August 5, 2021
Regional Comprehensive Economic Partnership (RCEP)
The Regional Comprehensive Economic Partnership
RCEP is the world’s largest regional trade agreement by
(RCEP) is a trade agreement, signed in late 2020 after eight
several metrics (Figure 2). Its envisioned economic
years of talks, among the ten members of the Association of
footprint was even larger before India withdrew in 2019
Southeast Asian Nations (ASEAN)—Brunei, Burma
over various concerns, including reportedly competition
(Myanmar), Cambodia, Indonesia, Laos, Malaysia, the
with China. RCEP accession procedures are not restricted
Philippines, Singapore, Thailand, and Vietnam, and five
by geography, and offer an expedited process for India.
ASEAN free trade agreement (FTA) partners—Australia,
Figure 2. Economic Indicators of Major Trade Deals
China, Japan, New Zealand, and South Korea. RCEP is to
enter into force 60 days after ratification by six ASEAN and
three non-ASEAN countries. Members aim for entry into
force in early 2022; to date, China, Japan, Singapore, and
Thailand have ratified the deal.
RCEP follows the recent entry into force of “mega-
regional” trade deals, including the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership
(CPTPP or TPP-11), which includes seven RCEP members
and four countries in the Americas (Figure 1). Although

overall RCEP has less extensive commitments than other
Source: CRS with data from World Bank and WTO.
recent trade agreements (e.g., CPTPP or the U.S.-Mexico-
Notes: CPTPP and RCEP include 7 overlapping members; EU-Japan
Canada Agreement), many analysts view RCEP as an
trade does not include intra-EU trade.
achievement for the multilateral trading system, which
RCEP’s 20
faces myriad challenges. The collective economic weight of
chapters cover trade in goods and services,
its membership gives RCEP the potential to deepen some
investment, government procurement, standards and
trade patterns and supply chains in Asia through lower trade
technical regulations, intellectual property rights (IPR), e-
costs and streamlined rules. Congress may consider how
commerce, and other issues. Several chapters are new to
RCEP affects U.S. commercial and strategic interests, and
ASEAN FTAs. RCEP is considered a “living agreement,”
if it affects the relevance of the United States in shaping
with a built-in agenda for further talks in various areas.
trade rules and economic integration in Asia and globally.
RCEP has a complex tariff schedule. The parties agree to
Figure 1. Asia-Pacific Members of Regional FTAs
reduce or eliminate tariffs by approximately 92% over 20
years, with eliminated tariffs/quotas covering over 65% of
goods traded. There are sizable carveouts in certain sectors,
such as agriculture in the case of Japan. Due to existing
FTAs, tariff reductions are not necessarily substantial for all
of the parties. In services, while seven members agreed to a
“negative list” approach that restricts only those sectors
listed explicitly, eight members (including China)
negotiated to keep a “positive list” approach that only
liberalizes the sectors they list in the agreement—these
countries committed to transition to a negative list within
six years. Some estimates suggest that at least 65% of

