The second anniversary of RCEP has continuously released dividends from regional economic growth

■ Reporter He Shifei and Liu Xu

In the two years since the implementation of the Regional Comprehensive Economic Partnership (RCEP), under the framework of flexible and efficient trade arrangements, the economic and trade exchanges and smoother cooperation among member countries have become more active, providing a strong impetus for the Asia-Pacific region to lead the world in economic growth in 2023. It is foreseeable that in the future, with the help of RCEP, the 15 member countries will expand the space for economic and trade cooperation between each other and improve the level of connectivity. To this end, the International Business Daily invited experts to share practical experience in promoting common economic development under the multilateral trading system by analyzing the achievements of RCEP in the past two years.

Expert Roundtable

Yuan Bo is the director and researcher of the Asian Institute of the Ministry of Commerce Research Institute

Song Wei is a professor and doctoral supervisor at the School of International Relations, Beijing University of Foreign Chinese

Jia Zhongzheng is an assistant researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences

(In no particular order)

Q1

In the past two years since its implementation, RCEP has continuously released trade dividends through a series of measures such as tariff reduction, implementation of rules of origin, and promotion of trade facilitation, and economic and trade exchanges between member countries have become more and more active, playing an important role in regional economic development and even the recovery of the world economy. Can you elaborate on the achievements made since the implementation of RCEP in promoting trade and economic exchanges in the Asia-Pacific region, especially between China and ASEAN?

Yuan Bo: In 2022, the overall foreign trade of the RCEP region will reach US$14 trillion, an increase of 9.4% over 2021 before the RCEP came into effect, accounting for 28.5% of global trade in goods. Since 2023, trade at the global level has declined due to factors such as declining international market demand, continued geopolitical conflicts, and exchange rate and price fluctuations, but the overall foreign trade of the RCEP region is still expected to grow on the basis of 2021. In the past two years, the RCEP region has continued to become a hot spot for global investment, attracting foreign direct investment to US$531.4 billion in 2022, especially greenfield investment. According to FDI Markets, from January to October 2023, the RCEP region attracted a total of 1,842 greenfield investment projects, exceeding the number of projects in the whole of 2022 (1,819), and the investment amount reached US$189.69 billion, exceeding the investment amount in the whole of 2022 (US$181.56 billion).

The superimposed implementation of RCEP and the China-ASEAN Free Trade Agreement has further promoted the trade of intermediate goods between China and ASEAN, making the industrial and supply chains between them increasingly closely linked. China imports energy and mineral resources, non-ferrous metals, processors and controllers, integrated circuits and other intermediate products from ASEAN countries, and exports integrated circuits, telephones, flat panel display modules, lighting fixtures, textile raw materials, batteries, steel, non-ferrous metal alloys, auto parts, mineral fertilizers and other intermediate products to ASEAN countries, providing an important boost for the development of manufacturing industry in ASEAN countries. In 2023, China's trade in intermediate goods with ASEAN will reach 4.2 trillion yuan, an increase of 12% over 2021, before the agreement came into effect, of which about 2.1 trillion yuan will be exported and imported into ASEAN.

RCEP promotes trade in the new three products, further deepening the cooperation between China and ASEAN in the field of new energy industry. In 2022, the trade volume between China and ASEAN in the new three products (solar energy, lithium-ion batteries, and electric vehicles) reached 73.84 billion yuan, an increase of 16.2% over 2021, before the RCEP came into effect. In 2023, this trade volume will reach 90.97 billion yuan, a year-on-year increase of 23.2%.

The positive effects of RCEP tariff reduction and trade facilitation measures on agricultural trade are gradually emerging. In 2022 and 2023 after the RCEP came into effect, China's agricultural trade with ASEAN continued to grow. In 2022, it will exceed 400 billion yuan, a year-on-year increase of 19.8%, and in 2023, it will reach 422.9 billion yuan, a year-on-year increase of 3.3%. The RCEP has come into effect, providing more convenience for the export of fruits, nuts, animal products, animal and vegetable oils, sugar and many other agricultural products from ASEAN countries such as Thailand, Vietnam, and Indonesia to China. In 2023, China will import 47.69 billion yuan of fresh durian from ASEAN countries, a year-on-year increase of 74.6% and 1.8 times that of 2021. At the same time, China's exports of processed foods such as grapes and fresh pears to ASEAN such as temperate fruits, vegetables, fruit juices and canned food have also shown a continuous growth trend. In 2023, China will export 9 billion yuan of garlic to ASEAN countries, a year-on-year increase of 40.1% and 1.2 times that of 2021.

