Deepening Regional Cooperation with the RCEP to Facilitate the Construction of A China-ASEAN FTA Version 3.0

By Guo Yan

The year 2022 is of special significance for the cooperation between China and ASEAN countries， as it marks the 55th anniversary of the establishment of ASEAN is also the first year during which ASEAN countries and China established a comprehensive strategic partnership. As each others largest trading partners， China and ASEAN have greatly strengthened bilateral trade and economic cooperation. According to statistics from the General Administration of Customs， from January to August 2022， the trade volume between China and the ASEAN region continued to grow， reaching USD 627.58 billion， up 13.3% year-on-year.

Recently， the China-ASEAN Business Leaders Forum and Special Dialog on RCEP Business Cooperation was held in Guangxi. The Forum was held both online and offline， with the theme of “Deepening Regional Economic and Trade Cooperation under the RCEP and Boosting the China-ASEAN FTA 3.0”， and focused on green transformation and upgrading， the industry and supply chain and other hot topics， with the aim of developing a consensus on business cooperation in the RCEP region and boosting China-ASEAN economic and trade relations to a new level.

China and ASEAN have greatly tightened cooperative trade ties

As the second and fifth largest economies in the world， and as each others largest trading partners， China and ASEAN together contribute more than 30% to the global economy， with a total economic volume of more than one-fifth of the world. Faced with the profound recent changes and the global COVID-19 pandemic， ASEAN and China have joined hands to overcome current difficulties， and both sides have significantly strengthened their bilateral trade and economic cooperation.

Zhang Shaogang， Vice President of the China Council for the Promotion of International Trade（CCPIT）， pointed out in his speech that since the establishment of the conversational partnership between China and ASEAN 30 years ago， both sides have always upheld the principle of mutual help and common development， and have together set up the most promising and dynamic model for regional cooperation. When faced with the pandemic， China-ASEAN economic and trade cooperation has bucked the trend， with ASEAN becoming the largest trading partner of China for two consecutive years， and also becoming the most important destination and source of direct foreign investment.

From January to July this year， the cumulative two-way investment between China and ASEAN countries exceeded USD 340 billion. Under joint promotion from both sides， the Regional Comprehensive Economic Partnership （RCEP） officially came into force on January 1st this year. Zhang Shaogang said： “The imminent launch of the construction of the China-ASEAN FTA 3.0， and the deepening cooperation in new areas such as the digital economy and green economy have laid a solid foundation for the business community of both sides to further build a consensus and tap into previously unseen potential.”

When facing new opportunities in this new era， according to Zhang Shaogang， the CCPIT is willing to work with friends from the business community in the ASEAN region under the RCEP， continuously explore business opportunities brought about by the construction of the New International Land-Sea Trade Corridor and the comprehensive connection between the Guangxi Zhuang Autonomous Region and the Guangdong-Hong KongMacao Greater Bay Area， deeply promote regional economic integration， consolidate the ChinaASEAN comprehensive strategic partnership， and secure economic recovery and resilient growth in the region， making new and positive contributions to the building of a China-ASEAN community with a shared future.

Chen Dehai， secretary general of the ASEANChina Center， pointed out that China and ASEAN have been actively participating in and promoting regional cooperation and economic globalization， and have taken the lead in building the largest free trade area among developing countries by promoting the signing and implementation of the RCEP and the continuous improvements in the liberalization and facilitation of regional trade and investment. He believes that the implementation of the high-level RCEP agreement will further advance the integration of regional industrial and value chains， as well as regional economic integration， create favorable conditions for the construction of the China-ASEAN FTA 3.0， and inject new impetus into regional economic development and prosperity.

In addition， the Report on ASEAN Business Environment 2022 was unveiled at the Forum， which indicated that China and ASEAN set the most successful and dynamic model for regional cooperation in the Asia-Pacific region， and that Chinese enterprises as a whole spoke highly of the ASEAN business environment. A survey showed that more than 40% of respondents were optimistic about the local business environment and planned to expand their operations in the ASEAN region. However， due to the large differences in the business environment among ASEAN members， the lack of government services in some ASEAN member countries， and the fact that some ASEAN countries have not yet completed the domestic approval process for the RCEP， Chinese enterprises still face some practical operation difficulties there， including a desire for a better environment， and have put forward six demands， including strengthening infrastructure construction， formulating reason- able market access policies， abolishing substantive policies for foreign enterprises， and accelerating the implementation of the RCEP.

ASEAN member countries will share RCEP dividends

In 2022， the RCEP agreement will come into effect in member countries one after another. This January， the RCEP was enacted in 10 countries including China， Japan， New Zealand， Australia， Singapore， Vietnam， Thailand， Cambodia， Brunei and Laos， in South Korea in February， and in Malaysia in March， with the RCEP ushering in a new era of regional economic and trade cooperation. RCEP members are expected to share the dividends of regional integration and promote economic growth by boosting trade and investment， with the worlds largest regional economic cooperative agreement.

Cambodian Deputy Prime Minister Hor Nam Hong said， “the RCEP will help build a relatively stable multilateral trade order in the AsiaPacific region， and will further strengthen the trade and investment ties among the RCEP member countries.” Indeed， the Cambodia-China FTA was implemented on the same day as the RCEP， on January 1st， 2022， a milestone which will help improve peoples well-being in both countries， while also laying a new foundation for Cambodia-China economic and trade cooperation.

