1. The agreement
The Regional Comprehensive Economic Partnership, signed on 15 November 2020.
For China, in force from 1 January 2022.
2. The members
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Plus China, Japan, Korea, Australia and New Zealand.
Fifteen parties.
3. The tariff commitment
Staged reductions, with the schedule differing by party and by product.
Between China and Japan there was no prior bilateral agreement, and RCEP created a preferential relationship that had not existed.
4. The origin cumulation
The defining feature.
Materials originating in any of the fifteen parties count as originating for the purposes of the regional value content test.
For manufacturers using inputs from across East Asia, this is the rule that makes qualification possible.
5. What exporters should be doing
Checking whether RCEP delivers a better rate than a bilateral agreement.
Testing each product against RCEP’s origin rules.
Recording the test.
6. Where the benefit is largest
Products with multi-country supply chains in East Asia.
Products where the bilateral agreement’s value content threshold was out of reach.
Products exported to Japan, where no bilateral agreement exists.
7. Where it is not
Products with excluded schedules.
Products where the bilateral agreement gives a better rate.
8. Closing view
RCEP is not a replacement for the bilateral agreements. It is an additional route.
The value comes from choosing between them per product.
*This article is based on the Regional Comprehensive Economic Partnership agreement.*