In terms of investment cooperation, with the full implementation of RCEP in ASEAN countries, Chinese enterprises' investment in ASEAN has continued to grow. China has become an important source of foreign investment in many ASEAN countries, including Malaysia, Thailand, Indonesia, Cambodia and Vietnam, and the investment of Chinese enterprises has played a positive role in the development of manufacturing and employment in these countries. In 2022, China has become the largest source of investment from Malaysia, Thailand and Cambodia, second only to Singapore in terms of investment in Indonesia, and in 2023, China will continue to be the largest source of foreign investment in Cambodia and the second largest source of foreign investment in Indonesia.

Song Wei: In the past two years, driven by the RCEP policy dividends, China-ASEAN industrial cooperation has been deepened to help regional economic development. First, the scale of regional trade has continued to grow. Thanks to the facilitation of customs clearance brought by the RCEP, China's total imports and exports with other RCEP members accounted for 30.2% of China's total foreign trade in 2023, an increase of 5.3% compared with 2021, before the agreement came into effect. In the first 11 months of 2023, China's total imports of fresh durian from RCEP member countries such as Thailand and Vietnam were 1.7 times that of 2021, before the agreement came into effect. Second, it has boosted confidence in regional economic, trade and investment. The implementation of RCEP has helped to build a stable, transparent and predictable policy environment, and the use of foreign investment by most members has shown a positive upward trend.

Jia Zhongzheng: First, the scale of trade has increased significantly. ASEAN has maintained its position as the mainland's largest trading partner for four consecutive years, and the mainland has also been ASEAN's largest trading partner for many years.

Second, the trade structure has been continuously optimized. The scale of the equipment manufacturing industry has increased significantly, and green energy and consumer electronics have grown significantly. In 2023, among the mainland's exports to the other 14 RCEP member countries, the export scale of the equipment manufacturing industry will increase by 32.8% compared with 2021, accounting for 6.5 percentage points of the mainland's exports to other RCEP member countries. Lithium batteries, auto parts, and flat panel display modules have maintained substantial growth. In terms of imports, the import volume of energy products increased by 31.2% compared with 2021, accounting for 32.4% of the mainland's energy product imports, an increase of 2.5 percentage points.

Third, market players have benefited significantly. The RCEP superimposed on the bilateral free trade agreements that have entered into force in the mainland and other members has made enterprises feel full. According to the data of the General Administration of Customs, in 2023, under RCEP, 90.52 billion yuan of preferential imports and 2.36 billion yuan of tax concessions will be enjoyed, and the preferential import commodities will mainly be plastics and their products, machinery and appliances and their parts, organic chemicals, etc., and 270.07 billion yuan of preferential exports will be enjoyed, and 4.05 billion yuan of tariff concessions can be enjoyed by member countries, and the main export commodities are inorganic chemicals, clothing and clothing accessories, plastics and their products, etc. There are 723 approved exporters in mainland China that have independently issued 12,000 RCEP declarations of origin, with a value of 10.18 billion yuan. RCEP and bilateral free trade agreements have brought tangible dividends and benefits to export enterprises.

Q2

As a multilateral regional cooperation rule, how will RCEP be implemented with higher quality in the future, especially in China, Japan, South Korea, China, Australia and New Zealand, so that RCEP can benefit all parties faster and better?

Yuan Bo: First, we need to improve the RCEP cooperation mechanism and enhance the efficiency of regional economic and trade cooperation. Members should give full play to the role of the RCEP Joint Committee and its four sub-committees, and at the same time promote the establishment of the RCEP secretarial body. All parties can strengthen cooperation, coordination and supervision on the high-quality implementation of the RCEP, and actively and fully implement the commitments on liberalization and facilitation in the areas of trade in goods, trade in services and investment, as well as liberalization in the areas of intellectual property, competition policy and government procurement under the RCEP framework. Now that the RCEP has been fully implemented, all parties need to actively promote the follow-up negotiations of the RCEP, including the unfinished negotiations in the areas of rules of origin, investment, government procurement and other chapters, and promote the construction of an upgraded version of the RCEP.

