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China aims to achieve shared prosperity in RCEP collaboration

25/10/2023    303

With the first rays of sunshine in 2022, the Regional Comprehensive Economic Partnership (RCEP) agreement came into effect, setting sail as the world’s largest free trade area. 

This landmark agreement brings about more opportunities for international economic and trade cooperation, steering toward a better tomorrow.

Deep integration of China

In 2020, after eight years and 28 rounds of negotiations, the RCEP agreement was officially signed. This signified the birth of the world’s largest free trade area, which accounts for approximately 30 percent of the world’s total population, economic size and trade volume. 

Of particular value is the diversity among the member economies, ranging from the most developed to relatively advanced, emerging and partially developed ones. This diversity presents extensive potential for cooperation, profoundly influencing a series of important international economic and trade principles, including WTO reform.

It serves as a way to breakthrough amid a changing and complex global landscape, as well as a significant milestone in supporting multilateralism and free trade. The impact and significance of this agreement are enormous and far-reaching.

RCEP was initiated by the 10 ASEAN countries, and its 15 members also include China, Japan, South Korea, Australia and New Zealand.

Currently, ASEAN has become China’s largest trading partner, and China has been ASEAN’s largest trading partner for 10 consecutive years. Moreover, many other RCEP member countries are important trading partners of China.

The economic ties are close. In 2022, China’s total import and export volume with other RCEP member countries reached 12.95 trillion yuan (US$1.8 trillion), a year-on-year increase of 7.5 percent, accounting for 30.8 percent of China’s total foreign trade. China’s non-financial direct investment in other RCEP members amounted to US$17.96 billion, a rise of 18.9 percent, while absorbing their direct investment totaling US$23.53 billion, an increase of 23.1 percent.

On June 2, this year, RCEP officially took effect for the Philippines, marking the comprehensive implementation of RCEP for all 10 ASEAN countries. This promoted a broader scope, higher level and deeper level of open cooperation, forming a more prosperous integrated regional market.

RCEP covers a wide range of areas, including the reduction of tariffs and non-tariff barriers, facilitation of trade in goods and services, cooperation in finance and telecommunications, investment, rules of origin, intellectual property and dispute settlement, as well as cooperation in small and medium-sized enterprises and economic and technological cooperation. 

In response to the uneven economic development among RCEP members and the highly complementary economic structures, RCEP integrates multiple “10+1” free trade agreements between ASEAN and China, Japan, South Korea, Australia and New Zealand, as well as the existing multiple free trade agreements between China, Japan, South Korea, Australia and New Zealand.

It embodies both the direction of high-standard traditional economic and trade rules and the establishment of flexible mechanisms that encourage the development of emerging economies. It balances high standards with applicability, setting an important example for jointly building high-level economic and trade rules, showcasing the determination and courage of all 15 member countries to continue riding the waves and facing the vast Pacific and globalization. Their sincere efforts are moving and worthy of respect.

For example, in terms of trade in goods, the overall openness reaches over 90 percent, with immediate or phased elimination of tariffs to zero within 10 years. In services trade, except for Cambodia, Laos, Myanmar and Vietnam, the number of committed service sectors by other parties has increased to over 100 (based on the WTO’s classification of 160 service sectors). 

Developing economies are allowed to adopt a “positive list” approach in services trade while transitioning toward a negative list. China, for instance, has committed to adding 22 sectors, including research and development, management consulting, manufacturing-related services and air transport, on top of the approximately 100 sectors committed during its accession to the WTO. 

The commitment level of 37 sectors, such as finance, law, construction and maritime transport, has been raised to the highest level among existing free trade agreements, and it will gradually convert its positive list into a negative list within six years after the agreement comes into effect. 

RCEP sets many soft provisions on transparency and trade facilitation, granting some developing economies exceptional treatment while explicitly requiring further opening-up in the future and prohibiting the withdrawal of already committed measures.

Furthermore, in promoting regional integration, RCEP widely incorporates China, Japan and South Korea into a comprehensive regional free trade agreement, establishing a free trade relationship between China and Japan, as well as between Japan and South Korea for the first time, filling the gap in a multilateral free trade zone in Northeast Asia. 

