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Getting RCEP across the Line

Published online by Cambridge University Press:  19 February 2021

Deborah K. Elms
Deborah K. Elms*
Affiliation:
Asian Trade Centre, Singapore
*
Email: [email protected]
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Abstract

After eight years of effort, the 15 Asian members involved in the Regional Comprehensive Economic Partnership (RCEP) met in a virtual ceremony to sign the final document on Sunday, 15 November 2020. The final deal matches the original objective – to knit the region together and allow firms to build supply chains across the region to deliver goods, services, and investment to Asian markets more seamlessly. Getting this free trade agreement (FTA) to this point involved repeated missed deadlines, the loss of one important negotiating partner, and thousands of miles of travel for a rotating cast of officials, trade ministers, and leaders. RCEP began in late 2012 as an effort to unravel what has often been called the ‘spaghetti or noodle bowl’ of overlapping and inconsistent rules that can impede trade. While most of the countries in the region have extensive experience in trade and are outward oriented, trade in Asia has been bedeviled with challenges. This includes a range of both tariff and non-tariff obstacles that have made it more difficult than might be expected to trade, especially for final products, within the region.

Keywords

Tradedigital economytrade in servicessupply chainsGVCstrade in goodstrade facilitationASEANASEAN Economic Community (AEC)Regional Comprehensive Economic Partnership (RCEP)Trans-Pacific Partnership (TPP)Comprehensive and Progressive Trans-Pacific Partnership (CPTPP)
Type
From the Trenches
Information
World Trade Review , Volume 20 , Issue 3 , July 2021 , pp. 373 - 380
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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References

1 ASEAN has a mix of different types of Dialogue Partners. Six Dialogue Partners (Australia, China, Japan, India, New Zealand, and South Korea) have FTAs in place with ASEAN. Several other countries including the European Union, Russia, and the United States are also Dialogue Partners with ASEAN, working together on a range of projects, but are not also connected through FTA arrangements at the ASEAN regional level. For more details on the Dialogue Partners and various programs, see the External Relations tab on the ASEAN website, https://asean.org/asean/external-relations/accessed (accessed 17 December 2020).

2 Over the course of the RCEP talks, ASEAN completed a new regional FTA with Hong Kong, leading to a total of six ASEAN+1 FTAs.

3 See ‘Guiding Principles and Objectives for Negotiating the Regional Comprehensive Economic Partnership,’ https://asean.org/wp-content/uploads/2012/05/RCEP-Guiding-Principles-public-copy.pdf(accessed 23 November 2020).

4 See the ASEAN Economic Community Blueprint, particularly Section 9, https://asean.org/wp-content/uploads/archive/5187-10.pdf (accessed 9 December 2020).

5 For more detail on STRACAP in ASEAN, see ASEAN Guidelines on Standards, Technical Regulations and Conformity Assessment Procedures, 2015, https://asean.org/storage/2017/09/ASEAN-Guidelines-on-Standards-Technical-Regulations-and-Conformity-Assessment-Procedures.pdf (accessed 23 November 2020).

6 Note, however, that RCEP does not include Vietnam in this list. Until midway through the RCEP negotiations, Vietnam was always included in ASEAN-level extensions and flexibilities, with additional capacity building and other programs designed around increasing the integration of these later members to ASEAN. After Vietnam became part of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) in early 2019, it no longer requested special treatment within ASEAN and this was largely extended to RCEP as well.

7 This task, which was already difficult, was complicated by Pak Iman's simultaneous posting in Geneva to work on the World Trade Organization (WTO) for part of his term as RCEP Lead, as well as head of other Indonesian bilateral FTA efforts, including with the European Union, as Director General of International Trade Negotiations.

8 Australia volunteered to host the first session, thinking it was good way to get a ‘round’ in when teams were still quite small and travel and local accommodation budgets did not need to be so extensive. However, as the negotiations dragged on, Australia ended up being called up repeatedly, like other member governments, to host additional sessions. At the peak, RCEP rounds could include 650 delegates from across the 16 member governments.

9 Note, however, that not every tariff concession is lengthy. Many reductions or elimination of tariffs start on the date of entry into force and most will be fully implemented before the end of the long timelines embedded into the tariff schedules. Not all tariffs will be changed under RCEP. Some will remain ‘unbound’ with no commitments while other tariffs may continue to exist (albeit at lower levels than at the outset) after the full implementation period concludes.

10 Singapore had the easiest job. It simply created a ‘headnote’ to say that all tariffs would be eliminated under RCEP. Singapore only applies tariffs to a literal handful of lines in any case on an MFN basis.

11 With specific timelines that vary depending on levels of economic development.

12 As a further complication for understanding RCEP positive list schedules, Mode 3, which is about the ability of RCEP firms to deliver services from inside the member country, was managed through the investment commitments. These, as noted below, are all done on a ‘negative list’ basis. Mode 4, which covers the movement of specific services providers, has been taken up in the Temporary Movement of Natural Persons Chapter 9. In short, the positive list schedules for RCEP includes mostly Modes 1 and 2.

13 Article 20.8.

14 Provision 18.3.1(j).

15 As negotiations switched to a ‘virtual’ format under the escalating COVID-19 pandemic and increasing travel restrictions, officials had to manage sensitive final points without the benefit of in-person sessions to reach agreement. Decisions on Indian concessions, potential adjustments to the agreement in the wake of India's departure, and wrapping up final issues were complicated by the virtual format.

16 See footnote 2, Article 20.9 Accession.

17 To see the signing ceremony, https://www.youtube.com/watch?v=oZuEAa-JQ28 (accessed 9 December 2020).

18 Technically, Vietnam did not join the agreement until January 2019 but the CPTPP started for Asian members Australia, Japan, New Zealand, and Singapore on 31 December 2018.

19 The EU was also busy negotiating FTAs during the RCEP period with many additional Asian partners such as Australia, India, Indonesia, and New Zealand. The EU also worked on an investment agreement with China.

20 Cambodia, Laos and Myanmar are not part of APEC.

21 Governments need a place to discuss issues of concern without having to worry about creating or adjusting potentially legally binding rules. As trade has become more complex, it is critical that governments have an opportunity to raise topics and share experiences and best practices with one another.