On April 28, 2021, the House of Councilors of Japan approved the Regional Comprehensive Economic Partnership Agreement (RCEP), nearly completing the ratification process that began with RCEP’s approval by the lower house of the Diet on April 15. Japan is expected to formally deposit its ratification instrument with the ASEAN Secretariat after a few remaining internal procedures.
The RCEP, signed on November 15, 2020, is the largest regional free trade agreement (FTA) outside the WTO. Its 15 member states account for approximately 30% of the world’s gross domestic product (USD 26.3 trillion) and 30% of the world’s population (2.3 billion)*. It will enter into force for signatory States that have deposited their ratification instruments 60 days after the date as of which at least six signatory ASEAN member states and three signatory non-ASEAN member states have deposited their ratification instruments with the Depositary of the ASEAN Secretary-General (Article 20.6.2). As of today, Singapore (deposited April 9), China (deposited April 15) and Thailand (parliamentary ratification process completed February 9) have completed their ratification processes. Depending on the ratification schedules of other states, the RCEP may enter into force as early as this year.
In the meantime, businesses are encouraged to strategically analyze the RCEP and consider and take advantage of any new opportunities it offers in the form of new preferential markets, cost savings and/or supply chain optimization.
*For overview of the RCEP, please see our client alert on December 2.