After eight years of unremitting efforts, the Regional Comprehensive Economic Partnership (RCEP) was officially signed on November 15th. Against the backdrop of the COVID-19 pandemic, the accelerated evolution of the world’s once-in-a-century changes, and the headwind confronting the economic globalization, the official signing of the RCEP highlights that openness and cooperation remain the trend of history, and that mutual benefit and win-win results are still the pursuit of the people. The Chinese industry and business community is heartened by it and full of expectations. We should seize such rare opportunity and promote the implementation of the RCEP to share the development dividends delivered by the RCEP. Relying on the vast market, facility interconnectivity and factor flow of the region, we will promote deeper-level win-win cooperation which spans more regions and sectors, and bring, at this new historical starting point, regional economic and trade cooperation to a new level, exploring new possibilities for China’s economic development and adding new driving forces to regional or even global economic recovery and growth.

1. Close economic ties between China and other members of the RCEP

The 15 RCEP member countries account for about 30% of the world’s population, economic volume, and trade volume, forming a free trade bloc with the largest population, the most diverse membership structure and the greatest development potential. Amidst the global economic recession caused by the pandemic, East Asia has shown great economic resilience, recovery momentum and growth potential. As a region with the world’s largest population and largest scale of manufacturing industry,  East Asia enjoys frequent and intensive flows of commodities, people and capital, boasts relatively complete industrial and supply chains, and has generally established an economic cycle from finance and financing, scientific and technological research and development, raw material supply, production and processing to consumption. Therefore, the RCEP constituted by the countries in this region is an important part of the world trade system.

Most of other RCEP member countries, as China’s important trading partners, have close economic ties, frequent business exchanges, and fruitful cooperation with China. In 2019, the total trade volume between China and other RCEP member countries exceeded $1.43 trn, accounting for 31.2% of China’s total foreign trade volume. In the first half of this year, despite the impact of the pandemic, China’s total trade volume with other RCEP member countries reached $664.4 bn, still accounting for about 1/3 of China’s total foreign trade volume; additionally, China attracted $7.2 bn of actual direct investment from other member countries, accounting for 10% of total actual FDI China attracted.

ASEAN occupies a central position in regional cooperation and has always played a leading and central role in RCEP negotiations. As each other’s important trading partners, China and ASEAN have achieved particularly remarkable results in economic and trade cooperation. In 2002, China and ASEAN initiated the negotiation for a free trade area, which was the first free trade area negotiated between China and other countries. In 2010, the China-ASEAN Free Trade Area was officially established, which has ushered the bilateral economic and trade relations into an era of rapid development. From January to September, the total trade volume between China and ASEAN rose against the trend to $481.8 bn, a year-on-year increase of 5%. Therefore, ASEAN replaced the European Union to become China’s largest trading partner. A historic moment, and an ideal pattern in which China and ASEAN are each other’s largest trading partners has taken shape. From January to September, China registered a total direct investment of $10.72 bn in all the sectors of ASEAN, a year-on-year increase of 76.6%, and ASEAN’s newly increased actual investment in China reached $5.47 bn, a year-on-year increase of 6.6%. As we celebrate the 10th anniversary of the establishment of the China-ASEAN Free Trade Area and the China-ASEAN FTA Upgrading Protocol fully enters into force, the economic integration between China and ASEAN has reached a higher level in terms of both scale and quality.

China, Japan and South Korea are each other’s important economic and trading partners. We have formed, after continuously advancing economic and trade cooperation and expanding common interests in recent years, a real economic community and a community of shared interests, and enjoy increasingly close economic integration. China is already the largest trading partner of both Japan and South Korea; Japan is China’s second largest trading partner and largest source of investment, and South Korea is China’s third largest trading partner and second largest source of investment. Meanwhile, the economic and trade cooperation among China, Japan and South Korea is still the engine of Asian regional and sub-regional cooperation. Be it the ASEAN plus China, Japan, South Korea (10+3) cooperation mechanism or the Northeast Asian economic cooperation, it can work only under the guidance and promotion of the China-Japan-South Korea economic and trade cooperation. Among them, China and South Korea have previously signed a free trade agreement. Through the RCEP, Japan has reached, for the first time, a free trade agreement respectively with its major trading partners, China and South Korea, which is bound to greatly boost the development of economic and trade relations among China, Japan and South Korea. Meanwhile, based on the RCEP, these three countries will jointly accelerate the negotiation of the China-Japan-South Korea Free Trade Agreement.

