On Jan. 1, 2022, the Regional Comprehensive Economic Partnership (RCEP) agreement officially came into force for six ASEAN members, including Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam, and four non-ASEAN signatory states — China, Japan, New Zealand and Australia, indicating that the world’s largest trade deal so far has set sail.
It will also take effect on Feb. 1 for South Korea, which has already completed the ratification process. Besides, other participants in the RCEP are also gathering pace in proceeding with the ratification of the agreement.
On the first day of 2022, customs authority in Qingdao city, east China’s Shandong province, issued a RCEP certificate of origin, also the first one of its kind in the country, for a batch of over 2,800 tons of calcium chloride to be exported to Japan by Qingdao Haiwan Group at the RCEP Qingdao Pilot Innovation Base for Economic and Trade Cooperation.
“With the certificate of origin, the tariff rate for the batch of goods can be reduced from 3.3 percent to 3 percent after its arrival in Japan,” said Liu Kun, business manager at the company, adding that tax reduction for the batch of exports amounted to nearly 10,000 yuan ($1,574).
On the same day, 16 customs departments under the customs of Nanjing, east China’s Jiangsu province, including that of Changzhou and Nantong cities and Suzhou Industrial Park, issued a total of 36 RCEP certificates of origin, which involved over $5.48 million worth of exports.
The China Council for the Promotion of International Trade (CCPIT) and regional institutions across the country released 158 RCEP certificates of origin for 69 companies on Jan. 1, 2022, which concerned $12 million of exported goods and are expected to cut customs duties by $180,000 for these companies.
RCEP certificates of origin for goods to be exported to Singapore, Thailand, Japan, New Zealand and Australia have been fully electronically issued. The CCPIT has also enabled companies to make reservations and ask for mail service and fast issuance concerning RCEP certificates of origin to facilitate customs clearance and help companies benefit from tariff reduction and exemption.
“China will fully implement the obligations of the RCEP agreement starting from today,” said Yang Zhengwei, Deputy Director General of the Department of International Trade and Economic Affairs, China’s Ministry of Commerce, on Jan. 1.
Tariffs on more than 65 percent of China’s trade in goods with the ASEAN, Australia and New Zealand immediately reached zero under the agreement. Meanwhile, 39 percent of South Korea’s exports to China and 50 percent of the latter’s exports to South Korea have been subject to zero tariffs right after the RCEP took effect.
Under the RCEP, China and Japan have established free trade relations for the first time, and immediate zero tariffs have been implemented for 25 percent of Japan’s exports to China and 57 percent of China’s exports to Japan.
Within about ten years since the RCEP took effect, about 90 percent of merchandise trade between members that have approved the agreement will eventually be subject to zero tariffs.
The RCEP will notably bring regional economic integration in East Asia to a new level, noted Tu Xinquan, dean of the China Institute for WTO Studies, University of International Business and Economics.
Many RCEP members are China’s neighbors, and as they reach agreements on rules of trade in goods, including the rules of origin, customs procedures, sanitary and phytosanitary measures as well as standards and technical regulations under the RCEP, the reduction of tariffs and the abolition of non-tariff barriers will produce a combined effect, which will significantly enhance trade relations between members, Tu said.
Under the RCEP, materials from a member country used by enterprises in another member state in production can be regarded as materials indigenous to the latter member state so as to make it easier for exports of member states to reach the threshold for enjoying benefits.
This will encourage manufacturers to configure production resources in the region and give full play to the resources and comparative advantages of countries involved, which can help form a closely knit and more resilient industrial chain and supply chain in the region and create broad development space, said Yan Yun, Deputy Director-General of CCPIT Commercial Certification Center.
Yan believes that Chinese companies should make the most of the overall advantages of China’s industrial chain and well leverage the large market characterized by regional integration to drive development through innovation.
The RCEP’s entry into force represents both free trade on a larger scale and opening-up at a higher level. According to Tu, RCEP members’ opening-up level under the agreement evidently surpasses that under their other bilateral and multilateral agreements in terms of trade in services, and those adopting positive list for services trade will convert to negative list within six years since the agreement came into force.
As regards investment, RCEP members have made high-quality commitments on adopting negative list for non-service industry investment, with no new restrictions added outside the list, and strengthened the level of investment protection.
By 2035, the RCEP will bring the cumulative increase in regional exports and imports to $857.1 billion and $983.7 billion, injecting strong impetus into regional and global economic growth, according to a report released by the Chinese Academy of International Trade and Economic Cooperation on the potential influence of the RCEP on the regional economy.