All 15 members have completed the entry into force procedures and mutually implemented tariff concessions
RCEP is moving towards a new stage of full implementation
On June 2, after the Regional Comprehensive Economic Partnership Agreement (RCEP) officially entered into force for the Philippines, all 15 members have completed the entry into force procedures and mutually implemented tariff concessions. The agreement has entered a new stage of full implementation.
RCEP is the largest free trade agreement in the world, and it is also a comprehensive, modern, high-quality and reciprocal free trade agreement. What does this agreement contain and what is its significance? Entering a new stage of full implementation, how to better release the dividends and potential of RCEP? The reporter interviewed Zhang Xiaotao, dean of the School of International Economics and Trade and director of the International Investment Research Center of the Central University of Finance and Economics.
The world‘s most populous, largest economic and trade area, and the most promising free trade zone set sail, and East Asia’s economic integration has taken an important step
Q: What was the establishment process and original intention of RCEP?
Zhang Xiaotao: RCEP was initiated by ASEAN in 2012. In November of that year, the leaders of the ten ASEAN countries, China, Japan, South Korea and other countries jointly issued the “Joint Statement on Initiating Negotiations on the Regional Comprehensive Economic Partnership Agreement” in Phnom Penh, Cambodia, officially launching Free trade zone construction process. In May 2013, the first round of RCEP negotiations was held in Brunei, and three working groups on trade in goods, trade in services and investment were established to discuss related issues. After 8 years and 31 rounds of formal negotiations, on November 15, 2020, the trade ministers of the ten ASEAN countries and 15 countries including China, Japan, South Korea, Australia, and New Zealand formally signed the agreement through video conference, which marks the At present, the free trade zone with the largest population, the largest economic and trade scale and the greatest development potential in the world has officially launched, and the economic integration of East Asia has taken an important step.
RCEP integrates multiple “10+1” free trade agreements between ASEAN and China, Japan, South Korea, Australia, and New Zealand, as well as existing multi-pair free trade partnerships between China, Japan, South Korea, Australia, and New Zealand. A new free trade partnership has been established between Japan and Japan and South Korea, resulting in a broader and more forward-looking free trade agreement.
The original intention of RCEP can be understood from four aspects: first, to expand and deepen the economic integration of the region, to enhance economic growth and fair economic development, to promote economic cooperation, to enhance economic partnership among members, thereby creating new employment opportunities, Improve the general welfare of the people of all countries; second, seek to establish clear and mutually beneficial market access and economic and trade rules, facilitate trade and investment, and support the development of regional industrial and supply chains; third, give differential treatment to the least developed countries and help developing members strengthen their capacity building to promote inclusive and balanced development in the region; fourth is to promote economic efficiency and trade and investment development through good governance and a predictable, transparent and stable business environment.
Q: RCEP is regarded as another important milestone in regional economic integration following the establishment of the ASEAN Economic Community. How to understand the role and significance of RCEP?
Zhang Xiaotao: RCEP covers 20 chapters, including market access such as trade in goods, trade in services, and investment, as well as a large number of rules on trade facilitation, intellectual property rights, e-commerce, competition policy, and government procurement. It can be said that the agreement covers all aspects of trade and investment liberalization and facilitation, and is considered to be “the most important achievement of East Asian economic integration in the past 20 years.”
In general, RCEP has three characteristics: the largest, the most inclusive, and the most potential for development. In addition to RCEP, the current major international regional economic and trade relations agreements include the European Union (EU), the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP), and the United States-Mexico-Canada Trade Agreement (USMCA), etc. RCEP is currently the free trade zone with the largest population and largest economic and trade scale in the world. According to 2019 data, the 15 member states of RCEP have a total population of 2.27 billion, a GDP of 26 trillion US dollars, and a total export of 5.2 trillion US dollars, accounting for about 30% of the global total.
RCEP is also very inclusive. There are huge differences in the economic system, development level, scale and volume among member countries in the region. There are not only highly developed countries such as Japan, Australia, and Singapore, but also underdeveloped countries such as Laos, Cambodia, and Myanmar. RCEP takes into account the demands of all parties to the greatest extent, and arranges a certain transition period for relevant countries in the agreement to provide more favorable conditions for these member states so that they can better integrate into regional economic integration.
RCEP is also the fastest growing region with the greatest development potential in the world. According to statistics from 2015 to 2019, the average economic growth rate in the RCEP region reached 5.2%, far exceeding the growth rates of CPTPP (2.2%), EU (2.3%) and USMCA (2.4%), and faster than the global average of 3.4%. economic growth rate. RCEP is of great significance to promoting regional economic integration and even the development of the world economy.
