Reconsidering RCEP’s Impact on Foreign Investment

This Op-Ed ponders the implications of the Regional Comprehensive Economic Partnership (RCEP) for foreign direct investment (FDI). It challenges the conventional wisdom that RCEP will result in notable changes in FDI volumes or geographic destination. The piece acknowledges that RCEP entails numerous provisions that create a more friendly environment for FDI or that have the potential to influence the volume and distribution of FDI. Examples include changes to rules of origin (ROOs), service sector liberalization, various investment facilitation measures, and enhanced intellectual property rights protections. Nevertheless, it identifies various reasons why there might not be a new order for FDI in the post-RCEP world. One reason is that by removing trade barriers, RCEP removes a powerful incentive for investing elsewhere. Another reason is that those RCEP signatories that are outward FDI powerhouses have many reasons to pour their money outside the RCEP region. The piece also offers various policy recommendations.

This piece originally appeared as Jean-Marc F. Blanchard and Wei Liang, “Reconsidering RCEP’s Impact on Foreign Investment,” The Diplomat, June 25, 2021, https://thediplomat.com/2021/06/reconsidering-rceps-impact-on-foreign-in.... Copyright remains with the original holder.