Since the biggest regional trade agreement, the Regional Comprehensive Economic Partnership, or RCEP, came into force in February, cooperation between China and the Republic of Korea has strengthened in fields such as electronics, machinery, automobiles and textile. CGTN's Yoo-sumin reports from Seoul.

The biggest regional trade agreement, called Regional Comprehensive Economic Partnership, or RCEP, came into force on February 1st, essentially affecting 15 countries including China and South Korea.

China is by far South Korea's biggest trading partner, accounting for a quarter of its exports, and South Korea is China's third-largest trading partner. The two countries have had an FTA in effect since 2015, but the RCEP is expected to provide greater range and degree of benefits. It will slash tariffs of some 41 additional categories such as medical devices, mechanical equipment, semiconductor manufacturing parts, or industrial textiles.

Twinny is a S.Korean autonomous robot company that falls under the "Machinery and equipment" category in the HS code system, which is used by customs to classify a product. The company expects the trade agreement to give it a leverage when exporting the products.

YOUNGSEOK CHEON CEO of Twinny, Autonomous robot company "With RCEP taking effect, Twinny, which relies heavily on imported raw materials, will benefit from the supply and demand of raw materials and diversification of exports. Outbound shipments to China are also expected to rise with increased price competitiveness."

Not only the mega trade pact provides preferential tariffs, and it unifies the rules of origin.

YUJIN LEE Manager, Center for Trade Studies & Cooperation, KITA "In general, there is a standard in trade, such as using more than a few percent of the domestic ingredients, but with RCEP, all ingredients procured from 15 RCEP member countries are recognized as locally manufactured. Before RCEP took effect, the authorities only allowed parts and ingredients procured from South Korea and China when exporting to China – but RCEP recognizes ingredients obtained from Japan or Vietnam as domestic ingredients."

RCEP also provides new opportunities for South Korean companies seeking to expand its footprint in China. Dear Dahila, is a luxury vegan cosmetics company that plans to aggressively venture out to China. China exempted "imported ordinary cosmetics" from undergoing animal testing last year. This allowed the luxury vegan brand to set its eyes on the promising market, with the retail sales value of cosmetics in China reaching 52.3 billion USD in 2020, according to Statisca.

CHRISTINE LEE Senior Global Business Manager, DearDahlia "At the moment, there are no direct import-related benefits, but as we are planning to strike contracts with more local Chinese clients, we expect increased efficiency in the logistical and distribution process in shipping our products. And specially in the case of China, we plan to cooperate with more vendors, so the RCEP will help grant advantages for our partners."

YOO-SUMIN Seoul "The RCEP agreement grants tariff reduction, enables greater market access, and involves simplified trade procedures. This favorable environment would enhance China- South Korea bilateral trade, and further strengthen regional integration in the Asia-Pacific region. Under a set of shared trade rules and standards, the RCEP agreement is expected to provide momentum to facilitate global free trade and multilateralism. Yoo-sumin, CGTN, Seoul."

Source: CGTN

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