The second is to build an international cooperation network for the RCEP production and supply chain with openness, inclusiveness, smoothness and efficiency as the core. Focusing on promoting regional trade in intermediate goods and making good use of regional rules of origin accumulation, we will strengthen the coordination and linkage of RCEP, CPTPP and bilateral free trade agreements signed by ASEAN and China, Japan, South Korea, Australia and New Zealand, so as to provide greater convenience for enterprises to strengthen regional industrial and supply chain cooperation and improve the overall industrial competitiveness of the region. Encourage members to further implement their commitments to openness, improve the level of liberalization and facilitation of intermediate goods trade, ensure the efficient, smooth, safe and stable supply chain of intermediate goods, and establish a good ecosystem for the coordinated development of key regional industries such as automobiles, petrochemicals, machinery, electronics, and textiles. At the same time, China, Japan, South Korea and Australia and New Zealand can strengthen cooperation in strengthening capacity building projects in the field of RCEP economic cooperation, form a joint force, provide support for the integration of less developed ASEAN members into regional industrial and supply chains, and jointly build an open, inclusive, smooth and efficient international cooperation network for industrial and supply chains.

The third is to focus on the digital economy and green economy to give birth to new growth points for RCEP market cooperation. Explore the further liberalization of digital trade and green product trade, and promote the mutual recognition of standards among countries in the region. Strengthen the construction of infrastructure related to the digital economy and green economy in the region, innovate digital finance and green financial products and service models, and accelerate the transformation of economic industries to digitalization and green and low-carbon. Advocate the concept of open international innovation cooperation, explore the establishment of a regional sharing mechanism for scientific and technological innovation achievements, and provide a more relaxed and free development environment for scientific research cooperation and talent exchange in the region.

Fourth, focus on small and medium-sized enterprises and optimize the RCEP public service system. Advocate the local governments of all member countries to establish enterprise service centers for RCEP and other free trade agreements, create a platform carrier for deepening RCEP regional trade, investment and industrial cooperation, and optimize the domestic policy system against RCEP and other high-standard economic and trade rules. Expand information exchange in multiple fields, provide free information inquiry and public welfare consulting services for the majority of enterprises, and guide enterprises to flexibly use regional accumulation rules to reduce costs. Members are encouraged to provide support for projects such as the establishment of RCEP origin management systems, application for AEO and approved exporter certification for MSMEs.

Song Wei: First, we should intensify trade and investment exchanges. With the help of the trade and investment liberalization opportunities brought about by the RCEP, we will guide large multinational companies such as Japan, South Korea, and Singapore to invest in construction projects in the mainland, and give full play to the driving and exemplary role of the vitality of foreign capital flows in economic and trade cooperation. The second is to promote bilateral and multilateral trade and investment agreements. While deepening RCEP cooperation, we will actively promote the upgrading of FTAs such as the China-Australia FTA and the China-Singapore FTA, accelerate the China-Japan-ROK FTA negotiations, and take multiple measures to steadily break through the policy and practice blockages of China, Japan, South Korea, and China-Australia and New Zealand. The third is to achieve synergy with CPTPP and other cooperation agreements. From the perspective of building a deeper FTAAP, on the basis of fully implementing the relevant rules of RCEP, we will deeply study the advanced rules of e-commerce and competition neutrality in western developed countries such as CPTPP.

Jia Zhongzheng: First, we will promote the negotiations on the China-Japan-ROK FTA. The RCEP has come into full effect and has created positive conditions for the resumption of negotiations on the China-Japan-ROK FTA as soon as possible.

