Trade patterns across Asia have been shifting since the Regional Comprehensive Economic Partnership, known as RCEP, took force at the start of 2022. Trade between China and fellow RCEP member economies topped US$5 trillion over a span of three years.

With a share of roughly 30 percent of worldwide economic output, the Regional Comprehensive Economic Partnership draws together a consumer population exceeding two billion people, positioning the bloc as the broadest trade arrangement of its kind and a driver of expansion across the region. Pathways into that market are available for European companies through RCEP, whether by building on established Chinese operations or by establishing a new foothold designed to draw on the agreement's provisions.

Within RCEP, China's manufacturing zones and interconnected supply networks position the country as a production and export node, underpinned by an industrial base that has developed considerable depth over time. Businesses headquartered in China or those that have relocated there gain access to reduced tariff rates, aligned rules governing product origin, and smoother customs handling, all of which lower the barriers to trade across other markets covered by the RCEP agreement.

Under the agreement, duties on a minimum of nine-tenths of all goods crossing member borders are scheduled to disappear across a two-decade window, with a number of protected product categories having already seen reductions take effect ahead of that timeline. Production expenses for European manufacturers — those turning out mechanical and electrical goods, automotive parts, or industrial machinery at Chinese facilities — stand to fall when their output is destined for buyers across ASEAN markets, Japan, or South Korea.

Customs data covering the three years following RCEP's entry into force show that trade between China and its partner economies under the agreement totalled RMB 38.57 trillion (US$5.4 trillion), a volume that held above 30 percent of China's total merchandise trade throughout that period. Goods and services flowing between ASEAN member economies and China reached a combined value of RMB 6.99 trillion — roughly US$980 billion — across 2024, a nine percent expansion from the previous year's tally, cementing the bloc's standing as China's foremost trading counterpart.

Under the World Trade Organization's most-favoured-nation schedule, a German manufacturer of water pumps shipping those products directly to the Philippines encounters an import duty of seven percent, the applicable rate tied to commodity classification 8413.20. Under RCEP rules of origin, pumps assembled in China using components drawn from the German firm's Chinese operations would be treated as goods of Chinese origin. Under the RCEP schedule, goods moving from China arrive in the Philippines free of import duties.

Forecasts presented at the Boao Forum's Bangkok Roundtable in August 2024 placed Cambodia on a path toward shedding least-developed-country classification around 2028, with trade agreements under the RCEP framework and related FTAs cited as factors behind rising export volumes and incoming foreign direct investment. Between January and October 2024, Thailand's commerce with fellow RCEP members totalled US$269.7 billion, a figure that accounted for just over half of all its external trade and edged upward compared with the same period a year earlier.

Investment provisions built into RCEP — notably the framework pairing pre-establishment national treatment with a negative-list approach — have drawn attention from regional analysts, who point to evidence that cross-border business conditions are becoming both more open and more predictable. The rules-of-origin framework within RCEP is structured to be both standardised across member economies and adaptable enough to accommodate varying trade circumstances.

Under RCEP, businesses trading across all 15 member economies gain access to a consolidated tariff-preference framework, removing the need to navigate multiple overlapping ASEAN+1 bilateral agreements. Trade promotion records kept by China's Ministry of Commerce show that 647,400 RCEP certificates of origin passed through the country's issuing system between 2022 and 2024, with the goods they covered carrying a combined declared value of US$21.9 billion. Throughout 2024, the total value of certificates of origin issued approached US$8 billion — a rise of over 10 percent against the previous year — while the volume of those instruments climbed by nearly a quarter, reaching 273,400.

Trade facilitation — streamlining customs procedures and cutting red tape at borders — forms another layer of what RCEP sets out to achieve alongside its tariff provisions. Under the accord, member states take on obligations covering swifter processing at border crossings, rulings on customs matters that traders can rely on in advance, and a broader openness in how those decisions are reached and communicated. Under customs procedures, time-sensitive freight and express shipments face a six-hour clearance target, while the bulk of other cargo is expected to move through within two days.

Trade in services and investment — two areas addressed directly by RCEP rules — stand to broaden the range of options available to European firms whose operations blend production with service-based activities. Two distinct frameworks govern how services commitments are handled across the agreement's membership: some countries have opted for a negative list structure, while the remainder are working through a gradual positive list arrangement.

Where investment is concerned, the RCEP lays down a framework of protections and transparency obligations — among them equal treatment for foreign investors, restrictions on certain performance demands placed upon them, and stronger aftercare arrangements once investment is established. Under the RCEP framework, 27 pre-existing trade agreements and 44 separate investment treaties are drawn together into one unified structure.

Under a unified trade framework covering Thailand, Malaysia, Japan, and Vietnam, a European-headquartered firm operating in China can draw on inputs sourced across those four countries, carry out assembly on Chinese soil, and move finished goods into Vietnamese markets — all while benefiting from reduced tariff rates and streamlined paperwork requirements.

Trade access through RCEP comes with reduced costs and simplified procedures for European companies, though constraints and exposure to risk remain part of the picture. Phased over a 20-year period, the removal of those tariffs will leave a broad range of goods facing elevated import duties throughout the transition. How each member state handles tariff concessions is governed by its own schedule, so the treatment any trading partner receives hinges on the specific bilateral relationship in place.

Import duties on a range of protected product categories — agricultural goods among the most prominent — are set to stay in force. Adherence to the RCEP's rules of origin calls for thorough country-of-origin assessments and carefully maintained supply chain records across a business's product lines. Gaps in administrative infrastructure and digital customs readiness across RCEP member economies mean that border procedures can play out unevenly, with some shipments facing longer clearance times than others.

Regulatory friction extends well beyond tariffs, with mismatched technical standards, licensing obligations, local content mandates, and language differences each capable of adding layers of difficulty to cross-border commerce.

Under the RCEP framework, a German auto-parts manufacturer operating out of a Shenyang facility is positioned to ship precision components directly to Thailand, Vietnam, and fellow member states while qualifying for reduced tariff rates through certificates of origin issued under the agreement. Headquartered in France, a specialty chemicals firm shifted a portion of its manufacturing operations into Guangdong Province, positioning those facilities to channel goods toward downstream customers in Malaysia and Indonesia under the reduced-tariff rules of origin that RCEP makes available to qualifying producers.

A boutique label registered in Italy, operating through bonded warehouse space in Shenzhen, drew on RCEP's e-commerce and trade facilitation chapters as the basis for a push to reach online shoppers across Malaysia, Thailand, and Vietnam. A cost-benefit analysis run by the company found that rules-of-origin requirements embedded in RCEP, compounded by incompatible certification standards across the ASEAN markets it was targeting, collectively offset any tariff advantages a Chinese manufacturing base could have provided — leading executives to shelve the partial production relocation.

Operations within China — whether newly built or scaled up — can open a path for European firms into the broader RCEP trading bloc. Companies examining RCEP as a component of their broader China-facing strategy have the option of mapping their supply chains, modelling country-of-origin scenarios, and building out long-range investment projections before committing to a course of action.