The cost of intra-regional trade in goods has been significantly reduced, and new trade and investment opportunities have been created, boosting confidence in regional and global economic recovery
Q: What benefits does RCEP bring to the economic and trade development of member countries and the East Asian region? What opportunities will it bring to China’s foreign trade and related enterprises?
Zhang Xiaotao: From January 1, 2022, RCEP will come into force for 10 countries, including Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, New Zealand and Australia, and will then take effect for South Korea, Malaysia, Myanmar and Indonesia. It will take effect for the Philippines on June 2 this year, and so far, all 15 members have completed the entry into force procedures.
RCEP is essentially an inclusive super-large free trade agreement, which aims to share the dividends of economic development and promote the common prosperity of the entire region. Since it came into effect, relying on the two major markets of China and ASEAN, RCEP has released a huge potential. With the gradual reduction of tariffs, consumers will have more market choices and meet cross-border consumption needs, which will help promote overall consumption upgrades. For enterprises, the cost of intra-regional trade in goods has been significantly reduced, and new trade and investment opportunities have been created, boosting confidence in regional and global economic recovery. According to calculations by the Peterson Institute for International Economics, by 2030, RCEP will increase global GDP by US$186 billion per year.
According to statistics from the General Administration of Customs, in 2022, my country’s imports and exports to the other 14 RCEP member states will be 12.95 trillion yuan, an increase of 7.5%, accounting for 30.8% of my country’s total foreign trade import and export value, and the growth rate of imports and exports to other RCEP member states will exceed twofold. The number of digits reached 8, and the growth rate of imports and exports to Indonesia, Singapore, Myanmar, Cambodia, and Laos all exceeded 20%. As my country’s “Belt and Road” initiative continues to absorb new members, intra-regional trade has gradually become the key direction of my country’s economic development, and the importance of RCEP and ASEAN will gradually become prominent.
Give full play to the comparative advantages of its own production factors and promote China’s manufacturing industry to move towards the mid-to-high end
Q: The “Cumulative Rules of Origin” is a highlight of RCEP. How does RCEP deepen regional industrial and supply chain cooperation? How will it affect the development of my country’s manufacturing industry?
Zhang Xiaotao: According to the “Cumulative Rules of Origin”, the original materials of other member countries used by enterprises in RCEP member countries in the production process can be regarded as original materials in the region, and can increase the proportion of original value components cumulatively, so that member countries It is easier for products exported between countries to meet the threshold for enjoying preferential tariffs.
The economic structures of RCEP member countries are highly complementary, with obvious comparative advantages, and the capital elements, technological elements, and labor elements in the region are complete. Under a series of institutional arrangements such as tariff reductions and exemptions, “Cumulative Rules of Origin”, customs procedures and trade facilitation, and negative lists to promote investment liberalization, market access in the fields of goods, services, and investment among member states has been further relaxed. It can give full play to the comparative advantages of its own production factors, adjust the layout of foreign trade and investment, optimize the allocation of resources, improve the efficiency of industrial division of labor, reduce the overall cost of the industrial chain, and enhance global competitiveness.
Under the RCEP framework, the cooperation among member countries is closer, and the attractiveness of the comparative advantages of each country to member countries has been greatly enhanced. Under the same conditions, it may be a priority for trade and investment. A good institutional environment has also strengthened my country’s ties with other RCEP member states and promoted the long-term prosperity and development of the region.
RCEP has brought great opportunities for the development of my country’s manufacturing industry, with both industrial upgrading and economies of scale. China’s manufacturing industry ranks first in the world, with a long and complete industrial chain. It is an extremely important supply chain radiation center in the Asia-Pacific region, connecting the economic pulse of the Asia-Pacific countries. Combined with the implementation of RCEP, China’s manufacturing industry will make full use of the advantages of complete industrial categories and strong comprehensive supporting capabilities, accelerate the transformation and upgrading of traditional industries and cultivate and develop emerging industries, focus on improving quality standards, and promote China’s manufacturing industry to move towards the mid-to-high end.
While enjoying the dividends of RCEP, related industries and enterprises are also facing higher standards, stricter rules and stronger competition from RCEP. We must correctly understand the competition brought about by the high-standard opening of RCEP, accelerate the pace of transformation and upgrading, improve the level of grasp of international rules, enhance the ability to prevent risks in the international market, and be prepared to deal with challenges.
Building high-standard free trade agreements has become a key area for China to actively promote high-level opening up
Question: Accelerating the implementation of the free trade zone strategy is an important part of my country’s new round of opening up. At present, what is the “gold content” of my country’s free trade zone network? How can regional free trade agreements help build a new system of a higher level of open economy?
Zhang Xiaotao: As the largest developing country in the world, China’s influence in the Asia-Pacific region and the world continues to increase, and it has gradually become an important force in promoting regional integration in the Asia-Pacific region. In recent years, my country has accelerated the construction of Free Trade Agreements (FTAs). In terms of the breadth of FTAs, as of now, my country has signed 19 free trade agreements with 26 countries and regions including Pakistan, Chile, and New Zealand.
