Background
3.1
This Chapter concerns the trade in goods provisions in the Regional Comprehensive Economic Partnership Agreement (RCEP) including:
Tariff commitments
3.2
RCEP’s Chapter on Trade in Goods (Chapter 2) deals with tariffs and other goods trading matters such as quantitative restrictions and import and export licencing. Chapter 2 is consistent with the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the other multilateral agreements on trade in goods in Annex 1A of the Marrakesh Agreement Establishing the World Trade Organization.
3.3
Each Party to RCEP has agreed to a schedule of elimination or reduction of tariffs on goods from other RCEP Parties in accordance with each Party’s agreed schedule, which are contained in Annex I of RCEP.
3.4
Dr Simon Twisk from the Department of Foreign Affairs and Trade (DFAT) stated that:
We calculate that [RCEP] has the elimination of tariffs on 89 per cent of Australia's exports to other RCEP countries by value on entry into force. Over the 20 years, that will rise to cover 94 per cent of Australian exports by value.
3.5
RCEP’s tariff reductions are not as significant as other Australian trade agreements with RCEP Parties. For example, both the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the China-Australia Free Trade Agreement (ChAFTA) will eliminate tariffs on 98 per cent of goods trade. Dr Twisk confirmed:
Apart from some very obscure tariff lines … RCEP is not providing additional market access. Also, it falls short of some of our existing FTAs [Free Trade Agreements] [with other RCEP Parties], particularly on, as I mentioned, some of those key agriculture exports.
3.6
However, RCEP’s key objective is not tariff reduction. The Perth USAsia Centre stated that:
… RCEP’s modest liberalisation outcomes need to be understood in the context of the agreement’s objectives. As tariff elimination has been central in the region’s existing FTAs (particularly the five ‘ASEAN Plus One’ agreements), most politically realistic trade liberalisation has already been delivered in other agreements. Thus, RCEP’s function in the regional trade architecture is not to break new liberalisation ground (the role of bilateral FTAs), but instead to provide a framework where these FTAs can be harmonised into a single and cohesive Indo-Pacific agreement.
Rules of origin
3.7
RCEP states that in order for a good exported from an RCEP Party to attract the preferential trade benefits of RCEP, it must be an ‘originating good’. Provisions of this sort are generally referred to as ’rules of origin.’
3.8
To be an originating good for RCEP purposes, a good must be:
wholly obtained or produced in an RCEP Party;
produced in a Party exclusively using materials from one or more RCEP Parties; or
produced in a Party with non-originating materials provided the good meets the Product Specific Rules set out in Annex 3A of RCEP.
3.9
According to the National Interest Analysis (NIA):
RCEP’s rules of origin will be modern and liberal, reflecting contemporary production processes and trade logistics arrangements. Movement of goods in the region through ASEAN to China, Japan and the Republic of Korea (and vice versa to Australia) will be easier, as will using regional distribution hubs.
RCEP’s regional rules of origin will support Australian access to regional value chains. Regional cumulation rules will facilitate inputs from the most efficient and cost-effective regional source, while supporting access to preferential tariff treatment.
3.10
Article Three acknowledged the regional value chain benefits from RCEP’s rules of origin:
The importance of the agreement to supporting regional value chains should not be overlooked ... RCEP’s single set of rules of origin that now apply among all the parties - rather than multiple and divergent rules among various FTAs - is positive for business that operates across multiple jurisdictions. Similarly, there are rules for simplified and streamlined customs procedures for ‘authorised operators’ trading across RCEP members.
3.11
The Northern Territory Government also submitted that RCEP would:
…increase opportunities for Northern Territory businesses to access regional value chains. RCEP has the potential to simplify the regional trade and investment environment, better integrate Northern Territory businesses into regional supply chains and improve market access for Northern Territory exporters ...
3.12
RCEP contains two mechanisms for identifying originating goods:
Certificates of Origin; and
3.13
Certificates of Origin may be issued by the issuing body of an exporting Party upon an application by an exporter, a producer, or their authorised representative.
3.14
In Australia, the Australian Chamber of Commerce and Industry (ACCI) and its member chambers are amongst the bodies able to issue Certificates of Origin. According to the ACCI, Certificates of Origin support Australian exporters and the corresponding importers in circumstances where they are investigated by foreign government authorities about their claims of satisfying criteria under the terms of Australian trade agreements.
3.15
In contrast, Declarations of Origin allow for self-declaration and may be completed by an approved exporter, or an exporter or a producer of the good.
The system of allowing companies to self-declare their preferential claim exposes importers and exporters to risk and undermines international systems of trade. It is however, negotiated in the RCEP agreement as an option alongside Certificates of Origin.
