What is the Ratification Status of the RCEP Agreement and When Will it Come into Effect?
This article was originally posted on March 31, 2021, and last updated on November 9, 2021.
- The Regional Comprehensive Economic Partnership (RCEP) has reached the threshold of entry into force and will take effect on January 1, 2022, according to a notice issued by the ASEAN Secretariat, the depositary body of the RCEP, on November 3, 2021. It comes as Australia and New Zealand become the latest member states to ratify the agreement. Other countries that have ratified RCEP include Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, and Japan.
- An official from the International Affairs Department of the Ministry of Commerce said that China is ready to implement RCEP when the agreement goes into effect. In terms of preparations for the implementation of tariff concessions, China completed the transfer of the tariff concessions table and submitted it to the ASEAN Secretariat in the first half of this year. At present, the implementation plan of tax reduction has entered the final stage of domestic approval procedures, which can ensure that the obligation of tax reduction can be fulfilled upon the entry into force of the agreement. In terms of preparation for the implementation of rules of origin, the General Administration of Customs formulated the rules of origin for RCEP and the rules for approved exporters in the first half of this year, which will be announced and implemented simultaneously with the entry into force of the RCEP. In response to country of origin management requirements under RCEP, the upgrade of the information system has been completed.
Once ratified by three-fifths of the 15 signatories – namely six ASEAN countries and three non-ASEAN countries, the RCEP agreement will enter into force in 60 days. Earlier in April, all signatories to the RCEP have made clear that they will strive to complete ratification within the year to expedite its enactment by January 1, 2022, according to China’s commerce ministry.
Ratification progress of RCEP participants
- On April 28, 2021, Japan’s upper house of parliament ratified the RCEP agreement, after the lower house gave the green light earlier in April. Japan became the second economy outside ASEAN to give its formal support to the deal.
- On April 15, 2021, China deposited the instrument of ratification with the ASEAN secretary-general, marking the completion of the ratification process for the Regional Comprehensive Economic Partnership (RCEP) Agreement, according to China’s Ministry of Commerce. On March 22, 2021, China approved the ratification of the RCEP agreement.
- On April 9, 2021, Singapore ratified the RCEP agreement and deposited its instrument of ratification with the Secretary-General of ASEAN, making it the first RCEP participating country to complete the official ratification process.
- On February 11, 2021, the Parliament of Thailand approved the RCEP agreement, according to the country’s Deputy Prime Minister and Commerce Minister Jurin Laksanawisit.
Import-export opportunities for China under RCEP
The RCEP is designed to eliminate as much as 90 percent of the tariffs on goods traded between its signatories over the next 20 years from the agreement coming into effect.
According to Wang Shouwen, China’ Vice Minister of Commerce, the RCEP will remove tariffs on nearly 30 percent of China’s exports.
Prior to the RCEP negotiations, China had already reached free trade agreements (FTAs) with ASEAN countries, Australia, and New Zealand respectively, which lowered tariffs on goods and services traded between the two sides of each FTA. With the RCEP in place, ASEAN members like Indonesia, Philippines, Cambodia, Myanmar, Malaysia, etc. could be able to expand their list of duty-free products from China to include automobiles and parts, motorcycles, chemicals, electromechanical products, and steel products.
In addition, as the first free trade agreement (FTA) between China and Japan, the RCEP will pave the way for China and Japan to mutually benefit from lower tariffs on machinery, electronic information technology, chemical products, among many other goods. Japan will eliminate 56 percent of tariffs on Chinese agriculture imports.
Import-wise, China will benefit from cheaper imports of advanced technology, key equipment, key parts and components, consumer goods, pharmaceuticals, and medical equipment, as well as production services, such as design, research and development (R&D), energy conservation, and environmental protection, to better meet the needs of the domestic market for high-quality goods and services.
The current total trade volume between China and the RCEP signatories accounts for about one-third of China’s total foreign trade volume.
In 2020, China’s exports to RCEP members amounted to US$700 billion, accounting for 27 percent of China’s total exports. China’s imports from its RCEP trading partners reached US$778 billion last year, accounting for 37.8 percent of its total imports. Ten percent of China’s foreign direct investment (FDI) comes from RCEP members.
The proportion is expected to grow further in the future because of the RCEP.
Boost to e-commerce and positive outlook
The RCEP is also projected to boost cross-border e-commerce between China, East Asia, and South East Asia. Chapter 12 of the agreement specifically outlines e-commerce. The regulations on e-commerce, including the facilitation of paperless trade, e-authentication, e-signatures, and the personal information protection for e-commerce users and online consumers, will provide a more conducive trade environment for cross-border e-commerce.
The RCEP is expected to have a far-reaching impact on regional trade facilitation and international economic integration over the next decades. China Briefing will continue to interpret RCEP opportunities for foreign investors. Please stay tuned by following us and for more information, you are welcome to email us at email@example.com.
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