“RCEP will accelerate global value chain (GVC) effects and regional integration through the simplification of the rules of origin. It will facilitate business activities in GVCs in terms of the movement of goods. Under RCEP, there is an agreement for a single Restrictiveness of Rules of Origin (ROO) framework that could be applied across the 15 member countries in RCEP,” the research paper, titled ‘Potential Impact of RCEP and Structural Transformation in Cambodia’ noted.

“Current studies highlight that the co-sharing rule is less restrictive across other forms of ROO rules and regulations. RCEP allows for a co-sharing rule under the ROO framework,” it said.

Businesses under RCEP need to show that a product has the regional value content level of 40 per cent or has undergone a change in tariff heading at the four-digit HS code level classification.

“The single ROO framework under RCEP will have important implications for GVC activities in the region in terms of greater intra-industry trade and investment, and it is likely to create more value-added activities in the region. RCEP also includes a flexible provision for an ROO framework in terms of tariff differentials, where an importing party applies different tariff treatments for the same originating good,” the paper said.

The agreement will play a key role in the country’s dream of turning a high-income country by 2050, it said.

Comparative advantage analysis for China, Japan, and South Korea shows that Cambodia’s exports to CJK are in consumer final products, which are labour-intensive in terms of ‘cut, make, and trim’ in clothing exports.

“It is important to develop more functional service activities in garments and export such as branding, marketing, and sourcing that will allow the textile and garment industry in Cambodia to move up the value chain,” the study report was quoted as saying by a Cambodian news outlet.

Hong Kong’s entry into RCEP will be a game changer for Cambodia’s economic growth plans, it added.

Fibre2Fashion News Desk (DS)