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Malaysia is a signatory to the Regional Comprehensive Economic Partnership (RCEP), a trade agreement between the 10 members of ASEAN, Mainland China, Japan, South Korea, Australia and New Zealand. The RCEP, an ASEAN-driven initiative, marks the amalgamation of existing free-trade agreements (FTAs) between ASEAN and partner countries. The RCEP aims to economically integrate the 15 countries in Asia and Oceania. It involves broader and deeper engagement between member countries with significant improvements over existing ASEAN FTAs and Comprehensive Economic Partnership Agreements.
The scope of RCEP consultation covers:
- Elimination or reduction of import duties
- Investment promotion, facilitation, protection and liberalization
- Protection of intellectual property (IP) rights, facilitation of e-commerce
- Economic and technical cooperation
- Legal and institutional issues
Overview of RCEP and other trade agreements
RCEP, signed on 15 November 2020, is among the key regional FTAs in discussion. As is, RCEP is the only FTA to include Mainland China, Japan and South Korea.
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Malaysia’s access to a wider RCEP market presents significant trading and investment opportunities.
Areas to consider
The RCEP serves as a pivotal tool to accelerate access into regional markets and mitigate interruptions to supply chains. Businesses should commence necessary preparations to leverage RCEP benefits, including the following five areas of the Agreement:
1. Reduction of tariff barriers
Businesses should analyze whether their exports and imports can benefit from duty elimination or reduction under the RCEP. This includes the evaluation of tariff differences.
2. Flexible rules of origin
Businesses should focus on the specific application of rules of origin (RoO) and the management of origin information.
3. Optimizing supply and value chains
Businesses that have established an industrial network or have conducted trade within the RCEP region should:
- Analyze existing industrial supply and value chains based on preferential tariffs and RoO
- Make full use of trade facilitation opportunities to optimize industrial value chain
Businesses that have yet to establish an industrial network within the RCEP region should begin to leverage the benefits of the Agreement.
4. Protection of intellectual property
The RCEP Agreement pays more attention to issues related to intellectual property. Businesses should strengthen their risk assessment and management towards international trade activities to mitigate compliance risks.
5. Domestic measures for RCEP implementation
After the formal signing of the RCEP Agreement, member countries will begin the domestic approval process and gradually introduce detailed measures for the implementation of the Agreement. Enterprises should pay close attention to updated announcements.