MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

DISSERTATION

IMPACTS OF RCEP ON RICE EXPORT OF VIETNAM

Major: Master of International Trade Policy and Law

Trịnh Thị Tuyết Nhung

Ha Noi - 2016


MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

DISSERTATION

Impacts of RCEP on Rice Export of Vietnam

Major: Master of International Trade Policy and Law

Full Name: Trịnh Thị Tuyết Nhung
SUPERVISOR: Assoc. Prof. Dr. Từ Thúy Anh

Ha Noi - 2016


DECLARATION
I, Trịnh Thị Tuyết Nhung, hereby declare that the work presented herein is the original

work done by me and has not been published or submitted elsewhere to the best of my
knowledge. Any literature date or work done by another and cited within this thesis has
given due acknowledgement and listed in the reference section.
The work was done under the guidance of Assoc. Prof. Dr. Từ Thúy Anh, at the Foreign
Trade University, Hanoi.
Hanoi, 30 November 2016


ACKNOWLEDGEMENTS
I would like to express my deep gratitude to Assoc. Prof. Dr. Từ Thúy Anh , my research
supervisor for her professional guidance, valuable support and useful recommendations
of this research work. My grateful thanks are also extended to Ms. Lê Thanh Thủy and
Ms. Nguyễn Thu Hà for their support to keep my progress on schedule. I would also like
to thank other lectures of MITPL program for their sharing of knowledge that very useful
in my research.
Finally, I wish to thank my family, my friends for their support and encouragement
throughout my study.


1

TABLE OF CONTENTS

TABLE OF CONTENTS ................................................................................................. 1
LIST OF FIGURES.......................................................................................................... 4
LIST OF TABLES ........................................................................................................... 4
LIST OF ABBREVIATIONS .......................................................................................... 5
EXECUTIVE SUMMARY .............................................................................................. 7
INTRODUCTION ............................................................................................................ 9
CHAPTER 1: OVERVIEW ON RCEP AND THEORETICAL FRAMEWORK TO

ASSESS IMPACT OF RCEP ON RICE EXPORT OF VIETNAM ............................. 13
1.1. Overview on RCEP.............................................................................................. 13
1.1.1. The context .................................................................................................... 13
1.1.2. The issues of the RCEP ................................................................................. 15
1.1.2.1. Market accesses issues .......................................................................... 16
1.1.2.2. Other matters in the RCEP .................................................................... 18
1.2. Theoretical framework to assess impact of RCEP on rice export of Vietnam .... 22
1.2.1. Approach ....................................................................................................... 22
1.2.2. The effects of removing tariff on international trade .................................... 22
1.2.3. Research Methods ......................................................................................... 25
1.2.3.1. Partial equilibrium method (SMART model) ....................................... 25
1.2.3.2. Method identifying factors affecting rice production and characteristic
of an industry...................................................................................................... 26
1.2.3.3. Synthesis method, comparison of data .................................................. 27
1.2.3.4. Classification method ............................................................................ 27
1.2.3.5. SWOT analysis method ........................................................................ 27
CHAPTER 2: IMPACT ASSESSMENT OF RCEP ON RICE EXPORT OF
VIETNAM ..................................................................................................................... 29
2.1. Current situation of RCEP rice export market ........................................................ 29
2.1.1. The role of RCEP members with rice export market ....................................... 29


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2.1.1.1 The importers .............................................................................................. 29
2.1.1.2. The exporters .............................................................................................. 30
2.1.2. Trade barriers of six important importers in RCEP area .................................. 31
2.1.3. Situation of Vietnamese rice exports in recent years ....................................... 39
2.1.4. The scale of RCEP members‟ demand with rice export of Vietnam ............... 41
2.2. Impact assessment results of RCEP on rice export of Vietnam.............................. 45

