ASEAN is no stranger to trade deals, having inked its first regional trade deal with China in 2002. It has similar standalone “Plus One” free trade agreements (FTAs) with Australia, India, Japan, Republic of Korea and New Zealand, which have collectively created a “spaghetti bowl” effect where ASEAN businesses grapples with different tariff rates and multiple rules-of-origin (ROO) provisions when trading with these countries.
RCEP would minimise these complex structural barriers by streamlining rules and procedures related to customs and trade-related infrastructure. In practical terms, ASEAN businesses would follow one set of procedures instead of having to navigate through five different sets of rules when trading with its RCEP partners. This would inevitably lead to greater ease of doing business in the region and increase ASEAN’s attractiveness as a trade and investment destination.