RCEP is short for a free trade agreement that was signed in November 2020. RCEP stands for Regional Comprehensive Economic Partnership. This article will present a very operational focused explanation of the agreement.
The member countries of this pact are:
- New Zealand
- South Korea
This is the first time there will be a single trade pact between China, Japan, Korea & Indonesia.
First and foremost, traders should be aware that the following minimal operations do not qualify for RCEP benefits:
- Preservative operations
- Packaging activities
- Simple processes that do no require specialized equipment or skills
- Labelling work
- Dilution of chemicals
- Polishing or painting
- Peeling, stoning or shelling
- Simple mixing
- Any combination or number of activities listed above from 1 to 10
If defined conditions are met, RCEP allows the use of cumulation, de-minimis (10%) for change in tariff classification rule, third party invoicing and non-direct shipments.
Certificates of origin
Although set into the distant future, the RCEP includes clauses for countries to move towards self declarations by exporters to quality their products for FTA benefits. However, in the initial stages of implementation or going live, exporters to most countries can expect to have to apply for traditional hard copy country of origin certificates. This will progress into implementation of self declaration by recognized exporters who have attained some form of qualification from the authorities and finally to a stage where exporters can issue the declarations themselves.
A final note
With the expanding implementation of the ASW, and the signing of the RCEP, a significant amount of trade focus will fall to Asia. Countries that pulled out of the RCEP like India may choose to join the pact in future. Other countries like the US may too attempt to align itself to the RCEP in future. Although it remains to be seen whether the RCEP be the most unifying Free Trade Agreement in history, it undoubtedly gives members states a remarkable advantage for process simplification.
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