2.2.1. Increasing quantity of Vietnam‟s rice export ................................................... 45
2.2.1.1. China and the Philippines, two largest rice importers ................................ 47
2.2.1.2. Japan and Korea, two most restriction countries........................................ 49
2.2.1.3. Indonesia and Malaysia .............................................................................. 52
2.2.2. The rise of competition in the area ................................................................... 56
2.2.2.1. Rice quality................................................................................................. 60
2.2.2.1.1 Milling rate .......................................................................................... 60
2.2.2.1.2. Diversity of rice types ........................................................................ 61
2.2.2.2. Brand identity ............................................................................................. 64
2.2.2.3. Production ability ....................................................................................... 66
2.2.3. Attract FDI – big challenge .............................................................................. 70
2.2.4. Other factors relevant to impact - assessment of RCEP on rice export of
Vietnam ....................................................................................................................... 76
CHAPTER 3: RECOMMENDATIONS TOWARD RICE EXPORT OF VIETNAM
TO RCEP........................................................................................................................ 78
3.1.Create and improve the brand of Vietnamese rice ............................................... 78
3.2. Improve rice quality ............................................................................................. 82
3.2.1. Choose the rice variety .................................................................................. 82
3.2.2. Make regulations in the process of taking care of rice variety, guidance for
farmers ..................................................................................................................... 84
3.2.3. Improve division of grain production............................................................ 86
3.2.4. Improve science, techniques.......................................................................... 88
3.2.5. Improve land quality, limit the impact of climate change ............................ 89


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3.3. Attract FDI in the rice industry ............................................................................ 90
3.3.1. Make sustainable development strategy for rice industry in long term ........ 90
3.3.2. Create big production area, improve infrastructure in the rice industry. ...... 91

3.3.3. Improve labour quality .................................................................................. 91
3.3.4. Restrict corruption and non-transparency in FDI project. ............................ 92
3.4. Build relevant strategy for each market ............................................................... 93
3.4.1. China and the Philippines .............................................................................. 93
3.4.2. Japan, South Korea ........................................................................................ 94
3.4.3. Indonesia, Malaysia ....................................................................................... 95
4.2.5. Take advantage of the incentives on Vietnam in RCEP ................................... 95
CONCLUSION .............................................................................................................. 96
REFERENCES ............................................................................................................... 98


4

LIST OF FIGURES
Figure 1. Impact of joining RCEP on Vietnam‟s rice export ........................................ 23
Figure 2. Impact of big scale demand on rice export ..................................................... 24
Figure 3. Rice imports from Vietnam to Japan .............................................................. 37
Figure 4. Rice exports of Vietnam in period 2007 – 2015............................................. 39
Figure 5. Vietnamese rice price from Jan-16 to Oct-16 (USD/ton, FOB) ..................... 40
Figure 6. Main exporting markets of Vietnam's rice in 2015 ........................................ 42
Figure 7. Rice import from Vietnam, selected countries ............................................... 43
Figure 8. Rice imports of Malaysia by exporting country in 2015 ................................ 55
Figure 9. Rice export of India, Thailand and Vietnam from 2007 to 2015 ................... 57
Figure 10. Rice (HS 1006): Major global trade flows, 2011–13 (1,000 mt) ................. 58
Figure 11. Rice price of high quality rice (5% rice broken) .......................................... 63
Figure 12. Rice price of low quality rice ....................................................................... 64
Figure 13. Yield of rice production, selected countries, 2015 ....................................... 68
Figure 14. Rice production area of Vietnam .................................................................. 73
Figure 15. Rice production area of Thailand ................................................................. 74


LIST OF TABLES
Table 1. Tariff elimination coverage by country under some ASEAN+1 FTA (%) ..... 17
Table 2. Ranking of RCEP members as rice importer on Global rice importer ............ 29
Table 3. Top ten rice exporters in the world, 2015 ........................................................ 31
Table 4. Tariff on rice import, selected countries .......................................................... 33
Table 5. Non-tariff barriers, selected countries.............................................................. 34
Table 6. Matrix level of restriction ................................................................................ 38
Table 7. The rice export changes of Vietnam due to RCEP .......................................... 45
Table 8. Rice exports from RCEP members to China change due to RCEP ................. 47
Table 9. Rice exports from RCEP members to the Philippines change due to RCEP ... 48


