The role of RCEP in economic recovery of the region

February 17, 2022 | 10:22
In 2020, 10 ASEAN countries and five partner countries officially signed the Regional Comprehensive Economic Partnership (RCEP), marking a milestone after eight years of negotiations.
The role of RCEP in economic recovery of the region
Pham Duy Khuong - Managing director, ASL Law

The agreement is expected to bring positive effects and significantly support small- and medium-sized enterprises (SMEs) in Vietnam. Since then, the signing and implementation of the RCEP are expected to play an important role in supporting the recovery of the regional economy after the pandemic.

The RCEP does not cover as many issues as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and it does not have regulations on labour, environmental standards, or issues about state-owned enterprises. However, the agreement is expected to bring more benefits to member countries than the benefits brought from the CPTPP, including Vietnam.

The first reason is that Vietnam now has access to the world’s largest free trade area with a market of 2.3 billion people and $26.2 trillion in global output. This accounts for about 30 per cent of the population worldwide and 30 per cent of GDP worldwide. Secondly, regulations on rules of origin for member countries are more flexible than those in the CPTPP. In order to enjoy tax incentives, imported and exported goods in the RCEP area must be wholly obtained or produced in a party as provided in Article 3.3; be produced in a party exclusively from originating materials from one or more of the parties; or produced in a party using non-originating materials, provided the goods satisfy the applicable requirements set out in Annex 3A.

Thanks to this, Vietnam’s exports can increase the ability to meet conditions for enjoying preferential tariffs, thereby increasing exports in the bloc, especially in markets like Japan, South Korea, Australia, and New Zealand. For previous free trade agreements (FTAs), Vietnam often faced many difficulties in meeting the origin requirements to enjoy tariff preferences because the raw materials of Vietnamese enterprises were from foreign countries such as China.

Third is the introduction of a comprehensive approach to the protection and enforcement of intellectual property (IP) rights in the region. In general, the commitment of IP rights in the RCEP is not as challenging as in the CPTPP or the EU-Vietnam FTA (EVFTA). Indeed, it is compulsory for Vietnam to ratify or accede to the following multilateral agreements to which it is not yet party:

- The Paris Convention for the Protection of Industrial Property;

- The Berne Convention for the Protection of Literary and Artistic Works;

- The Patent Cooperation Treaty;

- The WIPO Copyright Treaty (WCT);

- The WIPO Performances and Phonograms Treaty (WPPT); and

- The Marrakesh Treaty to Facilitate Access to Published Works for Persons Who are Blind, Visually Impaired, or Otherwise Print Disabled.

Vietnam will become a member of the WCT and WPPT on a 3-year roadmap and a member of the Marrakesh Treaty according to the 5-year roadmap, which reinforces the protection of copyrights and performance rights of Vietnam.

Compared with the CPTPP and EVFTA, commitments of the RCEP on cooperation and technical assistance in intellectual property issues are more diverse and detailed. In particular, the agreement requires member countries to provide technical assistance to the least developed and newly-joined ASEAN countries of Cambodia, Laos, Myanmar, and Vietnam in the implementation of a number of specific IP commitments of the RCEP.

Moreover, in order to comply with the roadmap to implement the commitments to join the IP agreements to which Vietnam is not a member, the RCEP also requires members to assist Vietnam in providing expertise in acceding to the WCT and WPPT, as well as the Treaty of Marrakesh.

Instead of putting pressure to upgrade the system of protection and enforcement of intellectual property rights for members reaches a new level, requiring members to trade benefits, IP in the RCEP is built according to the regime based on the existing IP foundation, level, and superstructure of member countries. Therefore, the commitments in the RCEP are not a serious challenge for Vietnam because it has been and continues to internalise commitments in new-generation FTAs.

E-commerce is also an important issue that member countries exchange info on and include in many commitments to facilitate and ensure safety and promote cross-border e-commerce. Among them, data regulations have emerged as an important issue that forces Vietnam to carefully consider and evaluate to supplement and amend these legal regulations into Vietnamese law.

According to the Law on Cybersecurity, domestic and foreign enterprises that collect, exploit, analyse, and process data about personal information, and data on the relationship of service and users that are created by service users in Vietnam, must store this data in Vietnam for the time prescribed by the government.

However, the RCEP does not require foreign service providers to use or place a server or data storage device in the host country’s territory as a condition for conducting business in its territory except for the performance of public policy or for the protection of essential security interests.

This regulation will be applied to Vietnam after five years, so now Vietnam needs to come up with an appropriate policy and roadmap to amend its legal provisions.

Next, the agreement requires member countries to ensure they do not prevent transfer of electronic data across borders if it is to carry out investment activities between member countries, except for implementation of public policy or protection of essential security interests. This is also a requirement that will take effect in Vietnam after five years and will have a significant impact on the development of a decree on personal data protection in the coming years.

In addition to all that, the commitment of member countries to support SMEs is also a matter of concern to Vietnam. In order to keep such enterprises informed about provisions of the agreement, the RCEP requires member states to establish an information platform that allows the public to access accurate and up-to-date information on the full text of the RCEP; SME-related trade and investment laws and regulations; and additional business-related information useful to SMEs in taking advantage of opportunities from the agreement.

By Pham Duy Khuong

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional