Regional Comprehensive Economic Partnership Agreement (“RCEP”) is an agreement between ASEAN and 6 partners having Free Trade Agreement with ASEAN (i.e. China, Korea, Japan, India, Australia and New Zealand). After over 7 years of negotiation, 15 members of RCEP (except India) signed RCEP on 15 November 2020.
RCEP with 20 chapters and 4 appendices can make the largest free trade area in the world with GDP scale of nearly USD27,000 billion. RCEP also is expected to promote the economy of Vietnam.
Parallel with others FTA, RCEP creates a framework to simplify customs procedures. Besides, such agreement establishes rules of origin, facilitates trade, and creates spaces for production connections across ASEAN.
When the RCEP comes into effect, Vietnam can increase its export opportunities to 14 Asian member countries. It helps the economy recover from COVID-19 epidemic. RCEP will contribute to creating a new trade structure in the region, promoting globalization towards trade liberalization and facilitation. Therefore, in general, RCEP is important for Vietnam.
The Agreement also creates an environment with highly diverse economies. These include economies with potential investment capital or technology, economies that have a lot of input materials. This is an important premise for the full development of the supply chain, thereby creating a unified production space.
However, Vietnam could face many obstacles. When RCEP comes into effect, competition pressure will increase. Specially, legal matters would occur more often. Ownership rights, intellectual property, and e-commerce are some matters that participators should pay attention. Moreover, fair competition law is also notable for enterprises.
Generally, RCEP opens many opportunities but also poses many challenges. Foreign investors as well as local enterprises should prepare carefully when investing and doing business. In addition, the Vietnamese Government would issue some changes on current regulation to adapt RCEP soon.
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