All 15 members completed the entry into force procedure to apply tariff concessions to each other

RCEP is moving towards a new stage of full implementation

On June 6, after the Regional Comprehensive Economic Partnership (RCEP) officially entered into force for the Philippines, all 2 members completed the entry into force process and implemented tariff concessions to each other, and the agreement entered a new stage of full implementation.

RCEP is the world's largest free trade agreement, 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 comprehensive 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 free trade zone with the most development potential set sail, and East Asian economic integration took an important step

Q: What was the process and original intention of RCEP?

Zhang Xiaotao: RCEP was initiated by ASEAN in 2012, and in November of that year, leaders of the 11 ASEAN countries, China, Japan, South Korea and other countries jointly issued the Joint Statement on Initiating the Negotiations on the Regional Comprehensive Economic Partnership Agreement in Phnom Penh, Cambodia, officially launching the process of building the free trade area. 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 consult on related topics. After 5 years and 8 rounds of formal negotiations, on November 31, 2020, the trade ministers of 11 countries including the 15 ASEAN countries and China, Japan, South Korea, Australia and New Zealand officially signed the agreement by video conference, marking the official launch of the world's most populous, largest economic and trade scale and the most potential for development of the free trade area, and an important step in East Asian economic integration.

RCEP integrates a number of "10+1" free trade agreements between ASEAN and China, Japan, South Korea, Australia and New Zealand, as well as the existing pairs of free trade partnerships between China, Japan, South Korea, Australia and New Zealand, and also establishes new free trade partnerships between China, Japan and Japan and South Korea, thus forming a broader and more forward-looking free trade agreement.

The original intention of the establishment of RCEP can be understood from four aspects: first, to expand and deepen the economic integration of the region, enhance economic growth and equitable economic development, promote economic cooperation, and strengthen economic partnership among members, so as to create new employment opportunities and improve the general welfare of people in all countries; The second is to 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 chains and supply chains; The third is to give differential treatment to LDCs, help developing members strengthen capacity building, and promote inclusive and balanced development in the region; The 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 after 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 such as 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 main international regional economic and trade relations agreements include the European Union (EU), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the USMCA Trade Agreement (USMCA). RCEP is currently the free trade zone with the largest population coverage and the largest economic and trade scale in the world. According to 2019 data, the 15 RCEP member countries have a total population of 22.7 billion, a GDP of $26 trillion, and a total export value of $5.2 trillion, each accounting for about 30% of the global total.

RCEP is also very inclusive. The economic system, level of development and scale of the member countries in the region vary greatly, ranging from highly developed countries such as Japan, Australia and Singapore to underdeveloped countries such as Laos, Cambodia and Myanmar. RCEP has accommodated the demands of all parties to the greatest extent possible, and arranged a certain transition period for relevant countries in the agreement, providing more favorable conditions for these member countries to better integrate into regional economic integration.

RCEP is also the fastest growing and most promising region in the world. According to statistics from 2015 to 2019, the average economic growth rate of the RCEP region reached 5.2%, far exceeding the growth rate of CPTPP (2.2%), EU (2.3%) and USMCA (2.4%), and also faster than the global average of 3.4%. RCEP is of great significance to promoting regional economic integration and even world economic development.

The cost of intraregional 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 East Asia? What opportunities will it bring to China's foreign trade and related enterprises?

Zhang Xiaotao: From January 2022, 1, RCEP will officially enter into force for 1 countries, including Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, New Zealand and Australia, and then for South Korea, Malaysia, Myanmar and Indonesia. It entered into force for the Philippines on 10 June this year, and all 6 members have thus completed the entry into force process.

RCEP is essentially an inclusive mega-free trade agreement that aims to share the dividends of economic development and promote the common prosperity of the entire region. Since its implementation, RCEP has released great potential by relying on the two major markets of China and ASEAN. With the gradual reduction of tariffs, for consumers, the market choice is more abundant, and cross-border consumer demand is satisfied, which will help promote the overall consumption upgrade. 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 the Peterson Institute for International Economics, by 2030, RCEP will increase global GDP by $1860 billion per year.

