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1 1 (October 17, 2022)

handle is hein.crs/govejcq0001 and id is 1 raw text is: Congressional Research Serico ~ informing the legislative debate since 1914 S Updated October 17, 2022 Regional Comprehensive Economic Partnership (RCEP) The Regional Comprehensive Economic Partnership (RCEP) is a trade agreement, signed in late 2020 after eight years of talks, among the ten members of the Association of Southeast Asian Nations (ASEAN)-Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, and five ASEAN free trade agreement (FTA) partners-Australia, China, Japan, New Zealand, and South Korea. RCEP entered into force in January 2022 after ratification by six ASEAN and three non-ASEAN countries. To date, it has yet to be ratified by the Philippines and Myanmar. RCEP follows the entry into force of mega-regional trade deals, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes seven RCEP members and four countries in the Americas (Figure 1). Although overall RCEP has less extensive commitments than other recent trade agreements (e.g., CPTPP or the U.S.-Mexico-Canada Agreement), many analysts view RCEP as an achievement for the multilateral trading system, which faces myriad challenges. The collective economic weight of its membership gives RCEP the potential to deepen some trade patterns and supply chains in Asia through lower trade costs and streamlined rules. Congress may consider how RCEP affects U.S. commercial and strategic interests, and if it affects the relevance of the United States in shaping trade rules and economic integration in Asia and globally. Figure 1. Asia-Pacific Members of Regional FTAs KREA JAPAN LAOS BU!RM -4 ~ ~ V~ CAMBODIA BRUNEI -INGAPORE F - - MALAYSIA - INDONESIA NEW RCEP only members ZEALAND URCEP and CPTPP members `Four other CPTPP members in the Americas are not shown. Source: Created by CRS. History and Scope RCEP negotiations began in 2012 as an ASEAN initiative with the stated goal of harmonizing and building on existing ASEAN+1 FTAs with regional partners. While RCEP was conceived by ASEAN, which has long sought to create a common trading and manufacturing base, China actively shaped the negotiations and views RCEP as a victory of multilateralism and free trade. It marks the first trade deal among some participating economies with China. It is an important first for Japan with both China and South Korea, despite a now-stalled attempt at trilateral trade talks. RCEP is the world's largest regional trade agreement by several metrics (Figure 2). Its envisioned economic footprint was even larger before India withdrew in 2019 over various concerns, including reportedly competition with China. RCEP accession procedures are not restricted by geography, and offer an expedited process for India. Figure 2. Economic Indicators of Major Trade Deals Data for 2020 * CPTPP :-EU-Japan FTA RCEP IJUSMCA 24% I. 7T7 6'%, Shae of globals Shar of Shae of goods trade global GOP global population Source: CRS with data from World Bank and WTO. Notes: CPTPP and RCEP include 7 overlapping members; EU-Japan trade does not include intra-EU trade. RCEP's 20 chapters cover trade in goods and services, investment, government procurement, standards and technical regulations, intellectual property rights (IPR), e- commerce, and other issues. Several chapters are new to ASEAN FTAs. RCEP is considered a living agreement, with a built-in agenda for further talks in various areas. RCEP has a complex tariff schedule. The parties agree to reduce or eliminate tariffs by approximately 92% over 20 years, with eliminated tariffs/quotas covering over 65% of goods traded. There are sizable carveouts in certain sectors, such as agriculture in the case of Japan. Due to existing FTAs, tariff reductions are not necessarily substantial for all of the parties. In services, while seven members agreed to a negative list approach that restricts only those sectors listed explicitly, eight members (including China) negotiated to keep a positive list approach that only liberalizes the sectors they list in the agreement-these countries committed to transition to a negative list within six years. Some estimates suggest that at least 65% of services sectors will be fully open, with advanced market access in professional, financial, telecommunications, computer, and logistics services. These and other provisions go beyond some other ASEAN FTAs, such as investment protections prohibiting more extensive performance requirements than previous commitments (e.g., technology transfer as a condition of market access). RCEP does not include investor-state dispute settlement (ISDS), though parties commit to review its inclusion within five years. In e-commerce, members commit not to impose customs duties on electronic transmissions. General obligations to prevent data localization requirements or cross-border data transfers are subject to broad exceptions for national security and public policy reasons. The e-commerce

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