An Evaluation of the Regional Comprehensive Economic Partnership Agreement: Market Access and Trading Rules

• Published date: 01 September 2022
• Author: Bin Sheng,Chenxin Jin
• Date: 01 September 2022
• DOI: http://doi.org/10.1111/cwe.12437

©2022 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 49–74, Vol. 30, No. 5, 2022 49

*Bin Sheng, Professor, School of Economics, Nankai University, China. Email: shengbin@nankai.edu.cn; Chenxin Jin

(corresponding author), Assistant Researcher, the APEC Study Center, Nankai University, China. Email: jinchenxin@

nankai.edu.cn. The authors acknowledge fi nancial support from the project “Reconstruction of International Economic

Rules in the Context of Global Value Chain and the Role of China” funded by the Publicity Department of CCP,

and the project “Global Economic Governance, New Rules of International Trade and Investment, and China’s New

System of Open Economy” (No. 20JJD790003) funded by the Ministry of Education, China.

An Evaluation of the Regional Comprehensive

Economic Partnership Agreement:

Market Access and Trading Rules

Bin Sheng, Chenxin Jin*

Abstract

The Regional Comprehensive Economic Partnership (RCEP) agreement was signed

on November 15, 2020. This marks the formal conclusion of the world’s largest free

trade agreement in terms of population and economic scale. The RCEP agreement

covers new liberalization commitments in goods, services, investment, and movement of

natural persons, and addresses some emerging behind-the-border trade issues, to forge

more transparent, open, and inclusive trade rules. Its aim is to build a comprehensive,

modern, inclusive, and high-quality free trade agreement. This paper summarizes the

framework and highlights of the RCEP agreement, measures the extent of tariff reduction

from various perspectives, makes a quantitative assessment of the level of service trade

liberalization of the member states adopting positive list commitments, and makes an

in-depth analysis of trade rules and provisions in the RCEP agreement. Furthermore,

this paper also makes a comprehensive comparison of main provisions among the

Comprehensive and Progressive Agreement for Trans-Pacifi c Partnership, RCEP, and

US-Mexico-Canada Agreement. The paper concludes with policy recommendations for

China to promote the implementation of the RCEP agreement.

Keywords: China, free trade agreement, RCEP, trade and investment liberalization

JEL codes: F13, F15, F53

I. Introduction

The Regional Comprehensive Economic Partnership (RCEP) Agreement was agreed

and signed by 10 Association of Southeast Asian Nations (ASEAN) members along

Bin Sheng, Chenxin Jin / 49–74, Vol. 30, No. 5, 2022

©2022 Institute of World Economics and Politics, Chinese Academy of Social Sciences

50

with China, Japan, Republic of South Korea, Australia, and New Zealand on November

15, 2020. This marks the formal conclusion of the world’s largest free trade agreement

(FTA) in terms of population and economic scale. The 15 members of the RCEP have a

2.27 billion population, US$26.2 trillion GDP, and US$5.2 trillion exports in total.

The RCEP agreement came into eff ect on January 1, 2022, and will benefi t its member

economies tremendously. As estimated by HSBC Global Research (2020), RCEP

members will contribute over half of global GDP by 2030 and are expected to achieve

a net increase of US$519 billion in exports and US$186 billion in national income on

an annual basis. According to a simulation result based on the LINKAGE model of the

World Bank by Ferrantino et al. (2020), the RCEP agreement might bring an increase

of 1.5 percent in GDP, 2.1 percent in national income, 4.9 percent in exports, and

4.9 percent of imports for its member countries by 2030. Park et al. (2021) also estimate

that the RCEP agreement will increase skilled labor wages by 1.1 percent and create

2.6 million new jobs by 2030 for its member economies. More important, the RCEP

agreement is China’s first mega-regional trade agreement in recent years, which signals

“China’s rise as a shaper of trade law norms and governance mechanisms” (Gao et al., 2021).

It is a milestone for China to play an increasingly important role in the global and Asia-

Pacifi c regional integration.

This paper estimates the degree of openness of market access for the fi rst time by

using quantitative methods, and it assesses exploratory achievements in promoting

new trade and investment rules, based on the text and technical annexes of the

RCEP agreement. Our study attempts to provide an accurate understanding of the

RCEP agreement and its expected eff ects, and to help China to take advantage of the

development opportunities brought by RCEP and promote the implementation of the

agreement more eff ectively.

The paper mainly contributes in three ways. First, based on more than 200,000 tariff

lines of 36 bilateral tariff concession schedules, the paper calculates a series of trade

liberalization indicators, including agreed tariff rates, effectively applied tariff rates,

length of tariff reductions, and the proportion of zero-tariff and high-tariff products.

This analysis will depict and evaluate the extent of commodity trade liberalization

under the RCEP agreement. Second, based on nearly 2,000 pages of annexes to the

RCEP agreement, the paper conducts a quantitative assessment (using the coverage

ratio approach) of the extent of service trade openness, including market access and

national treatment, for member states (including China) that adopted “positive list”

commitments. This estimates and compares service trade liberalization among diff erent

members, sectors, and modes of service trade. Third, the paper summarizes the

features of the RCEP trading rules and provisions and analyzes their regional impacts,