The implementation of the Regional Comprehensive Economic Partnership (RCEP) agreement has moved a big step closer this month with the news that China has ratified the deal well ahead of schedule.
The country is also pushing the other 14 signatories to the deal - which was finalized in November 2020 - to move forward with their own ratification processes in order to ensure the terms of the agreement can be implemented as swiftly as possible. So what does this mean for the progress of the agreement and its impact on trade in the region?
Building a smoother trading environment
Last month, China's General Administration of Customs detailed some of the work that has gone into preparing for the implementation of the RCEP, especially when it comes to key issues such as rules of origin requirements and tariff concessions.
So far, China has set out proposals for how to revise guidelines on rules of origin, and is seeking to work with all parties of the RCEP to reach a consensus as soon as possible, the Global Times reports.
In addition, a new information system to help origin management of the RCEP is also being reviewed, which will cover export visas and the application of agreed tax rates.
The publication also noted an administrative measure for approved exporters is in the works and expected to go through consultation procedures in the near future.
All this should help facilitate multilateral trade throughout the Asia-Pacific region. For example, it was recently suggested that RCEP could make it much easier for China's neighbors, such as Vietnam, to export manufactured goods throughout the region. This would enable firms to import raw materials such as cloth and take advantage of tax incentives when exporting finished products.
Japanese commentators have also noted the advancement of the RCEP will lead to better integration, which could help counter some of the protectionist moves that have been seen as a result of the Covid-19 pandemic. At the same time, however, it is expected to increase China's influence in the region, especially with the absence of other large economies like India and the US.
Writing for Nippon.com, professor at Kanagawa University Oba Mie said: "There is no denying that the RCEP, as an agreement aimed at facilitating the development of cross-border supply chains, is likely to augment the gravitational pull of the Chinese economy, which has benefited so much from such supply chains."
However, she also noted that by joining RCEP, China is committed to following international rules for investment and intellectual property rights for the first time, which is a significant step forward.
Paving the way to full implementation
China's ratification of the agreement three months ahead of schedule may also be seen as an effort to demonstrate the country is engaged with multilateral deals and keen to encourage positive training relationships.
Beijing has made it clear that it wants to see the RCEP fully implemented by the start of 2022, and is urging other participants to speed up their own ratification processes. In order to take effect, nine of the 15 signatories to the deal will need to formally ratify the agreement, including six ASEAN members and three non-ASEAN countries.
Wang Shouwen, China’s vice commerce minister, said at a news conference: "China has taken the lead in ratifying the RCEP, underscoring the great importance and full support from the Chinese government for the early implementation of the deal."
However, tensions remain high between several nations within the group. As well as the ongoing trade dispute between China and Australia, a recent joint statement by Japan and the US warned that China's behavior "presents political, economic, military, and technological challenges" for the international community, which drew a swift rebuke from Beijing.
Therefore, ratification by Japan will be a major next step for the RCEP, according to Tian Yun, vice director of the Beijing Economic Operation Association. He told the Global Times the deal is now at a "critical phase", especially given political instability in Myanmar, which has also signed up to the deal.
"China is setting itself as an example to encourage other countries to follow suit, and to ensure them that the political uncertainties will not be an impediment to the deal," Mr Tian said.