5

Table 10. Rice exports from RCEP members to Japan change due to RCEP ............... 49
Table 11. Rice exports from RCEP members to Korea changes due to RCEP ............. 50
Table 12. Rice exports from RCEP members to Indonesia change due to RCEP ......... 52
Table 13. Rice exports from RCEP members to Malaysia change due to RCEP .......... 53
Table 15. Milling rate, selected countries ...................................................................... 60
Table 16. Milling Rate, selected countries, period 2006 - 2015 .................................... 61
Table 17. Export price quotes ........................................................................................ 61
Table 18. Area Harvested of India, Thailand and Vietnam ........................................... 66
Table 19. Rough Production, selected countries, 2015 .................................................. 69
Table 20. Milled Production, selected countries, 2015 .................................................. 69
Table 21. Top five foreign investors of Vietnam ........................................................... 70
Table 22. Foreign direct investment projects licensed by kinds of economic activity .. 71
Table 23. SWOT analysis .............................................................................................. 75

LIST OF ABBREVIATIONS
AANZFTA


ASEAN-Australia-New Zealand Free Trade Area Agreement

ACFTA

ASEAN-China Free Trade Area

AITIG

ASEAN-India Trade in Goods Agreement

AJCEP

ASEAN-Japan Comprehensive Economic Partnership agreement

AKFTA

ASEAN-Korea Free Trade Area

ASEAN

Association of South East Asian Nations

COMTRADE

Statistics about trade of United Nations

ERS

Economic Research Service


EU

European Union

FAO

Food and Agriculture Organization


6

FTA

Free Trade Agreement

GDP

Gross Domestic Product

MUTRAP

European Trade Policy and Investment Support Project

PSD online

Production, Supply and Distribution Online

RCEP


Regional Comprehensive Economic Partnership

RCEP area

The area includes countries participate RCEP

ROO

Rules of Origin

SMART

Software for Market Analysis and Restrictions on Trade

SPS

Sanitary and Phytosanitary Measures

SWOT

Strengths, Weaknesses, Opportunities and Threats

TBT

Technical Barriers to Trade

TPP

Trans-Pacific Partnership


TRAINS

Trade Analysis and Information System

U.S

The United States of America

USD

US dollar

USDA

United States Department of Agriculture

USITC

United States International Trade Commission

WITS

World Integrated Trade Solution

WTO

World Trade Organization


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EXECUTIVE SUMMARY
RCEP (Regional Comprehensive Economic Partnership) is a framework for free
trade negotiations which were initiated by

the ten members of Association of

Southeast Asian Nations (ASEAN10) (Vietnam, Laos, Cambodia, Thailand, Myanmar,
Malaysia, Singapore, Indonesia, the Philippines and Brunei) and the six nations with
which ASEAN has existing bilateral FTAs (China, Japan, South Korea, India, Australia
and New Zealand). RCEP is one of the most FTAs of Vietnam in the future. This study
serves 2 goals: Firstly, the study evaluated the effects of the RCEP on Vietnam's rice
exports; secondly, this study provides some recommendations to the Government of
Vietnam to best preparation to deal with the impact of the RCEP for Vietnam's rice
exports. Due to these goals, research approaches of this study in view of Vietnam as a
rice exporter. RCEP impacts‟ evaluation based on the benefits and risks it brings to
Vietnamese rice exports. To assess the impact of the RCEP on rice export of Vietnam,
this study used a combination of methods, including partial equilibrium method (use
SMART model); method identifying factors affecting rice production and characteristic
of an industry; synthetic method, comparison of data; classification method, SWOT
analysis method. RCEP is still in negotiating the process, so it will be difficult to
predict the result. This research based on the assumption of the author in case of best
scenario. This research focuses on six important partners of Vietnamese rice exports in
RCEP area, includes China, the Philippines, Japan, South Korea, Malaysia, and
Indonesia. RCEP area is the most important market for rice exports of Vietnam. It
accounts for more than a half of total Vietnamese rice exports. The restriction on rice
imports of countries in this area is different. The most restricted level countries are
Japan and South Korea, be followed by China and Philippines; the lowest restricted
level countries are Malaysia and Indonesia. However, in general, all countries have
strong protection for the domestic rice industry. Because of this context, there are three

main impacts of the RCEP on rice exports of Vietnam that are: (i) increasing rice
export quantities and expand new market; (ii) increasing the competition in RCEP area;


8

(iii) increasing FDI inflow rice industry. However, the Vietnamese rice industry has
many weaknesses, such as no brand, low quality, and unconformity policies. It leads to
many difficulties of Vietnamese rice in use positive impacts and restricts negative
impacts which are brought by RCEP. To deal with this problem, some
recommendations for the Government of Vietnam are: (i) to create and promote brand;
(ii) to improve rice quality; (iii) to change policies to attract FDI; (iv) to plan a separate
strategy for each market; (v) to take advantage of the incentives on Vietnam in RCEP.


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INTRODUCTION
1. The importance of Research
In the trend of globalization, Vietnam is increasingly involved in many free trade
agreements, including RCEP. Being a multilateral agreement in the Asia - Pacific,
RCEP has many impacts, both positive and negative on the economy of Vietnam,
including the rice industry. Rice has been Vietnam's export industry for decades and
has a great contribution to the economy. Moreover, rice is one of domestic resources,
so the development of this industry will increase the Vietnamese economic strength.
Asia - Pacific region is the main exported market for Vietnamese rice for many years,
so the fluctuations in this market have a strong influence on Vietnam's rice exports.
For these reasons above, there is necessary to assess the impact of the RCEP on
Vietnam's rice exports, thereby reasonable solutions should be recommended to deal
with the changes which are bought by this agreement better.

2. Research questions
The research questions for this study were:
- Does RCEP bring benefit for Vietnamese rice export?
- Which challenges does Rice export of Vietnam have to face when RCEP is effective?
- How can Vietnamese Government deal with these problems?
3. Research subjects
Research subjects of this study are RCEP and rice export of Vietnam.
4. Goals of the study
This study serves 2 goals:
First of all, this study evaluated the effects of the RCEP on Vietnam's rice export.
In addition to assessing rice exports as a normal economic sector, the study also paid a


10

special attention to the specific characteristics of the rice industry for the most
comprehensive and accurate assessment.
Secondly, this study provided some recommendations to the government of
Vietnam to have the best preparation for the impact of the RCEP for Vietnam's rice
exports. With the scope and extent of the RCEP, the impact of this agreement on
Vietnam's rice exports are great including the opportunities and challenges, so it is
needed to prepare as much as possible.
5. Scope of Research
This study focuses only on impact assessment of RCEP on the rice export of
Vietnam. Research is mentioned on the macro level of Vietnamese rice export rather
study the microscope for each enterprise.
6. Research Methodology
This study used a combination of methods, including partial equilibrium method
(use SMART model); method identifying factors affecting rice production and
characteristic of an industry; synthetic method, comparison of data; classification

method; SWOT analysis method.
7. Research Assumptions
RCEP is in negotiation process, the results of this agreement are difficult to
predict. In this research, with the assumption RCEP will be negotiated successfully
with the best results, the authors assume that all RCEP members will reduce tariffs on
importing rice to zero percent. This assumption is also used to run the SMART model,
particularly, the tariff before RCEP is applied tariff, the new tariff after RCEP is zero
percent for all countries.
8. Literature review
MUTRAP (2015), Assessing the Impacts of the Regional Comprehensive
Economic Partnership on Vietnam’s Economy