The second is to upgrade the China-Australia and New Zealand Free Trade Agreement. The China-Singapore FTA Upgrade Protocol, which came into force in 2022, expands and modernizes the existing agreement. In December 2023, China and Singapore discussed the launch of negotiations on trade in services in the form of a negative list, in preparation for the next phase of negotiations on the official launch of the negative list for trade in services. The ChAFTA, which came into force in December 2015, has achieved the goal of "comprehensiveness, high quality and balance of interests", and the Authorized Economic Operator (AEO) Mutual Recognition Arrangement was officially implemented on December 14, 2023, greatly enhancing the ease of customs clearance. The ChAFTA Joint Committee is expected to restart soon, and will further promote cooperation in the fields of standards, metrology, intellectual property, competition, education, and food safety. Whether it is the negative list for trade in services or the AEO mutual recognition arrangement, it will bring a good demonstration effect to economic and trade cooperation in the RCEP region.

The third is to give full play to the leading role of China's cooperation with Japan, South Korea, Australia and New Zealand. China, Japan and South Korea are both located in East Asia, the most dynamic region of the world economy, and are important trade and investment partners of each other, with the combined GDP of the three countries accounting for about 25% of the world's total and the trade volume between the three countries accounting for about 20% of the world's total. Australia and New Zealand are important developed economies in the Pacific region, and their economic and trade structures are highly complementary to China. At present, China and these four countries have formed a very close cooperative relationship in the global industrial and supply chains and production networks in the Asia-Pacific region. In the future, China should continue to play a leading role in economic and trade cooperation with Japan, South Korea, Australia and New Zealand in the RCEP, reduce various hidden barriers that hinder the free flow of economic factors through improving multi-channel and multi-level regional free trade arrangements, maintain the momentum of regional economic integration, and contribute to the common goal of moving towards the Free Trade Area of the Asia-Pacific.

Q3

At present, the global trade and investment rules are changing, and bilateral and multilateral trade rules are increasingly becoming an important supplement to the WTO multilateral trading system.

Yuan Bo: The RCEP not only grants the least developed members flexible and special differential treatment in terms of their commitment to openness, but also strengthens capacity building through pragmatic economic and technical cooperation, helps them better adapt to high-standard economic and trade rules in the fields of service investment, intellectual property rights, competition policy, and e-commerce, and also helps all parties to form a greater consensus when negotiating new rules at the WTO level. In addition, under the current situation of global industrial and supply chain rules facing multiple challenges and declining stability and predictability, RCEP guides enterprises to actively use regional accumulated rules of origin to reduce trade and investment costs through the implementation of open trade and investment liberalization and facilitation measures, providing a good institutional guarantee for enterprises to stabilize production and operation and optimize the layout of production and supply chains in the RCEP region, and these practices will also have a positive impact on the formulation of rules at the global level.

Song Wei: The RCEP agreement aims to reach an inclusive, flexible and mutually beneficial free trade agreement, which means that trade liberalization has entered a new stage and enriches and develops the connotation of the international economic and trade cooperation system and mechanism.

The first is to increase openness and reciprocity. The RCEP agreement members will achieve zero tariffs on more than 90% of the tariff items in the field of merchandise trade, adopt the negative list principle in the field of trade in services and investment, have more relaxed market access for mutual investment, and the economic entities in the region will be more open. The second is to broaden the scope of access for member states. The RCEP includes high-income countries such as Japan, South Korea, Singapore, and Australia, as well as middle-income countries such as China, Malaysia, Indonesia, Thailand, and the Philippines, as well as low-income countries such as Cambodia, Laos, and Myanmar.

Jia Zhongzheng: In the two years since RCEP came into force, it has helped member states in the region expand the breadth and deepen the depth of economic and trade cooperation. As one of the important supplements to the WTO multilateral trading system, it provides a useful reference for further improving international economic and trade rules.

First, integrate the rules within the domain to form a resultant force. Through the harmonization of tariff commitments, rules of origin, trade and investment liberalization and facilitation, and other trade rules, RCEP has maximized the integration of 27 trade arrangements and 44 investment agreements of members in the region, effectively promoting the development of the multilateral trading system and bringing tangible benefits to participants.

Second, the introduction of the rules of accumulation of origin. When determining the origin qualification of products, the raw materials of each RCEP member country can be calculated cumulatively to meet the origin standards of final export products, which lowers the threshold for tariff benefits, helps enterprises better carry out industrial layout in the region, and strengthens the cooperation of industrial chains and supply chains in the region. As of the first half of 2023, the number of certificates of origin and the amount of visas issued by China's national system for the promotion of international trade increased by more than 25% year-on-year, significantly higher than the growth rate of international trade in the same period.

