RCEP - The "Largest" FTA signed by China

China Practices 2020/12/14
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RCEP and RCEP's members

RCEP, the so-called Regional Comprehensive Economic Partnership, is a free trade agreement entered into by 15 Asian-pacific nations.

In 2012, the 10 member nations of the Association of Southeast Asian Nations ("ASEAN"), i.e. Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, began negotiations with 6 major traders of ASEAN, which are India, China, South Korea, Japan, Australia and New Zealand.

Though India quit during the negotiations in 2020, the other 15 nations finalized and executed RCEP on November 15, 2020. RCEP will be officially in effect upon each nation's domestic ratification.

Key concepts of RCEP

In addition to trading in goods, services and investment, RCEP covers various new topics including intellectual property, e-commerce, competition, government procurement etc.

For trading in goods, 90% of goods in the region will immediately or soon become zero-tariff.
For trading in services, China, among eight of the nations, has adopted the positive list measure, which will be converted to negative list approach as the remaining seven nations; 22 sectors are added to the 100 sectors committed by China to the WTO.
For investment, 15 nations made liberalization commitments through negative list approach on manufacturing, agriculture, forestry, fisheries and mining; this is the first time China commits on investment through negative list under a FTA, as a step forward of China's current efficient Special Administrative Measures (Negative List) for Foreign Investment Access.
For Intellectual Property, RCEP covers protections for copyrights, trademarks, geographical indications, patents, industrial design, genetic resources, traditional knowledge and folklore, among others.
For e-commerce, RCEP nations commit to reducing barriers for small and medium enterprises, share info, experience and practice, promoting paperless trading, e-authentication and e-signature, protecting personal info, rights and interests of online users.
For trade remedies, RCEP encompasses safeguard measures, anti-dumping and countervailing duties.
Government procurement - the nations commit to promoting the transparency of laws and regulations, procedures, and developing government procurement cooperation.

Impact of RCEP

In 2019, there are 2.27 billion citizens living in the 15 member nations of RCEP, a roughly one third of the world's population, with a summary GDP of USD 26 trillion.

Among the 15 nations, China has an enormous 1.3 billion population. Before RCEP, China has already executed a series of free trade agreements separately with the aforementioned ASEAN, Australia, South Korea, and New Zealand.

With RCEP eliminating tariff and non-tariff trade barriers, promoting investment facilitation and liberalization, China is expecting to boost its trading and investment with the 14 other nations in the Asia-pacitic region. China's internet and e-commerce are second largest in the world, and have become its major industry domestically.

For the past 20 years, China has relied on WTO rules to participate in international trading. The western world and China are bound together by the supply chains. However, we are looking at the accelerating deglobalization across the world: in the last few years, the United States has brought up trade wars with China. The U.S. also started then quitted the Trans-Pacific Partnership, Japan took over and renamed it the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ("CPTPP"). CPTPP excludes China and some of the AESAN nations, but includes Canada, Chile, Mexican and Peru. It is crucial for China's whole economy to find another growing point.

China has determined switching from international trading to "domestic circulation plus international circulation". Chinese government sees RCEP as an important opportunity to enlarge its "international circulation" - trading and investment with AESAN, Japan and Australia.

While the flow of trading greatly endangered by the COVID-19, billions of jobs in RCEP nations are threatened. We are looking at these nations getting back, enhancing their supply chains and increasing investments with each other. For China, we believe the commitments in RCEP will have China continue to supply the region, open up its massive domestic consumer market and investment sector.

AUTHOR: Yuanxi Chen

Counsel

Shanghai
+886-2-2707-9976

[email protected]

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author directly.