11

MUTRAP (2015) examined the effect of Regional Comprehensive Economic
Partnership on Vietnam‟s Economy. In this research, authors assessed the impacts of
RCEP on whole Vietnam‟s Economy by using sectoral analysis. This research
performed useful knowledge about context of RCEP, RCEP‟s issues and its impacts on
economy sectors, including Agricultural, forestry and fishery sector.
Từ Thúy Anh, Lê Minh Ngọc (2015), Challenges for Vietnam in ASEAN+6
integrations: A sectoral analysis, Journal of Economics and Development, 212, page 212
In this research, authors examined the impacts of RCEP on specific sectors by
using partial equilibrium method (SMART model). This research introduced a useful
method to assess the impacts of an FTA on specific economic sector. It also spent
attention on challenges for Vietnam due to RCEP.
MUTRAP (2010), Impact assessment of free trade agreement on Vietnam’s
economy
This study identified the impact and efficiency of several FTAs, especially
ASEAN-Korea, ASEAN-India, ASEAN-Australia New Zealand and AFTA on

Vietnam‟s economy. In this research, authors used some modeling to assess these
impacts: Computable General Equilibrium model, Gravity model, SMART model.
Fukunaga, Isono (2013), Taking ASEAN+1 FTAs towards the RCEP: A Mapping
Study
In this research, authors focused on ASEAN+1 FTAs to identify the opportunities
and challenges for RCEP. This research proposed some recommendations for RCEP
negotiation process: tariff elimination up to 95%, clearly regulation about tariff
barriers, general provision of RoO.
Hà Văn Hội (2015), Joining TPP: Opportunities and Challenges for Rice export
of Vietnam, VNU Journal of Science: Economics and Business, 31, page 1-10


12

Hà Văn Hội (2015) focused on the impacts of TPP on Rice export of Vietnam. In
this research, authors shown prediction about positive and negative impacts of TPP on
Vietnamese rice export. This research stated that TPP will bring opportunities to
increase rice export for Vietnam due to reducing tariff. However, Vietnam has to face
with competition from Thailand and India. The weakness of Vietnamese rice in
international trade is low quality.
Nguyễn Thị Lan Anh (2014), The impacts of ASEAN Free Trade Agreement on
Vietnam’s rice sector
This research examined the impacts of ASEAN Free Trade Agreement (AFTA)
on regional production, consumption, trade, and prices for agricultural and processed
food. This study found that AFTA increase small quantity of Vietnam‟s rice production
and export. This study also found that trade creation outweighs trade diversion in some
manufacturing sectors.

.



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CHAPTER 1: OVERVIEW ON RCEP AND THEORETICAL FRAMEWORK
TO ASSESS IMPACT OF RCEP ON RICE EXPORT OF VIETNAM
1.1. Overview on RCEP
1.1.1. The context
Compared to Western Europe and North America, East Asia still considered as
the slow development about the economic linkage in the area. In the deadlock of the
Doha round, bilateral agreements still are a mainstream trend in East Asian trading
system. From the 2000s, East Asian Government, have signed dozens of agreements of
bilateral free trade agreements, however, much agreements are often not appreciated
for the quality. The FTAs are decided based on the elements of geopolitics and not
merely economic aims. Most FTAs in East Asia often ignore the "sensitive" issues and
the bilateral FTAs disjointed, overlapping impacts negatively on regional economic
integration. In the context of bilateral mechanisms also revealed many limitations as
such, many countries in East Asia try to join in the multilateral cooperation.
RCEP (Regional Comprehensive Economic Partnership) is a framework for free
trade negotiations that were initiated by the ten members of The Association of
Southeast Asian Nations (ASEAN10) (Vietnam, Laos, Cambodia, Thailand, Myanmar,
Malaysia, Singapore, Indonesia, the Philippines and Brunei) and the six nations with
which ASEAN has existing bilateral FTAs. They are China, Japan, South Korea, India,
Australia and New Zealand. About RCEP, scale has a total population of about 3.4
billion people (nearly half of the world population), with a combined GDP of about
US$ 17.23 trillion, which is about a third of the world‟s (Singapore 2014). RCEP
officially launches, talks in the margins of the East Asia Summit in Phnom Penh,
Cambodia on 20 November 2012, based on fundamental principles is to expand and
promote the commitment of ten ASEAN countries with free trade partners. The goal of
the RCEP is the integration of the different FTA that ASEAN signed with Japan, South
Korea, Australia, New Zealand, India and China (ASEAN + 1 FTAS) into a

comprehensive agreement to maximize the benefits.


