Rules of Origin Within ASEAN and RCEP: Has It Been Resolved?

As a well-established trading bloc, rules of origin (ROO) for ASEAN are expected to benefit member states’ businesses by providing preferential tariff treatment which is the fundamental purpose of trade liberalization. However, these rules are prevented from being applied thoroughly due to the lack of government trust in certain member states in business actors and targets of duty collection for customs authorities. The self-certification by business actors has proven to be a solution to the problem but ASEAN A-X Formula may be counterproductive to ROO, eliminating the foundation of regionalization and potentially causing trade deflection. The First Protocol of ASEAN Trade in Goods Agreement (ATIGA) amendment simplifies the procedure of operational certification for ROO. Furthermore, the Regional Comprehensive Economic Partnership (RCEP) as a significant trading pact including ASEAN members and five major trading partners has adopted proof of origin allowing self-certification applied earlier in the European Union and NAFTA. Alternative solutions should also be explored since distrust and national financial interests have not been resolved. Recently, blockchain embedded with smart contracts has been applied in various business sectors which should be further applied in free trade area (FTA) applications. Blockchain’s characteristics as an immutable ledger originating from the hashing process and cryptography would address the problem of ASEAN ROO application. Therefore, this study aimed to analyze the effectiveness of ROO within ASEAN and RCEP. A literature review and doctrinal study methodology were applied in this analysis.