RCEP trade deal explained for small exporters
The RCEP trade deal was signed on November 15, 2020, by 15 Asia-Pacific countries. It is meant to cut trade costs across a market of about 2.2 billion people. For a small exporter, the short answer is this: nothing changes today, but you should start preparing now. The deal is not in force yet.
Sources: Singapore Ministry of Trade and Industry, Remarks by Minister Chan Chun Sing at the RCEP Media Doorstop, 15 November 2020; Wikipedia, Regional Comprehensive Economic Partnership, archived 24 November 2020.
Who signed and what it covers
RCEP stands for the Regional Comprehensive Economic Partnership. Signers from ASEAN were Brunei, Cambodia, Indonesia, Laos, Malaysia and Myanmar. The Philippines, Singapore, Thailand and Vietnam signed as well. Australia, China, Japan, South Korea and New Zealand signed too.
Together the 15 members hold about 30% of the world's people and produce about 30% of global output. That makes RCEP the largest trade bloc in the world.
India took part in the talks but did not sign. The door was left open for India to join later.
Sources: Wikipedia, Regional Comprehensive Economic Partnership, archived 24 November 2020 (web.archive.org/web/20201124210641/https://en.wikipedia.org/wiki/Regional_Comprehensive_Economic_Partnership).
What is inside the agreement
RCEP deals with goods, services and investment. It also has rules on intellectual property, electronic commerce and competition policy.
For you, the most useful parts are usually tariffs, rules of origin and customs. Singapore's trade minister, Chan Chun Sing, spoke on signing day. He said Singapore's firms would get extra preferential tariff access in China, Japan and South Korea on top of what existing agreements give. In some of those markets the extra access reaches 22.1%. He named chemicals, plastics and processed food as sectors that could save on costs.
Sources: Singapore Ministry of Trade and Industry, Remarks by Minister Chan Chun Sing at the RCEP Media Doorstop, 15 November 2020.
Rules of origin matter most for small firms
A tariff cut only helps if your product qualifies as made in the region. That is what rules of origin decide. Today, exporters often juggle several different sets of origin rules, one for each older agreement.
The minister said RCEP merges several existing sets of origin rules into one rulebook. He also said it allows regional cumulation. In plain words, you can count parts and materials from any of the other 14 members as local content. A garment maker that buys fabric from one member and thread from another may find it easier to qualify.
Check this against your own product. Rules differ by item, and the detailed tariff schedules matter more than the headlines.
Sources: Singapore Ministry of Trade and Industry, Remarks by Minister Chan Chun Sing at the RCEP Media Doorstop, 15 November 2020.
Faster customs and digital trade
The minister also described simpler customs procedures. Express and perishable goods are to be cleared within six hours of arrival. For a firm that ships fresh food or urgent parts, faster clearance can mean less waste and more certainty for buyers.
The e-commerce rules support electronic signatures and electronic transactions, and they cover the protection of personal data. On intellectual property, the members commit to the Hague and Madrid Protocols. That lets one filing cover several RCEP countries instead of a separate filing in each one.
The minister did not single out small firms in these remarks. The benefits he listed apply to business in general. Watch for the final text of the agreement for details that matter to your sector.
Sources: Singapore Ministry of Trade and Industry, Remarks by Minister Chan Chun Sing at the RCEP Media Doorstop, 15 November 2020.
When it starts and what to do now
Putting names on the paper does not start the deal. It begins once formal approval comes from at least six ASEAN members and from three of the five signers outside ASEAN. Each country must finish its own approval process first, and no start date is set.
While you wait, a few steps are worth your time:
First, list your top products and the markets you sell to or want to enter. Second, write down where each part and material comes from. Third, note the tariff you pay now in each market. Fourth, talk to your freight forwarder, customs broker or trade association about how origin proof will work. Finally, keep your supplier records tidy. Good records will be needed to claim any tariff benefit.
Do not change prices or sign long contracts on the assumption of lower tariffs. The cuts will arrive only after the agreement is in force, and they may phase in over time.
General business information, not legal or trade advice. Ask a licensed customs broker or adviser about your own goods.
Sources
Singapore Ministry of Trade and Industry, "Remarks by Minister Chan Chun Sing at the RCEP Media Doorstop," 15 November 2020 (mti.gov.sg). Wikipedia, "Regional Comprehensive Economic Partnership," archived 24 November 2020 (web.archive.org).