China, Japan and South Korea have formed a system arrangement for mutual market opening and tariff reduction, opening up new realms of cooperation. In November, China and ASEAN jointly announced the formal initiation of negotiations on the China-ASEAN Free Trade Area 3.0, which further enhances regional economic integration.

As the saying goes, open economies thrive while closed ones decline. Despite the challenges and setbacks in the current global economic landscape, a multilateral trading system that is open, fair and transparent serves the common interests of countries worldwide. 

As Chinese President Xi Jinping emphasized, we must adhere to high-level opening-up and promote high-quality development to achieve a Chinese-style modernization, providing new opportunities for open cooperation among countries. In the face of global challenges and difficulties, only by standing together as a big family can we achieve win-win cooperation.

The China International Import Expo, held in Shanghai for five consecutive years, is a good example of promoting cooperation within the RCEP framework. As the world’s only exhibition themed on imports with broad international participation, the CIIE facilitates trade and investment, demonstrating the symbiotic relationship between imports and exports. 

RCEP member countries play a significant role in the CIIE, creating new opportunities through regional cooperation and expanded opening-up. This has yielded positive results and should be further enhanced.

A partnership forged with the right approach defies geographical distance; it is thicker than glue and stronger than metal and stone. The comprehensive implementation of the RCEP signifies a brand-new stage in trade liberalization. It enriches and develops the connotation of the international economic and trade cooperation mechanism, and puts into practice the new concept of mutual benefit, cooperation and win-win outcomes. 

China, with its unique advantages, should cooperate with the world, create a better future for humanity, and make greater contributions. Therefore, it is recommended that:

Continuously promote institutional openness: During the gradual implementation of the RCEP, it is crucial for China to understand the gaps between itself and the rest of the world. This process serves as a mirror, reflecting the areas for improvement and identifying more opportunities for cooperation with other parties. 

In June, the State Council issued measures aimed at advancing institutional openness to international high standards in qualified free trade zones and free trade ports. I suggest that the Shanghai Free Trade Zone, especially the Lingang New Area, thoroughly study and promote the RCEP agreement. They should focus on areas such as goods trade, services trade, temporary entry for business personnel, digital trade and business environment, integrating international practices and rules to become a strategic link for both domestic and international circulation. This will help explore new paths for further opening-up and accumulate experience on a national level.

For example, services trade is a key aspect of China’s institutional openness. RCEP calls for gradual elimination of restrictions and discriminatory measures in services trade among member countries. It is recommended to explore mutual recognition of service industry standards. 

Taking finance as an example, a subject of common concern, China could lead in piloting comprehensive mutual recognition of professional qualifications with Japan, South Korea, Singapore and other countries or regions. This could involve creating a list of recognized qualifications. To address the issue of mobility of cross-border professionals in financial services, it is essential to facilitate their easy movement, including asset managers, securities analysts, accountants, asset appraisers and financial planners.

Furthermore, China should accelerate its “going global” strategy. Xi, in his video message to the Global Services Trade Summit of China International Fair for Trade in Services in 2023, called for encouraging the expansion of knowledge-intensive service exports. In this regard, the legal services industry should seize the opportunity to enter RCEP member countries. 

China’s legal services have developed and grown strong alongside the reform and opening-up. Their capabilities are no less than their international counterparts, but there is room for further improvement in terms of internationalization. Similar to large law firms in the United States and Western countries, which often expand alongside their domestic enterprises, Chinese law firms should have the confidence to follow in the footsteps of Chinese companies as they go global. They should focus on issues related to overseas capital markets, financing transactions and cross-border compliance, providing consulting and legal services to enhance international competitiveness.

Moreover, efforts should be made to promote standard coordination and mutual acceptance of conformity assessment results. RCEP strengthens member countries’ adherence to the WTO Agreement on Technical Barriers to Trade and recognizes understanding between member countries on technical regulations, standards and conformity assessment procedures. In reducing technical barriers, RCEP has gradually implemented unified rules in areas such as customs procedures, inspection and quarantine, and technical standards. 

Shanghai can conduct in-depth analysis and research on the standards of important commodities and key cooperation areas with RCEP member countries, enhancing coordination and cooperation in standards and technical certification to simplify customs procedures. This can be achieved through pre-rulings, advance declaration and pre-shipment inspection certification to facilitate trade.