14

RCEP is an FTA that is led by the ASEAN; link the economies of the 16
countries in the Asia-Pacific region. According to the evaluation of international
economic experts, RCEP establishment will reduce the dependence of the Asia-Pacific
on the Western markets that are in trouble.
Currently in the Asia-Pacific region, in addition to RCEP is also a multilateral
agreement known as Trans-Pacific Partnership (TPP) – a multilateral agreement in the
area with 12 members by the leader is the United States (cover 7 members are also
located in both agreements include as follows: Australia, Japan, Malaysia, New
Zealand, Vietnam, Singapore and Brunei). TPP is called an "FTA of the 21st century".
However, the 21st century is also seen as the "Asian century". So, it reasonable to call
an FTA covering Asian area as is an FTA of the 21st century. While TPP requires all
members to participate in liberalization in the trade as a developed country, the RCEP
is a multilateral agreement to reach each package class. Although it may be less
integrated, RCEP will be much higher flexibility compared to the TPP. Also note
further, TPP without the participation of China and India, the two the largest
population countries in the region with the very high growth rate. In other words,
RCEP is the only playground in areas of these two countries. Besides, with the
participation of China, the most powerful country in Asia, a big partner of many
countries, RCEP will be an important agreement in the region.
In addition, the new President of the United States, Mr. Donald Trump has always
strongly opposed to the TPP agreements during the election. Thus, despite being signed
on 04/02/2016, the efficiency of the future activities of the TPP is difficult to answer
because the U.S is the leading factor of TPP. The influence of the change in U.S.
politics might lead to the positive impact of the TPP will be limited. In this context,
RCEP will become the multilateral trade agreements which are most important in the

area and have a high likelihood of success by RCEP the success which was led by the
central factor is ASEAN.


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1.1.2. The issues of the RCEP
RCEP negotiation will be guide by the 8 following principles:
The RCEP will be consistent with WTO; will have broader and deeper
engagement with significant improvements over the existing

ASEAN +1 FTAs;

facilitate trade and investment and to enhance transparency in trade and investment;
support developing countries; the FTAs between and among participating countries
will continue to exist; an open accession clause to enable the new participation;
economy and techniques cooperation; negotiations on trade in goods, trade in services,
investment and other areas will be conducted in parallel. Cover 8 areas: trade in goods,
trade in services, investment, economic and technical cooperation, intellectual
property, competition, dispute settlement and other issues.
Box 1: Guiding Principles for Negotiating the Regional Comprehensive Economic
Partnership
RCEP negotiations will be guided by the following principles:
1. The RCEP will be consistent with the WTO, including GATT Article XXIV and
GATS Article V.
2. The RCEP will have broader and deeper engagement with significant improvements
over the existing ASEAN+1 FTAs while recognizing the individual and diverse
circumstances of the participating countries.
3. The RCEP will include provisions to facilitate trade and investment and to enhance
transparency in trade and investment relations between the participating countries, as

well as to facilitate the participating countries‟ engagement in global and regional
supply chains.
4. Taking into consideration the different levels of development of the participating
countries, the RCEP will include appropriate forms of flexibility including provision
for special and differential treatment, plus additional flexibility to the least-developed


