Abstract
Negotiations on the Regional Comprehensive Economic Partnership (RCEP) were launched in November 2012 between the Association of Southeast Asian Nations (ASEAN) and ASEAN’s free trade agreement partners Australia, China, India, Japan, New Zealand and South Korea. After more than 30 negotiations rounds, the Agreement was signed on November 15, 2020. In November 2019, India had indicated that it is not in a position to sign the Agreement, but even without India, RCEP still is the world’s largest free trade agreement, covering about 30% of global GDP. RCEP entered into force on January 1, 2022. This book chapter analyzes the economic potentiality of the agreement, focusing on the phasing out of tariffs on trade. Tariffs are expected to be reduced over 20 years, most tariffs being eliminated. The main impact will be in the cases where there has been no free trade agreement so far, which is the case between Japan and South Korea and, most importantly, between Japan and the People's Republic of China. Beyond tariffs, RCEP improves the business environment and opportunities for transnational value chains and cross- border trading for all companies operating in the RCEP area. It standardizes rules and procedures (the “single rulebook”), and it is supposed to create more transparency and increase the level of compliance to these rules and procedures. RCEP will have an impact on economic actors’ behavior and ultimately increase the level of economic integration in the region.
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Notes
- 1.
The protocol of engagement with India which keeps open a path for eventual Indian membership in RCEP (cf. Armstrong & Drysdale, 2022: 15).
- 2.
https://www.dfat.gov.au/trade/agreements/not-yet-in-force/rcep, November 18, 2020.
- 3.
The CPTPP, which went into effect at the end of 2018, has seven members overlapping with the RCEP. The member states are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
- 4.
Summary of the regional comprehensive economic partnership agreement, asean.org, November 18, 2020.
- 5.
This is the common rule of origin for all goods trade (RoO): In order to get the preferential treatment, a product needs to either reach an RCEP regional value content (RVC) level of 40% or undergo a change in tariff heading (CTH) at the four-digit HS code level. If these conditions are met, the goods qualify for RCEP trade preferences; this is lower and therefore less restrictive than comparable provisions of the CPTPP (Schott, 2021). This common rule of origin is estimated to reduce export transaction costs between 1.4 and 5.9%, thereby boosting merchandise exports among signatories by around $90 billion on average annually (4% of 2019 intra-zone merchandise trade and 0.5% of global merchandise trade; Dib et al., 2020).
- 6.
Japan exports will rise 5.5% due to RCEP membership: UNCTAD, NikkeiAsia, December 15, 2021.
- 7.
Quote by Zhou Shixin, Director of the Institute for Foreign Policy Studies at the Shanghai Institute for International Studies, in: RCEP starts to deliver benefits for enterprises: business leaders, Global Times, January 6, 2022.
- 8.
Press Release The date of the entry into force of the Regional Comprehensive Economic Partnership Agreement, November 3, 2021, www.mofa.go.jp/press/release/press4e_003051.html.
- 9.
Akio Mimura, Chairman of Japan Chamber of Commerce and Industry, KYODO, November 16, 2020.
- 10.
Press Conference by METI-Minister Hagiuda (Excerpt), November 5, 2021, www.meti.go.jp/english/speeches/press_conferences/2021/1105001.
- 11.
RCEP starts to deliver benefits for enterprises: business leaders, Global Times, January 6, 2022. 13.
- 12.
NikkeiAsia, November 15, 2020.
- 13.
CPTPP includes only four ASEAN countries (Brunei, Malaysia, Singapore and Vietnam).
- 14.
Press Conference by METI-Minister Hagiuda (Excerpt), November 5, 2021, www.meti.go.jp/english/speeches/press_conferences/2021/1105001.
- 15.
Japan exports will rise 5.5% due to RCEP membership: UNCTAD, NikkeiAsia, December 15, 2021.
- 16.
Analysis based on RCEP Annex 1 Schedule of Tariff Commitments of China, Section C: For Japan. www.dfat.gov.au, November 16, 2020.
- 17.
APEC’s Post-2020 vision will get RCEP support as US wanes, Global Times, November 18, 2020.
- 18.
RCEP’s boost to e-commerce. Benefits in the world’s largest FTZ offer huge potential amid coronavirus; Asian auto sector to make major gains under RCEP, Global Times, November 17, 2020.
- 19.
Korea joins RCEP, a light but significant trade agreement, koreajoongangdaily, February 1, 2022.
- 20.
Analysis based on RCEP Annex 1 Schedule of Tariff Commitments of Korea, Section D: For Japan. www.dfat.gov.au, November 16, 2020.
- 21.
RCEP pact to take effect for S. Korea next month, Korea Herald, January 27, 2022.
- 22.
Korea joins RCEP, a light but significant trade agreement, koreajoongangdaily, February 1, 2022. 24.
- 23.
www.wto.org/english/tratop_e/inftec_e/inftec_e.htm (October 10, 2022).
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Ziltener, P. (2023). The Regional Comprehensive Economic Partnership (RCEP): Free Trade and Investment in East Asia Under a “Single Rulebook”. In: Nguyen, A.T., Pham, T.T., Song, J., Lin, YL., Dong, M.C. (eds) Contemporary Economic Issues in Asian Countries: Proceeding of CEIAC 2022, Volume 1. CEIAC 2022. Springer, Singapore. https://doi.org/10.1007/978-981-19-9669-6_24
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