How will the RCEP affect logistics and commerce companies in the signatories of the agreement after implementation and how can they prepare for trade automation in 2022?
On January 1, 2022, the Regional Comprehensive Economic Partnership came into force after 6 nations from the ASEAN bloc and 4 signatories from non-ASEAN states submitted Instruments of Ratification/Acceptance to the ASEAN Secretariat, by December 26, 2021.
The treaty, which is a free trade agreement between the 10 ASEAN member states and five other countries from the Asia Pacific region, is the world’s largest trade deal. The five Asia Pacific nations are Australia, China, Japan, New Zealand, and the Republic of Korea. It encompasses:
The UNCTAD report also noted that tariff concessions will boost intraregional exports of the newly formed trade bloc by approximately US$42 billion. Computer simulations published by Peterson Institute for International Economics (PIIE) also project that US$209 billion will be added to global incomes by 2030. In the same simulations, RCEP is also predicted to increase ASEAN exports by US$514 billion by 2030.
Thus, with RCEP, the ASEAN region will see an increase in trade volume. Trade patterns among the nations in the bloc will also be altered, as most of the nations in the group will see an increase in both imports and exports. Trading companies in the logistics and commerce sectors may thus experience added strain on their current infrastructures, which could lead to bottlenecks and delays.
ASEAN companies in the logistics and commerce sectors should take early steps to be ready for such a massive increase in trade, by digitizing and improving the automation of trade processes as far as possible, and to do so with haste. If trade processes are not automated and digitized quickly, companies may get overwhelmed and be unable to fully reap the benefits of RCEP.
One of the key bottlenecks in the process of international trade has always been customs and borders. With the number of processes and paperwork that surround the customs clearing procedure, significant delays could result.
An added challenge in customs management is its relatively low level of automation and digitization in Southeast Asia, where technology levels vary widely between countries. In some countries, customs processes are still paper-based. Even in countries that have the infrastructure and systems in place for automated customs, many companies have not yet come on board to plug into those systems.
With the increase expected in trade volume thanks to the RCEP, and the increasing expectation for timely shipping and delivery, there is urgency for companies to begin investing in trade automation solutions, ensuring they are as ready as possible to take advantage of, and to handle, the surge.
AEB has a wide range of solutions that will enable your company to automate and digitize its trading processes. The solutions offered by AEB allow companies in Southeast Asia and the world to automate processes and connect to international customs management systems digitally, reducing bottlenecks in the supply chain and accelerating various aspects of the importation and exportation process.
One of the ways to manage trade compliance is to use compliance screening software to flag individuals or entities that are listed on global sanctions lists. AEB’s compliance screening software automatically references potential business partners against national and international sanctions lists.
The automatic checks will run in the background of company transactions without interrupting daily business, supporting businesses by using intelligent process automation and an algorithm that minimizes the number of false matches.
When an actual match is identified, the software automatically triggers pre-defined processes and generates an email to your compliance team which will save your company the time and hassle of needing to work through lists of matches.
Another trade automation option is to use automated systems to file export declarations in a speedier manner, which also frees up manpower. The Export Filing platform provided by AEB allows trading companies to send export declarations and documents to local customs authorities.
In terms of clearing imports through customs, a solution is to use an automated import filing system. The Import Filing platform provided by AEB allows companies to clear imports in-house, allowing them to save costs and automate the process
The Import Filing platform also allows companies to communicate with customs officials securely and stay updated about import shipments. Key import duty figures are also automatically generated by the platform based on the nature of the shipment and the prevailing regulations of the destination country, creating savings in time and minimizing potential errors.
The platform also includes a template functionality, allowing companies to manage a large number of recurring transactions efficiently. It will also transfer declaration data to customs authorities after validating it. Staff will only need to add data if needed, as it has been applied automatically from the host system.
Both platforms also allow companies to handle and process customs declarations in a centralized manner, making it possible to send data to multiple customs authorities using unified systems that automatically integrate changes in regulations or processes.
Automated filing can only manifest its full benefit when implemented for trade between countries with digitized and automated customs processes. However, many countries in the region continue to rely on customs brokers to bridge the last stage of the customs process, between the trading company, which could be more automated, and a more traditional paper-based customs authority.
To help customs brokers speed up this process as much as possible and tap into their customers’ available trade automation, AEB also offers companies the option to integrate their customs brokers into their software processes, allowing them to benefit from the same speed and automation as their customers, speeding up even a paper-based submission process as much as possible.
Instructions for customs declarations could be sent via data upload, allowing companies to transmit information to the broker’s system without any interruptions, resulting in more transparency and fewer steps and errors. The integration also allows customs brokers to share status updates automatically, eliminating manual input and potential errors.
Vital documents such as tax notices shared by customs brokers with their customers will also be linked directly to the transaction, making all data easily available and accessible for monitoring.
Through coordinated collaboration and automated data transmission, customs brokers will be saving costs, which may be transferred to your company in the form of price discounts.
The increase in trade that comes from the implementation of RCEP will take time to reach its full effect. Nevertheless, it has already begun and trading companies around the region need to be aware and take the necessary steps to be ready for the increased demand and strain on existing shipping systems that this agreement will entail.
Trade automation is one of the most fundamental and straightforward steps companies should take in preparation for this increase and they should do so as early as possible to prevent needing to play catch-up later on. The time is now; seize it with AEB.
