RCEP trade deal explained in one line: it is a new free trade pact among 15 Asia-Pacific economies, signed on November 15, 2020, and it is not yet in force. For a small exporter, that means no change to your tariffs today. It does mean you have time to get ready.
RCEP stands for the Regional Comprehensive Economic Partnership. Below is who signed, what the pact covers, and what a small firm can do now.
Who signed the pact
Fifteen countries signed. They are the ten members of ASEAN (Thailand, Vietnam, the Philippines, Singapore, Brunei, Cambodia, Indonesia, Laos, Malaysia and Myanmar) plus Australia, China, Japan, New Zealand and South Korea. The signing took place on the sidelines of the 37th ASEAN Summit, which Vietnam hosted online.
India took part in the talks from 2012 but is not a signatory. The leaders' statement says RCEP "remains open to India" and welcomes its possible accession later.
Sources: Singapore Ministry of Trade and Industry, signing notice, November 15, 2020; Joint Leaders' Statement on RCEP, November 15, 2020.
How big it is
The leaders say the pact covers about 2.2 billion people, or roughly 30 percent of the world's population. Together the members have a GDP of US$26.2 trillion, about 30 percent of the global total. The statement also says the members account for nearly 28 percent of world trade, using 2019 figures.
Those numbers explain the interest. A seller in one member country can reach buyers in 14 others under one shared set of terms, rather than learning each country's separate deal.
Source: Joint Leaders' Statement on RCEP, November 15, 2020.
What the agreement covers
The text has 20 chapters. It covers trade in goods and trade in services. It also covers investment, intellectual property, electronic commerce, competition and government procurement.
Two chapters matter most to small firms. One is a dedicated chapter on small and medium enterprises. The other is the electronic commerce chapter, which applies to firms that sell online across borders.
A trade pact like this normally lowers import taxes, called tariffs, on goods that qualify. A product usually qualifies only if it is made in the region, so the rules on where a product comes from will decide who benefits. The signed text sets those rules and the tariff schedules for each member. Read the parts for your own product and your own buyers' countries.
Source: Joint Leaders' Statement on RCEP, November 15, 2020.
When it takes effect
Not yet. The agreement enters into force only after at least six ASEAN members and three of the five non-ASEAN signatories deposit their ratification papers. Each country must first finish its own approval steps at home, such as a vote in parliament or a cabinet decision.
The leaders have asked their officials to move quickly. No start date has been set, so any plan you make should treat the timing as open. Until the pact is in force, you pay the tariffs you pay today.
Source: Joint Leaders' Statement on RCEP, November 15, 2020.
What small exporters can do now
You cannot claim RCEP benefits yet. You can still prepare in a few practical ways.
- List your top products and your top three buyer countries. Note which of those countries signed.
- Write down where your inputs come from. Origin rules look at where materials and work come from, so a clear bill of materials will save time later.
- Keep production and cost records tidy. Customs offices may ask you to prove where a product was made.
- Check what free trade deals you already use. Some of your goods may already enter certain markets at lower rates under earlier ASEAN pacts, and you should compare before you switch.
- Watch your own government's trade agency. Singapore firms can check Enterprise Singapore's free trade agreement guidance, and other countries have similar offices.
This is general information only. The signed text sets tariff schedules for each member, so check the schedules for your own product with a customs broker or trade adviser before you change prices or contracts.
Sources: Joint Leaders' Statement on RCEP, November 15, 2020; Enterprise Singapore, free trade agreement guidance for businesses.
The short version
Fifteen economies signed RCEP in November 2020. It covers a very large market, it has a chapter written for small firms, and it still needs ratification before it starts. Prepare your product and origin records now, and wait for official dates before you count on lower tariffs.
Sources
- Singapore Ministry of Trade and Industry, "Regional Comprehensive Economic Partnership Agreement Signed," November 15, 2020: mti.gov.sg/newsroom/regional-comprehensive-economic-partnership-agreement-signed
- Joint Leaders' Statement on the Regional Comprehensive Economic Partnership, November 15, 2020: asean.org (copy at worldjpn.net/documents/texts/asean/20201115.D1E.html)
- Enterprise Singapore, free trade agreements for businesses: enterprisesg.gov.sg