services sectors will be fully open, with advanced market
Source: Created by CRS.
access in professional, financial, telecommunications,
History and Scope
computer, and logistics services. These and other provisions
go beyond some other ASEAN FTAs, such as investment
RCEP negotiations began in 2012 as an ASEAN initiative
protections prohibiting more extensive performance
with the stated goal of harmonizing and building on
existing “ASEAN+1” FTAs with regional partners.
requirements than previous commitments (e.g., technology
While
transfer as a condition of market access). RCEP does not
RCEP was conceived by ASEAN, which has long sought to
include investor-state dispute settlement (ISDS), though
create a common trading and manufacturing base, China
parties commit to review its inclusion within five years.
actively shaped the negotiations and views RCEP as a
“victory of multilateralism and free trade.” It marks the first
In e-commerce, members commit not to impose customs
trade deal among some participating economies with China.
duties on electronic transmissions. General obligations to
It is an important first for Japan with both China and South
prevent data localization requirements or cross-border data
Korea, despite a now-stalled attempt at trilateral trade talks.
transfers are subject to broad exceptions for national
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Regional Comprehensive Economic Partnership (RCEP)
security and public policy reasons. The e-commerce
potentially influence some of China’s economic practices of
chapter, like some others, is not subject to general dispute
concern, such as the role of state-owned enterprises and IP
settlement. RCEP parties, particularly least developed
protections. In this view, RCEP may limit U.S. economic
countries (Burma, Cambodia, Laos) and ASEAN members
influence by having allowed China to reach an agreement
negotiated “special and differential treatment” that
without these TPP disciplines. Reflecting on RCEP,
largely offers transitional periods for various commitments
President Biden said that the United States must “set the
(e.g., related to e-commerce, trade facilitation, and IPR).
rules of the road instead of having China and others dictate
RCEP in Context
outcomes.” China remains one of the top beneficiaries of
RCEP’s estimated benefits. Chinese firms, in part due to
U.S. withdrawal in 2017 from the TPP negotiations it had
pressure from U.S. tariffs, have reportedly begun shifting
been spearheading, as well as increasing U.S.-China trade
manufacturing to ASEAN countries while maintaining
tensions, renewed interest among many RCEP countries to
sourcing networks in China, a trend that could accelerate
form a regional trade agreement as a potential alternative
under RCEP. At the same time, some countries aim to use
vehicle for developing more open and stable regional trade
RCEP to diversify supply chains from China.
links. Talks progressed slowly, largely due to the disparate
levels of economic development and priorities among
Commercial Interests and Trade Negotiating Strategy.
members. Some analyses characterize the scope of RCEP
RCEP could shift regional trade in ways that affect U.S.
rules and commitments as relatively shallow, and lacking
economic interests and reduce U.S. commercial activity if
on nontariff issues. Others emphasize significant progress
members shift trade to U.S. competitors, and supply chains
compared to previous ASEAN deals, and potential impacts
reorient to capitalize on RCEP tariff reductions and rules of
beyond trade concessions. Many experts view RCEP as
origin. Further, new trade rules in Asia that may not reflect
deepening regional integration, while serving as a “stepping
U.S. negotiating priorities, such as in digital trade, could
stone” for members to join higher-standard FTAs.
disadvantage U.S. competitiveness; though this may be
offset by existing U.S. FTAs with some RCEP partners. At
Many businesses operating in the region view RCEP’s most
the same time, U.S. firms with manufacturing in the region
significant component to be common rules of origin, which
may concentrate some operations further if RCEP rules of
govern how much of a product must be produced within the
origin lower input costs, and benefit from reduced nontariff
region to qualify for tariff benefits. This simplified regime
barriers. In response to the potential that RCEP (and
could facilitate the deepening of regional supply chains by
CPTPP) could disadvantage the United States, some
reducing tariffs on semi-finished goods and inputs across
Members have urged the Administration to develop a U.S.
RCEP members. For context, on average, more than a third
trade strategy for the region, pressing options such as
of all RCEP exports are to other RCEP parties.
CPTPP participation, resuming second-stage trade talks
Main channels of RCEP’s expected impact include some
with Japan, and pursuing a sectoral agreement on digital
reorientation of global linkages toward stronger connections
trade that is reportedly under consideration. The expiration
in East Asia, and helping offset U.S.-China trade frictions.
of Trade Promotion Authority (TPA), in which Congress
A Peterson Institute study estimated RCEP could add up to
sets U.S. trade negotiating objectives and procedures, may
$500 billion in world trade by 2030, with sizable benefits
factor into U.S. approaches in the region.
for China, Japan, and South Korea and export growth
Strategic Interests. Congress may also have interest in
concentrated in electronics, electrical equipment and autos.
monitoring and responding to RCEP’s geopolitical
Comparisons to CPTPP
implications. Many Asian policymakers argue that U.S.
engagement with the region has been largely security-
Congress may have interest in understanding how RCEP
related, and that the United States has not enunciated a
compares to the CPTPP agreement, given the major U.S.
coherent economic strategy since withdrawing from TPP. In
trading partners involved in both and the U.S. original role
this view, the U.S. absence from RCEP and CPTPP has
in negotiating TPP commitments. CPTPP is effectively the
limited its ability to pursue other goals, in part because the
original TPP text with a limited number of changes, such as
U.S. has fewer tools to motivate countries to adopt a more
the suspension of certain provisions on investment and IPR
U.S.-friendly foreign policy outlook. Further, countries that
by the remaining 11 members after U.S. withdrawal. Most
are part of RCEP may have increased their broader
analysts agree that RCEP generally has less extensive
influence in the region; such influence may further shift
commitments than CPTPP, though they both seek to reduce
should other countries, such as the United Kingdom or
trade barriers and establish rules—one comparative analysis
finds 30% of RCEP’
India seek to join. Some observers maintain past trade deals
s text duplicates CPTPP provisions. In
in general have had a limited impact on security-related
terms of market access, CPTPP will eliminate tariffs on a
dynamics. Many also argue that RCEP’s conclusion
greater number of tariff lines (99%) and reduce barriers to
validated ASEAN’s diplomatic approach of seeking
services trade for more sectors. This is in part due to
consensus with its disparate partners. ASEAN officials have
CPTPP’s uniform negative list approach, compared to
RCEP’s hybrid approach
long argued that the group exerts influence as a neutral
. There are also differences in
convener of more powerful countries, and that ASEAN-
rulemaking, with RCEP not covering some CPTPP issues
centric diplomacy can achieve results by “multilateralizing”
that had been advanced by U.S. efforts (e.g., state-owned
issues, as in RCEP, thereby making them less contentious.
enterprises, labor and environmental standards), and
covering other issues, but with less extensive (e.g., IPR) or
Cathleen D. Cimino-Isaacs, Coordinator, Analyst in
enforceable (e.g., investment, digital trade) commitments.
International Trade and Finance
Implications for U.S. Trade Policy
Ben Dolven, Specialist in Asian Affairs
Regional and Global Rules. Some Members of Congress
Michael D. Sutherland, Analyst in International Trade and
saw TPP as a U.S. opportunity to shape trade rules and
Finance
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Regional Comprehensive Economic Partnership (RCEP)

IF11891
Brock R. Williams, Specialist in International Trade and
Finance


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