Finally, the emphasis is on inclusive development. The RCEP gives special and differential treatment to the least developed countries (LDCs) by taking into account the differences in the level of economic development of member countries, taking into account the demands of all parties to the greatest extent, which is conducive to promoting inclusive and balanced development in the region and enabling all parties to share the development opportunities of RCEP.

Q4

How do you view the challenges of economic globalization caused by the increasing "fragmentation" of international economic and trade rules, and how can trade integration be extended to more economies and solve more development problems?

Yuan Bo: In the face of the challenges posed by the increasing fragmentation of international economic and trade rules to economic globalization, on the one hand, it is more necessary to strengthen cooperation at the multilateral level such as the United Nations and the WTO, and on the other hand, it is also necessary to actively promote the inclusiveness of various free trade agreement rules, promote coordinated development, and promote the formation of a more open and inclusive system of international economic and trade rules. For example, in the Asia-Pacific region, RCEP and CPTPP, as the two most influential regional trade agreements, can play an active role in them. By promoting the convergence of RCEP and CPTPP, we can promote the integration of regional regulations, provide stronger institutional guarantees for regional trade and investment, and provide reference for solving the problem of fragmentation in the field of international economic and trade rules.

Since the RCEP came into force, regional members have benefited from it to varying degrees, which has also increased the attractiveness of RCEP to members outside the region. At present, RCEP members are also actively exploring the issue of joining new members, for example, Hong Kong, China has officially expressed its desire to join the RCEP, and some South Asian countries also have active intentions to join. All parties need to formulate procedures for joining new members as soon as possible, assess the feasibility and pros and cons of joining new members, steadily expand the circle of friends of RCEP, form a more open market for regional integration, and further amplify the scale effect of the agreement, which will also bring greater demonstration effect.

Song Wei: At present, the world's economic growth is sluggish, economic globalization and free trade are facing severe challenges, especially the major developed countries are politicizing and pan-securitizing economic and trade issues, and have launched many protectionist policies for industrial and supply chains, which have had a huge impact on the rules-based global economic and trade governance order. To this end, the first is to highlight the advantages of the RCEP system and mechanism, and absorb other economies inside and outside the region. Adhere to open and inclusive access standards, treat countries at different income levels equally, maintain the practicality and flexibility of the provisions, and highlight the "development" attribute of RCEP, especially the preferential policy treatment for low-income countries, to demonstrate the determination of the region to work together to address development challenges. Accelerate the mutual promotion of RCEP and the Belt and Road Initiative, and realize two-wheel drive cooperation in the Asia-Pacific region.

Jia Zhongzheng: At present, the "fragmentation" of international economic and trade rules has led to the "fragmentation" of the world economy. The main manifestations are as follows:

On the one hand, trade restrictions have proliferated, and rifts between different blocs have widened. According to the World Trade Organization (WTO), the world has introduced an average of about 500 trade restrictions per year from 2013 to 2017, which increased to 1,500 in 2020 and 2,800 in 2022, about three times the number in 2019, according to data from the World Trade Organization (WTO). As a result of the marginalization of the World Trade Organization's dispute settlement mechanism, 29 international trade disputes have not been resolved. The number of "trade concerns" officially reported by WTO members also increased from 31 in 2016 to 130 in 2022. The rift in trade and investment between different groups has widened. According to the International Monetary Fund (IMF), the Ukraine crisis has led to a slowdown in global trade, especially among politically disagreed blocs. Intra-group trade growth has fallen to 1.7% from 2.2% before the Ukraine crisis, while inter-group trade has fallen from 3% to around -1.9%. Proliferating trade barriers and other restrictive measures are exacerbating the fragmentation of the world economy.

On the other hand, "decoupling and chain breaking" and "de-risking" have intensified, disrupting the global supply chain.

In the face of the impact of international economic and trade rules and the "fragmentation" of the world economy, more and more economies have taken joining regional economic and trade cooperation as a priority option through "soft connectivity" and "hard connectivity" to jointly address the problems faced in the process of economic and trade development.

In short, the soft and hard links between the rules and systems and market channels can help more and more economies join regional economic and trade cooperation, and provide a steady stream of new impetus for the current weak international economic and trade development trend.