The bilateral trade volume between Cambodia and China in 2021 met the target set by the two countries ahead of schedule， namely exceeding USD 10 billion by 2023. “Two-way trade is expected to reach USD 15 billion by 2025，” said Hor Nam Hong. “The simultaneous entry into force of the RCEP and the bilateral FTA brings brighter prospects for the Cambodian economy. The Royal Government of Cambodia is currently accelerating economic development， with a special focus on the digital economic transformation and the development of e-commerce. Last year， Cambodia enacted a new investment law to create a more open， transparent and investmentfriendly legal policy environment for foreign and local investors， thereby boosting the confidence of investors in Cambodia.”

Indonesia officially ratified the RCEP on January 1st this year and implemented the agreement on time. Indone-sias Coordinating Minister for Economic Affairs， Airlangga Hartarto， said， “the RCEP will help Indonesia to participate more actively in regional and global value chains， provide broader market access for the business community in Indonesia， and enable local MSMEs to sell their products to the region. The implementation of the RCEP will bring Indonesia more opportunities， especially for Indonesian companies trying to gain access to the Chinese market.” By 2040， it is expected that the implementation of the RCEP will boost the GDP in Indonesia by 0.7%， amounting to approximately USD 5 billion.

Hartarto continued： “In the new global landscape of the post-pandemic era， China and ASEAN should move forward and develop more forward-looking relations. We want to promote the comprehensive strategic partnership between China and ASEAN， to cover some emerging areas such as a more resilient supply chain， digital economy and sustainable development， and we will also welcome joint efforts to advance the ChinaASEAN FTA agreement.”

“China has been Malaysias top trading partner for 13 consecutive years， and the total bilateral trade value between Malaysia and China recorded a breakthrough growth of 27% in 2021， jumping to USD 421.07 billion from USD 329.77 billion in 2020. Malaysia and China have always had close trade relations and frequent exchanges at all levels， and have good performances in trade， which is reflected in the current growing and fruitful trade cooperation and the tighter ties of brotherhood across the centuries between the two countries”， said Tiong King Sing， the Malaysian Prime Ministers Special Envoy to China and Chairman of the Malaysia-China Business Council.

Tiong King Sin expressed his wish for RCEP member countries to help each other and reciprocate when moving towards green transformation and upgrading， and to make more efforts to advance the sustainable and orderly development of green energy in Southeast Asia， with the target of a recyclable economy， in order to enhance the resilience of ASEAN countries to global uncertainties.

The RCEP has helped China， Japan and South Korea to increase their exports significantly

The RCEP is the first FTA to ever enable China， Japan and South Korea to cooperate under the same free trade system. According to Ou Boqian， secretary general of the Trilateral Cooperation Secretariat， the trade volume of China， Japan and South Korea accounts for about 62% of the total of the RCEP， and the RCEP is expected to boost the export value of these three countries by USD 38 billion， of which USD 11 billion comes from trade and USD 27 billion from trade diversion. This will allow all three countries to take advantage of this historic opportunity to develop a framework with which to further facilitate regional cooperation and strengthen economic and trade relations. Meanwhile， intra-regional economic and trade cooperation and investment should be encouraged， and stimulating cooperation between businesses on human resources training， cultural and humanistic exchanges， and so on.

Japan was one of the first countries to implement the RCEP in this January， and the RCEP is helping China and Japan establish a FTA relationship for the first time as major trading countries. In this regard， Director-General of the Japan External Trade Organization （JETRO） Beijing Office and general representative in Northeast Asia， Takashima Ryusuke， explained that the rules of origin and the cumulative rules of origin are the most important rules of the RCEP， and many countries are using these rules of origin to develop and improve the trade with other countries. However， he believes that the utilization rate of these measures is still low and that trading companies should further study the RCEP in the future in order to better make full use of it.

South Korea carried out the RCEP in February this year. As of July 2022， the trade volume between South Korea and RCEP member countries has increased significantly. The chief representative of the Korean International Trade Association（KITA） Chengdu Office， Ko Beomseo， said that the growth rate of South Koreas exports to Australia was 57.6% in 2021， but 111.5% from January to July 2022， about twice that of last year. South Koreas exports to ASEAN countries such as Vietnam， the Philippines， Malaysia and Indonesia， as well as imports from these countries， grew significantly. Ko Beomseo also expressed his belief that these achievements resulted from the emerging supply chain in the region due to decreasing tariff rates.“Especially this year， while rising raw material prices have caused higher inflationary pressure on global economic growth， trade in the RCEP region offsets the impact of this to a certain extent，” he said.

In order to help enterprises make better use of the RCEP， according to Ko Beomseo， the KITA has established a comprehensive FTA center which mainly provides the latest information on FTA and training projects to enterprises， as well as policy reports. Through the website of the FTA center， enterprises can request information about the rights described in the FTAs， origin markings and so on.“We provide consulting services to companies who cant understand the origin criteria. We have also established 18 local application centers within South Korea and 9 overseas application centers in 9 countries， which will help South Korean enterprises make better and more full use of the RCEP，” he said.