There are winners and losers. The processed food sector will benefit considerably more from RCEP than agricultural will. The manufacturing sector is forecast to be worse off, while the services sector will benefit.
Another important aspect is the RCEP provides one set of trade rules for all of the countries involved, which will reduce complexity for exporters who trade with a number of RCEP countries.
NZ already has high-quality trade agreements with the other RCEP countries, so the majority of the benefits will come from non-tariff measures.
Tariffs reductions will be phased in over a 15 or 20-year period. Not all tariffs will be removed. Tariffs will be reduced to 10 per cent or less by most countries, but six countries will retain tariffs on 35 per cent of products. Most of the tariff benefits to NZ exporters will occur quite quickly once the agreement is ratified.
NZ has existing FTAs with all the RCEP countries. These have already reduced tariffs on most NZ exports. This means RCEP does not deliver significant new market access for goods exports as a result of tariff cuts. However, NZ exporters do encounter significant tariffs on product entering Indonesia.
The RCEP will eliminate tariff barriers from NZ exports to Indonesia on beef exports (bone in cuts), all sheep meat exports, preserved and prepared meat exports, table salt, fish and fish products, liquid milk, grated or powdered cheese, honey, avocados, tomatoes, persimmons, and many manufactured goods.
For exports to Indonesia the tariff reduction on chilled lamb and beef products will happen in the first year after the RCEP is ratified, whereas the tariff on frozen carcasses and bone-in products will be phased in over 15 years.
Tariffs on cheese and butter will be eliminated in the first year of the agreement, while tariffs on liquid milk and milk powder will be phased out over 10 years.
For NZ, benefits of the RCEP are also derived from improved market access, reduced processing times for clearing customs and a disputes process. In 2019 there were over 1,700 non-trade measures notified to the World Trade Organisation.
Non-trade measures are anything other than tariffs that can potentially impact trade, such as technical barriers to trade, sanitary and phytosanitary measures, certification or testing requirements, quotas, import or export licenses and taxes surcharges.
Delays in getting products across borders are a common non-tariff barrier. Under RCEP customs procedures must be predictable, consistent and transparent. There should also be processes in place to resolve any issues.
The RCEP provides increased protection for and recognition of intellectual property (IP) rights. Services exports will also benefit from the agreement, as some of the commitments regarding services go beyond what is included in the ASEAN Australia-NZ Free Trade Agreement (AANZFTA).
This will benefit sectors such as professional, educational and environmental services, computer related services, air transport, research and development, and distribution services.
Susan Kilsby is an Agricultural Economist at ANZ Institutional