South Korea to Implement RCEP Next Month... Which Industries Will Benefit?

Korea International Trade Association Published Report on 'Key Expected Effects of RCEP'

[Asia Economy Reporter Park Sun-mi] The Regional Comprehensive Economic Partnership (RCEP), the world's largest trade agreement involving 15 countries including the 10 ASEAN nations, the three Northeast Asian countries of Korea, China, and Japan, as well as Australia and New Zealand, will come into effect in Korea next month. Korean companies are expected to see expanded opportunities not only in product exports but also in overseas expansion in service sectors such as cultural content.

According to the 'Key Expected Effects of RCEP' report published by the Korea International Trade Association on the 28th, with the enforcement of RCEP next month, it is analyzed that Japanese companies will benefit in plastics and synthetic resins, Chinese companies in medical devices and video equipment parts, Vietnamese companies in automobile parts and steel, and Indonesian, Thai, and Philippine companies in cultural content and distribution sectors.

In particular, since RCEP is the first free trade agreement concluded with Japan, mutual market opening effects of about 83% are expected with Japan. Japan has promised to eliminate or reduce tariffs within 20 years on Korean imports accounting for 41.7% by item count and 14.0% by import value. Petrochemical products such as plastics, synthetic resins, and synthetic fibers are identified as major beneficiary items, with alcoholic beverages and textile products included in the 20-year tariff elimination and reduction items respectively. However, petroleum products with large export volumes to Japan, including gasoline, were excluded from the concession items.

China is expected to maintain the level of market opening already established under the Korea-China FTA. Tariff reductions under the Korea-China FTA are ongoing, and for some items, the Most Favored Nation (MFN) applied tariff rates are set lower than the FTA preferential rates, limiting additional tariff elimination effects. Compared to the existing Korea-China FTA, there are 25 additional concession items, and medical ultrasound diagnostic devices, electric motors and generators, industrial textile fibers, and stainless steel wire rods are expected to be beneficiary items under RCEP.

Vietnam has promised to additionally eliminate tariffs on items accounting for 3.3% by item count within the next 10 years compared to the existing Korea-Vietnam FTA. Major beneficiary items include automobile parts, machinery, and certain steel products such as shaped steel.

Meanwhile, with the enforcement of RCEP, materials from member countries will be considered as domestic materials. Compared to previously concluded FTAs, meeting the origin criteria is easier, and when companies utilize this, regional supply chain linkage can be promoted. Also, the application of integrated standards reduces administrative burdens and transaction costs caused by the application of different origin criteria in individual FTAs.

Market opening in the service sector through RCEP is also expected to be a good opportunity for Korean companies. Indonesia, Thailand, and the Philippines have additionally opened cultural content and distribution/logistics markets compared to the Korea-ASEAN FTA. Furthermore, China, Thailand, and the Philippines currently adopt a positive list approach listing the service sectors to be opened, but have promised to switch to a negative list approach within six years.

Yoo Jin Lee, senior researcher at the Korea International Trade Association and author of the report, said, "As the first regional trade agreement where Korea and Japan mutually opened their markets, the scope of opening is not large, but market opening effects are expected in some items such as petrochemicals. By unifying the different origin criteria of each FTA and introducing a self-certification method, the practical convenience for companies' utilization can be enhanced, and with the additional opening of the ASEAN service market, significant advancement in the cultural content sector utilizing K-Culture is highly anticipated."

This content was produced with the assistance of AI translation services.