From 2001 to 2015, China established FTAs with more than a dozen countries and regions. From the perspective of the development level of the signing countries, developing countries are the main ones; in 2015, China formally signed FTAs with South Korea and Australia respectively. It was the first time to sign an FTA with a relatively influential country in the world, which opened up a new situation for China’s FTA construction process. It can be said that China’s free trade zone has gone through a process of construction from scratch, from neighboring regions to other parts of the world, from low-level to medium-high level, and the “circle of friends” has continued to expand. At present, China has formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and is communicating and consulting with various members in accordance with the CPTPP accession procedures.
Since the reform and opening up, China has gradually deepened its participation in regional economic integration. my country has established FTA since the beginning of this century, and it has gradually risen to the level of national strategy. The report of the 18th National Congress of the Communist Party of China pointed out that it is necessary to coordinate bilateral, multilateral, regional and sub-regional open cooperation, accelerate the implementation of the free trade zone strategy, and promote interconnection with neighboring countries. In December 2015, my country launched “Several Opinions on Accelerating the Implementation of the Free Trade Zone Strategy”, which is also my country’s first comprehensive document to promote the construction of free trade zones. The report of the 20th National Congress of the Communist Party of China pointed out that it is necessary to promote high-level opening up to the outside world and steadily expand institutional opening up such as rules, regulations, management, and standards. This is the first time that “institutional opening” has been included in the report of the Party Congress. At present, the construction of high-standard FTA has become a key area for China to actively promote high-level opening up, and it is also an important manifestation of my country’s active participation in the international division of production and global governance.
Work hard on cohesive force and precise policy implementation to implement RCEP with high quality
Q: RCEP has entered a new stage of full implementation. How should we better grasp the opportunities and challenges brought by RCEP to promote high-quality economic development?
Zhang Xiaotao: The high-quality implementation of RCEP and the promotion of foreign trade stability and quality improvement are of great significance to my country’s economic and social stability. Previously, the Ministry of Commerce, together with six departments including the National Development and Reform Commission, jointly issued the “Guiding Opinions on the High-quality Implementation of the Regional Comprehensive Economic Partnership Agreement (RCEP)” to promote localities and enterprises to better seize RCEP opportunities. In general, efforts should be made to unite forces and implement precise policies:
One is to help companies understand and make full use of RCEP rules. To give full play to the role of RCEP, in the final analysis, it is to allow the agreement to benefit the majority of enterprises faster and better. Competent commercial departments at all levels should continue to work with relevant departments to closely combine the development strategy and actual needs of the region, and continue to organize and carry out relevant policy promotion and training. Trade promotion agencies at all levels, chambers of commerce, etc. can actively help relevant enterprises to familiarize themselves with the rules of the agreement, fully understand the opportunities and challenges brought by the agreement, and increase relevant training and guidance for import and export enterprises. Advantageous industries such as textiles and clothing, footwear, toys, light industry, home appliances, electronic information, metallurgical building materials, etc., make good use of the RCEP “Cumulative Rules of Origin” to jointly develop domestic and foreign markets and promote industrial transformation and upgrading.
The second is to further enhance the level of trade facilitation. Relevant departments can further strengthen coordination and linkage, comprehensively improve RCEP visa business, vigorously train visa officers, add visa points, actively promote RCEP enterprise self-declaration system, trade goods “pre-inspection” system, and implement import and export commodities “immediate release”, Fresh and live agricultural products are “released immediately after inspection”, imported goods are “directly picked up by the ship”, and exported goods are “delivered and loaded directly”, which improves trade efficiency and reduces trade costs.
The third is to explore the establishment of a number of high-level implementation of RCEP demonstration zones to promote high-quality implementation of RCEP by local governments. Select a number of cities that have close economic and trade ties with RCEP members, and endow them with high-level implementation of RCEP demonstration zone functions, making them a model for local governments to use RCEP rules to serve enterprises. Members’ tariff concessions and “Cumulative Rules of Origin” should be fully utilized to quickly form industrial clusters in the demonstration zone where most of the links in the industrial chain are within RCEP members and tariff concessions have a significant effect on reducing costs.
The fourth is to guide enterprises to optimize the industrial chain layout in RCEP member countries. China’s foreign trade has entered a new stage of development in which both scale and quality are considered, and the overall quality and efficiency of technology, quality, brand, and service are improved. The inevitable choice of competitiveness. Relevant departments should guide enterprises to strengthen core technology research and development, improve international business management, and integrate into the international division of labor system and global value chain at a higher level. (Chai Yaxin, reporter from China Discipline Inspection and Supervision News)