International Trade Deal Creates the World’s Largest Trading Bloc

On November 15th, fifteen counties joined together to form the Regional Comprehensive Economic Partnership (RCEP).  The trade pact covers nearly one third of the global economy and is made of up of the following Asia - Pacific nations: China, Japan, South Korea, Australia, New Zealand and the 10 Association of Southeast Asian Nations (Asean) member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The agreement is notable as the first free trade agreement between China, Japan, and South Korea. 

While RCEP is not as comprehensive an agreement as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the vast size of the economies under the agreement will have significant impact on global supply chains. The agreement will eliminate various tariffs for a 20-year period for products produced in member countries and, similar to other recent global trade deals, provides protections covering e-commerce, professional services, financial services, intellectual property, telecommunications, and protections for small and medium sized enterprises. Unlike some other agreements, RCEP does not cover unified standards on labor and the environment or commit countries to open vulnerable areas of their economies. Seven nations are members of both RCEP and CPTPP: Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam. 

  The agreement also provides for new rules of origin terms, which allow for easier movement of goods between member counties. Under the various free-trade agreements currently in place, global supply chains could still face tariffs based on their product’s components if produced elsewhere. Under RCEP, parts from any member nation would not be subject to additional tariffs. This could have a significant impact to US organizations as they design future supply chains. 

The agreement is also expected to aid these economies in future recovery from the COVID-19 pandemic. The Peterson Institute for International Economics anticipates an annual increase to global income by $186 billion by 2030 and expects the agreement will add 0.2% to the RCEP member state economies. The deal now faces ratification by member countries, a process which is expected to take two years. The agreement is also open for other nations to join at a later date.

For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

International Trade Deal Creates the World’s Largest Trading Bloc
EU Provides Guidance on the New E-Commerce VAT Rules
International, Tax BY Vicky Lu
IRS Releases New Proposed Partnership Schedules (K-2 and K-3) for International Tax Reporting
Congratulations, PrimeGlobal!
IRS Issued Final Regulations on the GILTI High-Tax Exclusion
IRS Provides Foreign Trust Reporting Requirements

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office
Pittsburgh

One PPG Place, Suite 1700
Pittsburgh, PA 15222

contactsd@schneiderdowns.com
p:412.261.3644     f:412.261.4876

Map of Columbus Office
Columbus

65 East State Street, Suite 2000
Columbus, OH 43215

contactsd@schneiderdowns.com
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102