16

ASEAN Member States, consistent with the existing ASEAN+1 FTAs, as applicable.
5. The ASEAN+1 FTAs and the bilateral/ plurilateral FTAs between and among
participating countries will continue to exist and no provision in the RCEP agreement
will detract from the terms and conditions in these bilateral/ plurilateral FTAs between
and among the participating countries.
6. Any ASEAN FTA Partner that did not participate in the RCEP negotiations at the
outset would be allowed to join the negotiations, subject to terms and conditions that
would be agreed with all other participating countries. The RCEP agreement will also
have an open accession clause to enable the participation of any ASEAN FTA partner
that did not participate in the RCEP negotiations and any other external economic
partners after the completion of the RCEP negotiations.
7. Provisions for technical assistance and capacity building may be made available,
building upon the ASEAN+1 FTAs, to the developing and least-developed countries
participating in the RCEP to enable all parties to fully participate in the negotiations,
implement obligations under the RCEP and enjoy the benefits from the RCEP.
8. The negotiations on trade in goods, trade in services, investment and other areas
will be conducted in parallel to ensure a comprehensive and balanced outcome.
Source: (Guiding Principles and Objectives for Negotiating the RCEP 2012)
1.1.2.1. Market accesses issues
Tariff reductions
The first goal of the RCEP is reducing and eliminating tariffs and non-tariff

barriers for all trade goods in order to establish a free trade area among the countries
participating RCEP.
However, this issue will also face with much difficulty. Firstly, countries have
different tariff elimination for each FTA. Although in the same FTA, the tariff


17

elimination of different countries also differs. Addition to that, the use of non-tariff
barriers is very popular in all countries, especially for the sensitive product.
Table 1 shows the tariff elimination coverage by countries under ASEAN + 1
FTAs. Almost countries have different tariff elimination for each FTA (except
Singapore). For example, Vietnam has tariff elimination that applies for AANZFTA is
94.8%, but the tariff elimination in AIFTA just 79.5%. In addition, in the same FTA,
each country has a different tariff elimination. For instance, in AJCEP the tariff
elimination of Vietnam is 94.4%, while the tariff elimination of Thailand is 96.8%, of
Myanmar just only is 85.2%.
Table 1. Tariff elimination coverage by country under some ASEAN+1 FTA (%)
AANZFTA

ACFTA

AIFTA

AJCEP

AKFTA

Average


BRN

99.2

98.3

85.3

97.7

99.2

95.9

CAM

89.1

89.9

88.4

85.7

97.1

90.0

IND


93.7

92.3

48.7

91.2

91.2

83.4

LAO

91.9

97.6

80.1

86.9

90.0

89.3

MLS

97.4


93.4

79.8

94.1

95.5

92.0

MYA

88.1

94.5

76.6

85.2

92.2

87.3

PHI

95.1

93.0


80.9

97.4

99.0

93.1

SGP

100.0

100.0

100.0

100.0

100.0

100.0

THA

98.9

93.5

78.1


96.8

95.6

92.6

VNM

94.8

n.a

79.5

94.4

89.4

89.5

AUS

100.0

CHN

94.1

IND


78.8

JPN

91.9

KOR
NZA

90.5
100.0

Source: (MUTRAP 2015)


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Rules of origin (ROO) of goods is a very important factor to decide the
application of tariff reduction with aim to avoid the trade deflection. ROO in the RCEP
towards rules of origin of goods is simple and easy to apply to all the Member States.
1.1.2.2. Other matters in the RCEP
Economic and technical cooperation
The aim of economic and technical cooperation is to reduce the development gap
between countries that participated in RCEP, enhance the benefits of the RCEP for
each member. Among the countries that join RCEP have a huge gap of development,
there are the developed countries such as Japan, Singapore, Australia; besides that
there are many countries still underdeveloped as Laos, Cambodia, and Vietnam.
Therefore, to the least developed countries have the opportunity to fully participate in
and also receive benefits from the RCEP, the negotiators have set out economic and
technical cooperation issues when negotiating this agreement. Economic, technical

cooperation is not a subsidy, but that is a form of support in terms of the technology to
help the least developed countries to catch up the level of other countries that joined
the RCEP.
Intellectual property
The purpose of the negotiation of this problem is to reduce the trade and
investment barriers related to intellectual property by the implement, protection and
enforcement of intellectual property rights. The developed countries involved in RCEP
have many goods with high intelligence. So, the intellectual property rights are one of
the top priorities. However, with many members have lower development level, should
have cleared the provisions which related to intellectual property in order to guarantee
the rights of the involved parties. At the same time, this provision will also restrict the
use of the national intellectual property rights as a trade barrier.


