What Is Rcep Agreement

October 15th, 2021 by

Our economic relations with Southeast Asia are strong. For many years, the EU has been the main source of foreign direct investment in ASEAN and one of its largest trading partners. We already have important free trade agreements with Singapore and Vietnam, as well as with Japan and Korea, and we are in negotiations with several others, including Indonesia, Australia and New Zealand. These agreements have helped maintain trade despite the pandemic, for example by multiplying by a significant increase in imports from Singapore of essential organic and pharmaceutical chemicals. The third point – and this is probably the most interesting feature of the agreement – is the section on rules of origin. Well, the rules of origin, your auditors may not be familiar with this kind of basic technology of trade agreements, but the rules of origin define what Malaysia, for example, must do in order to be able to use the tariff preferences of the agreement to sell products to Japan. In other words, how do you manufacture a product in Malaysia to ensure that the tariff preferences in the agreement can be used for sale in Japan? And the answer is that you can`t use too many products from the U.S. that come from far away, because then it really should be U.S. customs that apply instead of the intra-regional RCEP tariff. So they are rules of origin; It tells you what you need to do to get that preference. The main effect of RCEP is to have brought together the various free trade agreements that ASEAN has concluded with the other five Asia-Pacific countries into a single framework. It covers trade in goods, but does little to reduce non-tariff barriers.

Most services are excluded, but also agriculture, which is a sensitive sector. It is a “flatter” agreement than the EU`s existing free trade agreements with the region. And it cannot be compared to our own internal market. But that`s never the point. Other TPP members moved things forward and renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The trade ministers of the remaining 11 countries have signed it and seven have ratified it. But Trump`s withdrawal has significantly reduced his impact and influence on the United States, and the conclusion of the RCEP negotiations gives China an advantage in setting up trade conditions in the Asia-Pacific region. So what`s important about RCEP? First, it is the first major agreement to unite China, Japan and Korea into a single free trade group. This has the same political reasons that we talked about a few seconds ago. Indeed, it is very difficult to imagine how this agreement between these three countries could have been reached without ASEAN`s leadership of this larger bloc.

Now that it is indeed the right one, Japan and China have indicated that they are moving forward with a free trade agreement between China, Japan and Korea. It will probably also take time to negotiate, but it is a kind of beginning to free up other relationships that would have been very difficult politically without this framework. .

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