Certificate of origin of goods under RCEP regulations is valid for one year

“RCEP is going to take effect by the end of this year”, says a source from the Ministry of Industry and Trade (MoIT). The trade pact was officially signed on 15 November 2020 by the ASEAN and 5 partners including Australia, China, Japan, South Korea and New Zealand, after 8 years of negotiations.

It was conceived by ASEAN at the 2011 summit in Indonesia and launched negotiations after one year. It is designed to eliminate about 92% of tariffs on imports between its signatories within 20 years of coming into force.

It is also expected to establish common rules for e-commerce, trade, and intellectual property. The unified rules of origin will help facilitate international supply chains and reduce export cost and time for traders throughout the blocwithout regarding any specific request of any country.

The 15 RCEP’s member countries account for about 30% of the world’s population (2.2 billion people) and 30% of global GDP (US$ 26.2 trillion) as of 2020, making it the biggest trade bloc in history. The RCEP is hoped to convey a positive message forward a multilateral trade system.

And when taking effect, the RCEP will play a very important role in regional economic recovery after the Covid-19 pandemic.

To implement regulations, MoIT has drafted the Circular stipulating the Rules of Origin of goods in the RCEP.

The draft clarifies certificate of origin (C/O) is issued by designated agency of the exporting member country based on proposal papers of the exporter, producer or agent of the exporter,producer.

The exporter, producer or representative of the exporter or producer submits an application for a C/O in writing or electronically to the issuing organization of the exporting member country in accordance with the regulations, domestic law of the exporting member country.

The C/O must: a) have a common form agreed upon by the member countries; b) have a specific reference number; c) written in English; d) bearing the signature and seal of the issuing organization of the exporting member country. Signatures and seals can be manual or electronic.

The C/O is valid for one year since the date issued.

Regarding the inspection and verification of the origin of goods, the draft stipulates the competent authority of the importing member country may conduct the inspection and verification by the following methods:

a) send a letter of request for additional information from the importer;

b) send a letter request for additional information from the exporter or producer;

c) send a letter request for additional information to the issuing organization or the competent authority of the exporting member country;

d) physical inspection of the exporter's or manufacturer's production facility in the exporting member country by observing the production of the product and checking any documents proving the origin of the goods include accounting data;

e) any mechanism agreed upon by the member country.

The customs authority of the importing member country may suspend the granting of preferential tariff pending the results of the verification. The importing member country will allow the clearance of goods but may require that the clearance be carried out in accordance with its domestic law.

According to a 2020 projection by Peter Petri and Michael Plummer of the Brookings Institution, the trade pact is expected to enlarge the global economy by US$ 186 billion. Another forecast estimates the agreement could add US$ 209 billion annually to world income, and $500 billion to world trade by 2030, and that “new agreements will make the economies of North and Southeast Asia more efficient, linking their strengths in technology, manufacturing, agriculture, and natural resources.”

According to the Asian Development Bank (ADB), the RCEP is “relatively comprehensive in coverage” and combines existing deals, which brings Asia a step closer to a region-wide trading bloc.

The agreement further liberalizes goods and services trade, establishes common rules of origin for all goods traded, establishes commitments regarding government procurement, and aims to establish open and competitive markets.

Though the degree of liberalization within RCEP is not as deep as in theComprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), RCEP members are projected to gain $174 billion in real income by 2030, equivalent to 0.4% of the members' aggregate GDP.

China, Korea and Japan will benefit the most, with likely gains of $85 billion for China, $48 billion for Japan, and $23 billion for Korea. Other significant RCEP gains will accrue to Indonesia, Malaysia, Thailand, and Vietnam.

Due to their RCEP membership, Japan and Korea would accrue gains amounting to 1% of their GDP while Malaysia, Thailand, Vietnam and Brunei would all accrue gains of 0.5% of GDP or higher.