The Regional Comprehensive Economic Partnership (RCEP) is a proposed agreement between the member states of the Association of Southeast Asian Nations (Asean) and its free trade agreement (FTA) partners. The pact aims to cover trade in goods and services, intellectual property, etc.

10 Member states of Asean are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam and five of their Free-Trade Agreement (FTA) partners, in China, Japan, South Korea, Australia and New Zealand.

There will be 15 signatories because India, one of the original partners, announced last year (2019) it was leaving the negotiations over concerns that its local industries would be devastated by cheaper manufactured goods from China and agricultural and dairy products from Australia and New Zealand. The 15 other countries agreed to continue and said the door would remain open for India to rejoin.

The 15-member RCEP agreement will create the world’s largest free trade area,1 accounting for US$21 trillion, or 30 per cent of the world’s gross domestic product (GDP), reaffirming the region’s commitment to free and open trade. The new trade pact will complement Singapore’s existing network of more than 20 free trade agreements (FTAs) by further strengthening supply chain connectivity and promoting the flow of investments. Singapore’s trade value with the other 14 RCEP members has grown steadily over the past years, reaching US$393 billion and contributing to more than 51 per cent of Singapore’s total merchandise exports in 2018.

Mr Ho Meng Kit, CEO of SBF, said “RCEP will enhance regional cross-border trade which is essential for Singapore’s open and export-oriented economy. Once RCEP is in force, Singapore companies will be able to make use of regional cumulation to enjoy greater flexibility in sourcing from a larger pool of suppliers in the region. The inclusion of a dedicated small and medium enterprises (SMEs) chapter is commendable. We are heartened that governments in the region recognise the important role played by SMEs in the regional economy and are committed to addressing the unique challenges SMEs may face in making use of trade agreements.”

A single set of rules of origin to access preferential tariffs and regionally coherent trade rules under this agreement will also make it easier for businesses to navigate FTAs and cross-border trade. Manufacturers will benefit from being able to qualify for preferential tariffs more easily when they use raw materials or intermediate products from any RCEP party. This will boost opportunities for supply chain diversification in the region.

For businesses in service sectors, RCEP will provide certainty over market access and fair treatment for foreign service suppliers. In particular, telecommunications sector commitments will ensure portability of mobile numbers and reasonable roaming rates. RCEP also includes core investment protections such as expropriation compensation, fair and equitable treatment, and free transfer of  investment-related capital without delay.