecommunications, and acts as an extension of the “10+1” agreement. Further additions to the new agreement include submarine cable systems internationally, access to poles and ducts, the approach to regulations, international mobile roaming, and more flexibility in regards to the choice of technology. These additions hope to speed up the development of communication technology and regional information, focusing on cutting edge technology and upgrading and restructuring supply and industrial chains.
Finally, in the Financial Services Annex, we see new rulings in regards to financial services, transfers of financial information and self-regulatory organisations, which all represent the highest level of commitment China has made in the financial sector. Regulatory transparency is of top importance, with high-level commitments being made in this area, in the hopes of creating a more stable and open communication chain while still safeguarding the system and providing protection against potential financial risks. This will help China’s financial institution expand overseas and also allow international companies to enter China’s financial market.
Aiming to provide effective, transparent and efficient rules, the Dispute Settlement Chapter features many different salient features including the choice of forum, which allows the complaining party to choose where they want to address the dispute in question, and consultations, allowing the responding party and complaining party to first have a consultation if desired. Mediation, conciliation and good offices offer alternative methods to settle disputes, and the establishment of a panel to resolve disputes can be used when requests are not responded to within the stipulated timeline. Finally, the rights of interested third parties are taken into account, so they can participate in these disputes and have their views listened to by the panel.
Economic and Technical Cooperation (ECOTECH)
This chapter offers a framework to help realise the development aspect of the agreement. The countries in the RCEP noted that the agreement helps to narrow the gaps of development and increase mutual benefits for all of the parties involved, and the economic and technical cooperation listed here with help to make the use and implementation of the agreement more effective and efficient. The fifteen countries agreed to participate in activities which focus on areas including trade in goods and services, investments and intellectual property, all of which were agreed by the parties involved. Activities that offer capacity building and technical assistance to the developing countries within the agreement will be given priority, to help increase access to information for businesses and public awareness.