Both Australia and New Zealand are important trading partners of China, of which, Australia is China’s eighth largest trading partner, and China is the largest trading partner, export market as well as source of imports of Australia and New Zealand. In 2019, the bilateral trade volume between China and Australia reached $169.6 bn, and the bilateral trade in goods between China and New Zealand was $18.3 bn. Previously, China has signed a free trade agreement with Australia and New Zealand respectively. The export of agricultural and mineral products dominates the economy of both countries. The signing of the RCEP will restructure the supply chain and value chain in the region, as well as promote mutual trade and investment within the region.

2. Great significance of implementing the RCEP

It took 8 years to sign the RCEP since the start of negotiations. The 15 member countries cover both the most developed countries and the least developed countries, and vary in their economic development, political systems, cultural backgrounds, and level of openness. The RCEP integrates, expands and upgrades the preexisting “10+1” bilateral free trade agreements between the ASEAN and the other five members, unifying the uneven, sporadic preferential arrangements into intergrated, high-standard rules governing the whole region. As a comprehensive, high-quality, and mutually beneficial free trade agreement, the RCEP will significantly lower the operating costs of enterprises in the region, drive enterprises to restructure the supply chain and value chain in the region, and optimize the flow of goods, technology, services, and capital in the region, generating a strong positive “trade creation” effect which is conducive to the building of a more economically stable and prosperous East Asia. East Asia has put an end to the “primary-stage” model featuring bilateral cooperation and regional cooperation in small scale and strode towards a brand new era of larger-scale regional economic integration.

First, the regional trade and investment liberalization will be brought to a new level. The RCEP will bring higher-level openness to the region. In terms of trade in goods, the member countries will further open up their markets to each other. The members having established bilateral free trade areas will generally accelerate their reduction of tariff rates or add new product categories entitled to tax-reduction, while the other members will open their markets to each other, which is a significant achievement. All the member countries have promised to cut tariffs on most products to zero immediately or within ten years, and the free trade bloc will achieve substantial and phased results in terms of its openness in a relatively short period of time. With regard to trade in services, the overall level of openness of the 15 member countries is significantly higher than that of their respective “ASEAN+1” free trade agreement; some member countries have also pledged to adopt the negative list, so the level of openness will increase significantly. In respect of investment, all the 15 member countries will adopt the negative list as a commitment to open their non-service sectors to investment, which will greatly improve the transparency of policies of all parties. In terms of rules, the RCEP fully benchmarks itself against international high-level free trade rules in the aspects of e-commerce, intellectual property, government procurement, and small and medium-sized enterprises, which will provide long-term institutional guarantees for business environment optimization in the region. With the establishment of the RCEP, enterprises in the region will embrace a freer market which is more open, more stable and more transparent, and will surely gain more opportunities for cooperation and achieve development in a broader field.

Second, new impetus for regional economic development will be provided. The RCEP changes the fragmented landscape of the free trade agreements in the region, and sets up, for the first time, a unified trade and investment rule system in the region. Previously, ASEAN respectively signed free trade agreements with the other five countries, but with different rules regarding origin, investment opening, and services trade. As unified rules are formed under the RCEP, the operating costs of enterprises in the region will be lowered, the risks caused by uncertainties will be reduced, and the magnetism for investors outside the region will be further increased, which will effectively boost the trade and investment of worldwide enterprises in the region. At the same time, all the member countries will adopt the negative list as a commitment to open their non-service sectors to investment, and their service sector will gradually witness the full implementation of the negative list. Additionally, within the region, investment policies will be more transparent, the number of industries to be opened will increase significantly, the level of commitment will be greatly improved, and international investment, cross-border e-commerce will gain huge possibilities for development. The RCEP brings together 6 of the world’s 20 most populous countries, which means a vast consumer market with huge potential. The regional high-standard opening-up will promote the transfer of the consumer market from the developed member countries to the developing ones, enhance the diversification of the flow of finished products, and strengthen endogenous demand, so as to provide sufficient continuous impetus for the development of enterprises in the region.

Third, a new landscape of an open world economy will be created. At present, the international landscape is undergoing profound adjustments, protectionism and unilateralism are on the rise, uncertainties and instabilities have increased visibly, the world economy is in a downturn, and international trade and investment have shrunk significantly. The International Monetary Fund (IMF) projects a 4.4% decline of the world economy throughout this year. The United Nations Conference on Trade and Development (UNCTAD) predicts that global foreign direct investment will drop by 30% to 40% this year. The World Trade Organization (WTO) forecasts that global trade in goods will decrease by 9.2% this year. The signing of the RCEP is an important supplement to the multilateral trading system. It is in line with the general development trend of globalization and regional economic integration, goes with the trend of the times featuring peace, development, cooperation, and win-win results, and injects strong impetus into the building of an open world economy. The RCEP integrates multilateral or bilateral free trade agreements in the region. The member countries emphasize maintaining an open, inclusive and rule-based global trade and investment environment, and are committed to further opening up their markets, which has greatly strengthened the confidence of industry and commerce community in expanding trade and investment cooperation in the region.

