Research on the determinants of rules of origin between China and Japan under RCEP——Based on the ordered probit model and margin effect

RCEP is the first free trade arrangement between China and Japan. This paper takes the rules of origin between China and Japan under RCEP as the research object, puts forward determinants and uses the ordered Probit model and its margin effect for empirical testing. The research finds that, China and Japan tend to set loose rules of origin for product with the greater revealed comparative advantage, the higher level of intra-industry trade, and the greater export potential to promote bilateral trade. While both countries prefer to establish strict rules of origin for strategic products, agricultural products and import-competitive products facing trade creation to protect domestic market. Meanwhile, if the degree of product homogenization or the tariff reduction margin is high, the two countries tend to establish strict rules of origin to prevent trade deflection. The findings will provide reference for China to establish rules of origin when signing high-level FTAs or RTAs with developed economies in the future. Moreover, China can introduce more computer and artificial intelligence technologies in future FTA negotiations to help achieve predetermined objectives.