3.17
While acknowledging self-declaration was perceived to be convenient in the short-term, ACCI identified self-declaration as lacking standardisation, compliance, and support if claims are disputed or questioned:
Exporters self-declaring their claims for tariff concessions have no legal standing in foreign countries, unless they have the backing of the government. Certificates of Origin, however, are already a document backed by the exporter’s own government, and so do not suffer the same risk.
3.18
ACCI recommended that the Government retain the Certificate of Origin system for future trade agreement negotiations to protect exporters, but supported the option of self-declaration as provided for in RCEP.
Non-tariff barriers
3.19
RCEP contains a number of provisions addressing non-tariff barriers, including:
prohibiting taxes, laws, regulations and requirements that can afford protection to domestic production;
eliminating or minimising the trade distorting effects of export subsidies on agricultural goods;
obliging Parties to implement customs laws and regulations consistently;
requiring Parties use the actual value of imported goods when calculating customs duties;
strengthening cooperation on equivalence in sanitary and phytosanitary measures; and
incorporating into RCEP provisions relating to standards, technical regulations and conformity assessments from the World Trade Organization (WTO) Agreement on Technical Barriers to Trade.
3.20
RCEP also contains provisions enabling Parties to safeguard their economies in the event of a trade in goods based threat. These are called ‘trade remedies.’ In particular:
Parties may suspend the reduction of or increase customs duties on imported goods that could cause serious injury to domestic producers of those goods; and
Parties may make use of the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the Anti-Dumping Agreement) if they believe another Party is engaged in dumping.
3.21
RCEP prohibits Parties from using tariffs or quantitative limitations as trade remedies.
Support for RCEP non-tariff barrier provisions
3.22
Inquiry participants were on the whole supportive of the non-tariff barrier provisions in RCEP.
3.23
Article Three highlighted the value of RCEP in providing mechanisms to deal with non-tariff barriers:
Technical and non-tariff barriers are becoming increasingly important for securing competitive advantages in foreign markets. RCEP establishes institutional mechanisms that may help to address such barriers when they arise. For example, it provides for technical consultations/discussions among the parties on non-tariff and technical measures that are ‘adversely affecting trade’, as well as creating a consultation mechanism on ‘significant customs matters.’
3.24
Submissions from the meat and wine sectors made similar points. Meat and Livestock Australia submitted that:
The ability of RCEP to provide additional avenues for tackling non-tariff barriers is also encouraging - with NTB’s [non-tariff barriers] amongst RCEP members impacting the Australian red meat industry to the tune of $1.6 billion per annum. The promotion of compliance with WTO rules and further improvement in cooperation and transparency are useful inclusions.
3.25
Australian Grape and Wine said:
The sector is currently focused on diversifying markets and RCEP provides an opportunity for expanding and growing Australian wine exports throughout countries which are party to the agreement. RCEP helps to facilitate trade in these markets via a number of … non-tariff measures.
3.26
The National Farmers’ Federation (NFF) stated that non-tariff barriers were a significant issue for its members. The NFF encouraged the Government to promote the removal of non-tariff barriers using RCEP chapters relating to rules of origin, sanitary and phytosanitary measures, and standards, technical regulations, and conformity assessment procedures.
Concerns with RCEP non-tariff barrier provisions
3.27
Professor Anna George raised concerns about the capacity of the sanitary and phytosanitary provisions of RCEP to deal with the problem of antimicrobial resistance (AMR).
3.28
AMR is the technical term for antibiotic resistant bacteria. Antibiotic resistance happens when bacteria change in a way that prevents the antibiotic from working. Antibiotic resistant bacteria can be transmitted through the food-supply chain and can undermine the effectiveness of antibiotics.
3.29
Professor George stated:
The health security threat from the spread of AMR through the food chain demands greater technical capacity to ensure that food imports are tested for the presence of AMR organisms. This requires ongoing research, monitoring and surveillance of AMR.
3.30
Professor George’s submission stated that trade agreements should not undermine the capacity of governments to regulate imports to control AMR. According to Professor George, trade agreements can impose constraints to altering or imposing national measures to protect against AMR entering the food chain. Professor George viewed the current WTO and trade agreement provisions protecting public health as not sufficient to deal with the complexity of AMR transmission.
3.31
Professor George concluded that trade agreement commitments should be capable of being circumscribed to enable governments to regulate or legislate to prevent AMR transmission whilst retaining non-discriminatory provisions.
3.32
Appearing before the Committee, Professor George was asked specifically about the commitments in RCEP. Professor George did not identify any provisions in RCEP that would restrict Australia’s ability to regulate or test imports for AMR.