What is the Ratification Status of the RCEP Agreement and When Will it Come into Effect?
China and Thailand have ratified the RCEP agreement. The RCEP now requires ratification by an additional seven signatory countries – five in ASEAN and two non-ASEAN countries – so that it can come into effect. Once in effect, the RCEP will eliminate tariffs on nearly 30 percent of China’s exports to other RCEP member countries.
In March 2021, China’s Ministry of Commerce (MOFCOM) announced that the country has completed the ratification of the Regional Comprehensive Economic Partnership (RCEP) Agreement, pushing for early implementation of the Agreement.
Prior to that, in February this year, the parliament of Thailand also approved the ratification of the RCEP.
Once ratified by three-fifth of the 15 signatories – namely six ASEAN countries and three non-ASEAN countries, the RCEP agreement will enter into force in 60 days.
According to China’s commerce ministry, 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.
Ratification progress of RCEP participants
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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