According to the statistics of the General Administration of Customs, in 2022, China's imports and exports to the other 14 RCEP member countries will be 12.95 trillion yuan, an increase of 7.5%, accounting for 30.8% of the total import and export value of China's foreign trade, and the growth rate of imports and exports to other RCEP member countries will exceed double digits, of which the import and export growth rate of Indonesia, Singapore, Myanmar, Cambodia and Laos will exceed 8%. As China's "Belt and Road" initiative continues to attract new members, intraregional trade has gradually become the key direction of China's economic development, and the importance of RCEP and ASEAN will gradually become prominent.

Give full play to its comparative advantages in production factors and promote China's manufacturing industry to move towards the middle and high end

Q: The "cumulative rules of origin" are a highlight of RCEP. How does RCEP deepen regional industrial chain and supply chain cooperation? How to affect the development of China's manufacturing industry?

Zhang Xiaotao: According to the "Origin Accumulation Rule", materials originating from other member countries used in the production process of enterprises in RCEP member countries can be regarded as originating materials in the region, which can cumulatively increase the proportion of origin value content, making it easier for export products between member countries to meet the threshold of enjoying tariff preferences.

The economic structure of RCEP member countries is highly complementary, the characteristics of comparative advantages are obvious, and the capital, technology and labor factors in the region are complete. Under a series of institutional arrangements such as tariff reduction, "rules of origin accumulation", customs procedures and trade facilitation, and negative list promotion of investment liberalization, market access in goods, services, investment and other fields between member countries has been further relaxed, and economies can give full play to their comparative advantages in production factors, adjust the layout of foreign trade and investment, optimize resource allocation, improve the efficiency of industrial division of labor, reduce the comprehensive cost of the industrial chain, and enhance global competitiveness.

Under the RCEP framework, the cooperation between member countries is closer, and the comparative advantages of each country are greatly enhanced to member countries, and they may be used as priority trade and investment objects under the same conditions. The good institutional environment has also strengthened China's ties with other RCEP member countries and promoted the long-term prosperity and development of the region.

RCEP has brought major opportunities for the development of China's manufacturing industry, with both industrial upgrading and scale effects. China's manufacturing scale ranks first in the world, with a long and complete industrial chain, and is an extremely important supply chain radiation center in the Asia-Pacific region, connecting the economic pulse of Asia-Pacific countries. Combined with the implementation of RCEP, China's manufacturing industry makes full use of the advantages of complete industrial categories and strong comprehensive supporting capabilities, accelerates the transformation and upgrading of traditional industries and cultivates and develops emerging industries, strives to improve quality standards, and promotes China's manufacturing industry to move towards the middle and 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 by the high standard opening up of RCEP, accelerate the pace of transformation and upgrading, improve the level of grasping 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

Q: Accelerating the implementation of the FTA strategy is an important part of China's new round of opening up. At present, what is the "gold content" of China'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 world's largest developing country, China's influence in the Asia-Pacific region and even the world has been increasing, and it has gradually become an important force in promoting regional integration in the Asia-Pacific region. In recent years, the construction of China's free trade agreement (FTA) has accelerated. In terms of FTA breadth, up to now, China has signed 26 free trade agreements with 19 countries and regions, including Pakistan, Chile and New Zealand.

From 2001 to 2015, China established FTAs with more than a dozen countries and regions, mainly developing countries from the perspective of the development level of the signatory countries. In 2015, China formally signed FTAs with South Korea and Australia, marking the first time that China signed FTAs with the world's more influential major countries, opening up a new situation for China's FTA construction process. It can be said that China's free trade zone has gone through the construction process from scratch, from neighboring regions to other parts of the world, from low level to medium and high level, and the "circle of friends" has been expanding. At present, China has formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and is communicating and consulting with members in accordance with the CPTPP accession procedure.

