By Robert de Boer, Partner
On 4 November 2019 15 of the 16 Regional Comprehensive Economic Partnership (RCEP) Participating Countries concluded text–based negotiations for the RCEP and essentially all their market access commitments on goods, services and investment.
This is an important development that once the RCEP Agreement is signed and entered into force, the RCEP will deliver substantial new trade and investment opportunities for the RCEP Participating Countries. The RCEP Participating Countries currently account for approximately 30% of global trade.
It will be important for organisations conducting business between and among the RCEP Participating Countries to be aware of the provisions of the RCEP Agreement (once signed and entered into force) as it may impact negotiations, the day to day conduct and enforcement of commercial arrangements.
What is the RCEP?
The RCEP is a regional free trade agreement among 16 countries comprising the Member States of the Association of Southeast Asian Nations ((ASEAN), including Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam)) and Australia, China, India, Japan, New Zealand and the Republic of Korea.
India did not (at this stage) sign up to the deal, citing significant outstanding issues which remain unresolved.
What does the RCEP cover?
There are 20 chapters covering trade in goods, trade in services, investment, economic and technical cooperation, and new rules for small and medium sized enterprises, government procurement, intellectual property, competition and electronic commerce. In particular, the chapters deal with the following:
- Agreed rules of origin that will allow businesses in the RCEP region to access regional production chains
- Improved mechanisms for addressing non-tariff barriers including in areas such as technical standards, customs procedures and quarantine
- Providing a platform to expand trade in services throughout the RCEP region
- Enhancing rules governing financial services
- Setting a framework of rules to govern trade in, and the access and use of, telecommunications services across the RCEP region
- Supporting the movement of business people across the RCEP region
- Addressing “behind the border” barriers to the supply of professional services in RCEP Participating Countries
- Provisions aimed at facilitating the investment environment across the RCEP region, including requirements not to discriminate against foreign investors from RCEP Participating Countries (i.e. a “most-favoured nation” commitment), and rules requiring payment of compensation where an investment is expropriated
- Dispute Settlement (though the RCEP Agreement does not provide for investor-state dispute settlement – the RCEP Participating Countries will discuss this question in the future)
- Establishing a common set of rules on intellectual property protection and enforcement for the RCEP region
- Provisions on competition requiring maintaining competition laws and regulations that proscribe anti-competitive activities, and ensuring independent enforcement together with obligations in relation to the use of misleading practices or false or misleading descriptions
- Rules on government procurement by central governments
- Rules on e-commerce to make it easier for businesses to trade online
Where an existing free trade agreement exists between or among RCEP Participating Countries, the RCEP rules will take precedence where the standards are higher or market access is superior.
The RCEP Participating Countries are working towards signature of the RCEP Agreement in 2020. As part of this process market access negotiations will be finalised, and the text of the RCEP Agreement (and any associated documents finalised as part of the negotiations) will be subject to technical legal reviews by each of the RCEP Participating Countries. After these reviews are completed, the RCEP Agreement will be signed and the text of the Agreement published. Further jurisdictional steps will then be undertaken by the RCEP Participating Countries in a manner consistent with each of their treaty-making procedures.
The RCEP Participating Countries will work towards resolving India’s outstanding issues, and India’s final decision to become a signatory to the RCEP Agreement will depend on the satisfactory resolution of these issues.
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