The Regional Comprehensive Economic Partnership (RCEP): Free Trade and Investment in East Asia Under a “Single Rulebook”

Abstract

Negotiations on the Regional Comprehensive Economic Partnership (RCEP) were launched in November 2012 between the Association of Southeast Asian Nations (ASEAN) and ASEAN’s free trade agreement partners Australia, China, India, Japan, New Zealand and South Korea. After more than 30 negotiations rounds, the Agreement was signed on November 15, 2020. In November 2019, India had indicated that it is not in a position to sign the Agreement, but even without India, RCEP still is the world’s largest free trade agreement, covering about 30% of global GDP. RCEP entered into force on January 1, 2022. This book chapter analyzes the economic potentiality of the agreement, focusing on the phasing out of tariffs on trade. Tariffs are expected to be reduced over 20 years, most tariffs being eliminated. The main impact will be in the cases where there has been no free trade agreement so far, which is the case between Japan and South Korea and, most importantly, between Japan and the People's Republic of China. Beyond tariffs, RCEP improves the business environment and opportunities for transnational value chains and cross- border trading for all companies operating in the RCEP area. It standardizes rules and procedures (the “single rulebook”), and it is supposed to create more transparency and increase the level of compliance to these rules and procedures. RCEP will have an impact on economic actors’ behavior and ultimately increase the level of economic integration in the region.