3. Amplification of the positive effect of the RCEP through multiple measures

RCEP is the 19th free trade agreement signed by China with other countries. As of now, China has reached free trade agreements with 26 countries and regions, further improving its global free trade agreement network, and forming a layout of opening-up constituted by regional development strategies and pilot free trade zones inside China, as well as global free trade agreement network outside China. The layout is conducive to the fostering of a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other. Enterprises are the beneficiaries of pragmatic cooperation. Only when the government, trade and investment promotion agencies and enterprises achieve effective linkage and make full use of the preferential terms stipulated in the RCEP, can the positive effects of the RCEP on China’s economic development and foreign cooperation be truly realized and amplified.

Government departments should play a leading role. They should adjust corresponding domestic laws, regulations and management measures in accordance with the provisions of the RCEP, open the domestic market uniformly to more countries and in a wider range of fields, further relax market access restrictions, and create a market-oriented, law-based and internationalized first-class business environment, so as to create a larger platform and more favorable conditions for enterprises to further access the East Asian market, as well as to constitute more stable and more resilient regional industrial chain and supply chain. Government departments should facilitate the authoritative interpretation and publicity of RCEP-related policies through multiple channels, so that these policies can be understood and used by companies, and can truly become an effective instrument for companies to participate in international economic cooperation. Government departments should also, on the basis of RCEP, advance the negotiation of the China-Japan-Korea Free Trade Agreement, actively study and promote the construction of the Free Trade Area of Asia-Pacific (FTAAP), and strive to facilitate the institutional opening-up of rules, regulations, management, and standards.

Trade and investment promotion agencies should play a bigger role in service provision. For many reasons, the utilization rate of free trade agreements of Chinese companies has not been high, and free trade agreements have not been fully leveraged. As a response, trade and investment promotion agencies should regard the implementation of RCEP as an opportunity to leverage their unique advantages of connecting government departments and enterprises, as well as China and other countries to 1) actively publicize relevant policies, popularize RCEP-related knowledge, and introduce how to use the RCEP policy tools to enterprises and give them capacity building services; 2) optimize issuance of such certificates as the certificate of origin, expand the scope of “one-stop” services, and reduce corporate costs; 3) strengthen their own understanding of RCEP-related policies, and integrate that into their commercial legal services to provide better consultant services to enterprises; and 4) actively organize economic and trade forums and exhibitions related to RCEP member countries to provide companies with a larger platform for cooperation, delivering to companies the “coupon” customized by the Chinese government for them, ensuring that the policies can bring tangible benefits to companies, and deliver a wider range of benefits and a sense of gains to companies.

Companies should engage themselves in the RCEP. To this end, they should broaden their horizons, adopt new ideas, carefully study the RCEP as an important policy tool, take a fresh look at the huge market which is constituted by 10+5 member countries and governed by unified rules, and actively participate in international cooperation and competition. They should plan their strategic investment based on their own business development needs and by utilizing preferential arrangements in trade and investment within the region in a more effective manner. They should restructure the supply chain and value chain in the region, optimize production layout, and upgrade industrial structure. They should attach great importance to the origin management, and actively use the preferential certificate of origin for export in accordance with the rules of origin of free trade agreements. Additionally, they should find more possibilities for their quality and efficiency improvement, as well as industrial transformation and upgrading by making good use of the domestic and international markets and resources, increasing foreign trade, expanding foreign investment, and optimizing the allocation of regional resources ranging from raw materials to labor forces, from capital to technology, from production to market.

The China Council for the Promotion of International Trade (CCPIT) is an important window for opening-up and a crucial force in building a modern economic system. We will scientifically grasp the opportunities brought about by the new development stage, resolutely implement the new development philosophy, serve the building of a new development paradigm, and promote the implementation of the RCEP under the guidance of relevant departments. We will vigorously carry out policy publicity activities, compile the guidelines for enterprises to properly leverage relevant policies, organize a series of training sessions for enterprises, print and release related publicity materials, and extensively use new media to release information on free trade agreements. We will also optimize certificate issuance services, further coordinate with the work of “integrating the filing of foreign trade operators and the filing of enterprises in countries of origin”, optimize the filing process of enterprises in countries of origin, actively promote the printing of the electronic certificate of origin (ECO) by applicants, comprehensively expand the scope of services, provide enterprises with non-face-to-face approval services with “Internet plus government services” as the basis, and offer 24-hour online certificate issuance services. Additionally, the CCPIT website and WeChat official account on free trade agreement service should be established and made full use of; and the free trade agreement database and enterprise consulting and query service platform should be improved, so that the comprehensive services featuring “Internet plus free trade agreements” can be provided for enterprises and central and local government departments.