19

Competition
The purpose of this provision is to enhance competition, increase economic
efficiency and consumer welfare; to avoid the anti - competition actions. RCEP will
focus on two main issues are the SOEs and Government procurement. The State-owned
enterprises usually have many advantages on the market and being received more
subsidies by the Government, especially in sensitive areas such as agriculture, energy.
To avoid the anti - competition actions between enterprises, RCEP towards setting out
clear regulations on the operation of SOEs limited exclusively and subsidies from the
Government. In addition, transparency in government procurement is also an issue that
RCEP wants to achieve. However, it will be very difficult to negotiate this.
Dispute settlement
RCEP towards the goal is efficiency, performable, and transparency of the
mechanism of consultation and dispute settlement. Today, countries still use the
dispute settlement mechanism of WTO. However, in the future, RCEP may set out

specific and more complicated dispute settlement mechanisms to achieve this
objective.
Issues and other challenges
The problems that RCEP have to face within the process of negotiating the RCEP
are:
Firstly, the ASEAN + 1 Agreements are diverse.
As mentioned above, the RCEP was developed based on the ASEAN + 1
Agreements. However, the agreements have many differences in the content, the
schedule to complete. Therefore, to combine these agreements into a general agreement
would be very complicated, requiring a lot of effort from the parties of RCEP.


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The second, the countries join RCEP have a different developmental level and
benefit expected from this agreement is also very different.
This is a huge challenge for the negotiators to harmonize the benefit of the parties
with the RCEP. At the same time, to ensure the countries with different developmental
levels can fully participate in this agreement, it is also other difficulty.
Third, the sensitive goods
The country has its list of sensitive goods and the difference among countries is
very big. For example, rice has a very high level of protection in some countries such
as Japan, South Korea, but the rice exporting countries like Thailand, Vietnam has an
expectation of an open market for this commodity. This is also a difficulty in achieving
the goals of the RCEP.
The fifteenth negotiation round of RCEP was held in Tianjin, China from October
9 to October 21, 2016. According to the opinion of the negotiators is the agreement
will definitely be complete but not in 2016. The senior leadership‟s hope the
negotiation can end soon, but this agreement will require significant investments of
time and resources to complete. Currently, the negotiators had stuck with the rules, the

text and commitment in a variety of areas such as development and technical support,
e-commerce,

goods,

services,

investment,

intellectual

property

rights,

telecommunications, financial services, rules of origin, legal and institutional, and trade
facilitation. There is also the discussion of trade protection and Government
procurement.
The complete liberalization would actually be a big success for most of the RCEP
economy. This agreement creates much flexibility, in particular with the least
developed countries and brings the policy space for members.
The agreement will be significantly enhanced if the negotiating process is
improved in the direction allows the enterprise to participate and comment. However,


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the media still miss or incomplete. It leads to the Governments have to draft business
rules in many cases without input information practices or business experience. For
example, how an officer can know the ingredients of milk? How much active

transaction is if the tax or license or standards or different investment rules? Rules of
origin would be most useful for people making milk in RCEP? The same question was
also posed with the goods or services. In most cases, the negotiators must give conform
answers. However, just because a country has implemented the agreement in the past
does not mean that the situation also occurs with similar enterprises in the RCEP.
Although it has undergone fifteen negotiating rounds, many negotiators in RCEP
also concerned the expansion of the round with the parties concerned. The parties
concerned not to participate in negotiations, but they have a lot of valuable
information. This is very important and should be encouraged whenever and wherever
possible. Expected at the next negotiating round in December 2016 in Jakarta
(Indonesia), there may be the other official activities or operations on the sidelines for
the parties involved but also very limited. Instead the process for providing information
according to the legal regulations with many steps; the parties may send information
directly to the negotiators and officials through the electronic portal be identified
clearly, mainstream. Second, the RCEP officials must cooperate better with the media.
The ending result of the negotiations, RCEP will impact approximately 3 billion people
in 16 countries in East Asia, should be required to provide information and regular
updates.