Since the reform and opening up, China's participation in regional economic integration has gradually deepened. China began to establish FTA at the beginning of this century and gradually rose to the national strategic level. The report of the 2015th National Congress of the Communist Party of China proposed that it is necessary to coordinate bilateral, multilateral, regional and sub-regional opening up and cooperation, accelerate the implementation of the free trade area strategy, and promote interconnection with neighboring countries. In December 12, China launched Several Opinions on Accelerating the Implementation of the Free Trade Area Strategy, which is also the first comprehensive document to promote the construction of the free trade area in China. The report of the <>th 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 the opening up of rules, regulations, management, standards and other systems. This is the first time that "institutional-type opening-up" has been written into 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 embodiment of China's active participation in the international division of production and global governance.

Efforts should be made to cohesion and precise policies, and implement RCEP with high quality

Q: RCEP has entered a new stage of comprehensive implementation, how should we better grasp the opportunities and challenges brought by RCEP and promote high-quality economic development?

Zhang Xiaotao: High-quality implementation of RCEP and promotion of foreign trade stability and quality are of great significance to China's economic and social stability. Previously, the Ministry of Commerce, together with the National Development and Reform Commission and other six departments, jointly issued the Guiding Opinions on the High-quality Implementation of the Regional Comprehensive Economic Partnership Agreement (RCEP) to promote local governments and enterprises to better seize the opportunities of RCEP. In general, efforts should be made on cohesion and precise policies:

The first is to help enterprises understand and make full use of RCEP rules. Giving full play to the role of RCEP is, in the final analysis, to make the agreement faster and better to benefit the majority of enterprises. The competent departments of commerce at all levels should continue to work with relevant departments to continuously organize and carry out relevant policy publicity and training in close connection with the development strategy and actual needs of the region. Trade promotion agencies at all levels, business associations, 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, increase relevant training and guidance for import and export enterprises, rely on China's textile and garment, footwear, toys, light industry, home appliances, electronic information, metallurgical building materials and other advantageous industries, make good use of the RCEP "rules of origin accumulation", jointly develop domestic and foreign markets, and promote industrial transformation and upgrading.

The second is to further improve the level of trade facilitation. Relevant departments can further strengthen coordination and linkage, comprehensively improve RCEP visa business, vigorously train visa officers, set up more visa points, actively promote the RCEP enterprise self-declaration system, the "pre-inspection" system for trade goods, and implement the "immediate release" of import and export commodities, the "immediate inspection and release" of fresh agricultural products, the "shipside pick-up" of imported goods, and the "direct loading on arrival" of export goods, so as to improve trade efficiency and reduce trade costs.

The third is to explore the establishment of a number of high-level implementation RCEP demonstration zones and promote the high-quality implementation of RCEP by local governments. Select a number of cities with close economic and trade exchanges with RCEP members, and give them the function of high-level implementation of RCEP demonstration areas, making them a model for local governments to use RCEP rules to serve enterprises. Tariff concessions and "rules of origin accumulation" should be fully used to rapidly form industrial clusters in the demonstration zone where most of the industrial chain is within RCEP members and tariff concessions have obvious effects on cost reduction.

The fourth is to guide enterprises to optimize the layout of the industrial chain in RCEP member countries. China's foreign trade has entered a new development stage of taking into account both scale and quality, improving the overall quality and efficiency of technology, quality, brand, service, etc., and further optimizing the regional layout of the industrial chain is an inevitable choice for building a new development pattern of services, coping with internal and external challenges, and enhancing the international competitiveness of the industry. Relevant departments should guide enterprises to strengthen core technology research and development, improve the level of international business management, and integrate into the international division of labor system and global value chain at a higher level and at a higher level. (China Discipline Inspection and Supervision Daily reporter Chai Yaxin)