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RCEP is a regional free trade agreement that will complement and build upon Australia’s existing free trade agreements with 14 other Indo-Pacific countries.
It is a modern and comprehensive free trade agreement covering trade in goods, trade in services, investment, economic and technical cooperation, and creates new rules for electronic commerce, intellectual property, government procurement, competition, and small and medium sized enterprises.
On 15 November 2020, Ministers from 15 countries signed the Agreement. (Australia, China, Korea, Japan, New Zealand, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam).
In November 2019, India indicated it had several issues preventing it from joining RCEP and has since indicated it is not in a position to sign the Agreement: Joint Leaders’ Statement on the Regional Comprehensive Economic Partnership (RCEP).
Even without India, RCEP will still be the world’s largest free trade agreement. Which covers 58% of Australia’s two way trade in goods and services.
Australia will work towards ratification of the RCEP Agreement in 2021.
THE BENEFITS OF RCEP
The Key benefits of RCEP for Importers and Exporters will be:
THE LIMITATIONS OF RCEP
One limitation is the Direct Consignment Rules. Despite there being 15 parties, there are still strict requirements about what can occur to a good if it is not directly shipped from the exporting party to the importing party. Often in multi-party agreements, there are no restrictions on indirect shipment via a third country, provided that third country is also a party to the agreement. However, with RCEP, transhipments via other RCEP members, such as Singapore and Malaysia, will be subject to strict requirements, such as that the goods must remain under customs control.
If there is to be repackaging or labelling in other RCEP country, a back-to-back certificate of origin must be issued.
This will prevent the FTA making it easier for RCEP members to ship their goods via traditional international distribution hubs.
THE ASSESSMENT TO BE UNDERTAKEN
Where there are multiple FTA’s available, the task for importers and exporters is to consider the following:
Once a choice is made, it is important that the exporter and importer are on the same page. This means that the exporter is both assessing origin under the correct FTA and providing a proof of origin document that meets the requirements of that specific FTA.
The result is that once RCEP is implemented, importers and exporters will be able to choose from 3-4 FTA’s for some of our Trading partners. For example, with Indonesia there will be a choice between the Asean FTA, RCEP or the bilateral FTA between Australia and Indonesia.
RCEP does have the potential to ease the number of FTA’s considered. RCEP could effectively replace the 8 bilateral FTAs Australia has with RCEP members, plus the ASEAN FTA. Whether it will in fact do so, will depend on how the RCEP outcomes compare with the outcomes under 9 FTAs it seeks to replace.
Should you have any questions or queries, please feel free to contact our Customs Team.
Keeping you updated,
BRi Customs TeamBack to News Page