Strengthening digital trade cooperation

Currently, the scale of the digital economy is expanding, and the global digital transformation is accelerating, becoming an important factor affecting the world economic landscape. According to a report by the United Nations Conference on Trade and Development, the share of global digital trade in services trade has increased from 48 percent in 2011 to 63.6 percent in 2021. 

The RCEP has proposed specific requirements for digital trade in multiple chapters, emphasizing cross-border digital traditional rules while incorporating important rules such as intellectual property protection and e-commerce. 

For example, in terms of cross-border data, it requires reducing various restrictions imposed by member countries’ governments on digital trade, including data localization requirements; in e-commerce, it encourages member countries to improve trade management and procedures through electronic means, regulations on electronic authentication and signatures, online consumer protection, online personal information protection, cyber security, cross-border electronic mode information transmission, etc; in financial services, it strengthens the transmission and processing of financial information, payment and settlement, etc.

In recent years, China’s digital trade has developed rapidly, with both scale and growth rate at the forefront of the world. It is necessary to leverage China’s advantages in the digital field to promote connectivity among RCEP countries in the digital era, make digital trade and the digital economy a key cooperation area, achieve inclusive sharing of innovative achievements, and strive to eliminate the digital divide. 

It is suggested to strengthen exploration in Shanghai in promoting the orderly cross-border flow of data, clarify the implementation details and management measures for the circulation of specific industry data based on the basic principles of laws such as the Data Security Law and the Personal Information Protection Law, and in combination with the legislative power of the Pudong New Area, conduct pressure testing on the rules for cross-border data flow. Further improve the attribution of data usage rights and income rights, establish data pricing and trading rules, and clarify rights, obligations and liability for infringement in data circulation. Establish a cross-border data “white list” system, giving priority consideration to RCEP countries that have close economic and trade ties with China and have mature data management and legal environments, and allow cross-border data flow after filing materials such as data contracts and risk-assessment reports, under the premise of safety and order. At the same time, actively participate in and lead the formulation of international digital trade rules and standards. 

Deepening arbitration cooperation

With the RCEP, tariff barriers between countries are further eliminated, restrictions on trade in services and investment are further reduced, and the region sees tremendous growth in trade and investment, accompanied by an increase in disputes. 

The dispute settlement mechanism of the RCEP follows the principles and approaches of the WTO dispute settlement mechanism while fully considering the different levels of economic development among economies and their traditional dispute settlement practices. It encourages cooperative consultations between member states, establishes a one-stop expert panel model, allows resolution of disputes through cross-cutting provisions, and provides special and differential treatment for the least developed countries. This fully embodies the efficiency, transparency and inclusiveness of the RCEP. 

Arbitration, as an important means of resolving international trade and investment disputes, plays an indispensable role in handling international commercial disputes, optimizing the international business environment and promoting the construction of international rule of law.

Shanghai is committed to building an Asia-Pacific arbitration center open to the world, with three local arbitration institutions, one international organization arbitration institution and representative offices of four foreign arbitration institutions — the International Chamber of Commerce, Hong Kong International Arbitration Centre, Singapore International Arbitration Centre and Korea Commercial Arbitration Board. 

Shanghai has become an important window for international arbitration to enter China and for Chinese arbitration to go global. It was selected as one of the 10 most popular international arbitration destinations in the world in 2022. 

Currently, the Regulations on the Promotion of International Commercial Arbitration Centre Construction in Shanghai (Draft) is in the legislative research stage. It is suggested that Shanghai can try to establish a regional business dispute resolution cooperation mechanism, carry out close and regular exchange of experiences with RCEP countries, actively introduce arbitration rules and systems in line with international practices, and build a diversified mechanism for resolving foreign-related commercial and maritime disputes. 

It should also strengthen international exchanges and cooperation between judiciary and arbitration, enhance the ability to provide cross-border arbitration services, and provide efficient arbitration services for the RCEP. This is also a great opportunity for the legal profession to enhance professional and international capabilities. 

Constant efforts should be made to enhance the ability to serve the national strategy of comprehensive opening-up and development, contribute to the creation of an open, inclusive and win-win dispute resolution new pattern, and improve global diversified dispute resolution mechanisms.

The trend of win-win cooperation is unstoppable, and the RCEP has created a new chapter in regional cooperation. We should make the road wider, longer and more promising!

Source: Shanghai Daily