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ABSTRACT
The recently signed Regional Comprehensive Economic Partnership (RCEP) Agreement is likely to have a profound impact on the dissemination and integration of new regulatory standards for financial services in the Asia-Pacific region. By employing a text-as-data approach, this article measures the design of RCEP financial services rules in the regional trade agreements universe. This article finds that, first, RCEP has significantly deviated from the GATS financial services rules. Second, the textual source analysis of the RCEP financial services rules treaty language does not show that they are influenced by any single national text with overwhelming force, but by multiple textual sources in the Asia-Pacific region. China and the ASEAN have a more limited influence than expected, but the existing treaty languages of other major developed countries in this region, namely South Korea, Japan, Australia, and Singapore, has been primarily incorporated into RCEPs financial services rule. Besides, even if the United States is not the contracting party, considerable traces of its indirect influence can be found.
Acknowledgements
The author would like to extend her sincere appreciation to the two anonymous reviewers for their thoughtful, insightful, and scholarly evaluation of the article. Thank you also to Asia Pacific Law Review editorial team.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 See Dian Purnama Anugerah and Masitoh Indriani, ‘Data Protection in Financial Technology Services: Indonesian Legal Perspective’ (2018) 175(1) IOP Conf Ser Earth Environ Sci.
2 See Chang-Hsien Tsai and Peng Kuan-Jung, ‘The Fintech Revolution and Financial Regulation: The Case of Online Supply-Chain Financing’ (2017) 4(1) AJLS 109; Peter Gomber, Jascha-Alexander Koch and Michael Siering, ‘Digital Finance and FinTech: Current Research and Future Research Directions’ (2017) 87(5) J Bus Econ 537.
3 World Economic Forum, ‘Mega-Regional Trade Agreements: Game-Changers or Costly Distractions for the World Trading System?’ (July 2014) <https://cn.weforum.org/publications/mega-regional-trade-agreements-game-changers-or-costly-distractions-world-trading-system/> accessed 8 November 2023.
4 In the WTO, regional trade agreements (RTAs) are defined as reciprocal trade agreements between two or more partners, including FTAs, customs unions, EIA, and PSAs. WTO Glossary <https://www.wto.org/english/thewto_e/glossary_e/glossary_e.htm> accessed 8 November 2023.
5 Asian Development Bank, ‘Regional Comprehensive Economic Partnership: Overview and Economic Impact’ (December 2020), <https://www.adb.org/sites/default/files/publication/664096/adb-brief-164-regional-comprehensive-economic-partnership.pdf> accessed 8 November 2023.
6 Deborah K Elms, ‘Getting RCEP across the Line’ (2021) 20 World Trade Rev 373.
7 Wolfgang Alschner and Dmitriy Skougarevskiy, ‘The New Gold Standard? Empirically Situating the Trans-Pacific Partnership in the Investment Treaty Universe’ (2016) 17 J World Invest Trade 339.
8 Pasha L Hsieh, New Asian Regionalism in International Economic Law (2021); Julien Chaisse and Pasha L Hsieh, ‘Rethinking Asia-Pacific Regionalism and New Economic Agreements’ (2023) APLR 1.
9 Pasha L Hsieh, ‘New Investment Rulemaking in Asia: Between Regionalism and Domestication’ (2023) 22 World Trade Rev 173.
10 Ibid.
11 Meredith Kolsky Lewis, ‘The TPP and the RCEP (ASEAN+6) as Potential Paths toward Deeper Asian Economic Integration’ (2013) 8 Asian J WTO Int Health Law Policy 359.
12 Including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. See Collins C Ajibo and others, ‘RCEP, CPTPP and the Changing Dynamics in International Trade Standard-Setting’ (2019) 16 Manch J Int Econ Law 425.
13 Trans-Pacific Partnership: Summary of U.S. Objectives, USTR, <https://ustr.gov/tpp/Summary-of-US-objectives> accessed 8 November 2023.
14 Lewis (n 11).
15 Ajibo and others (n 12).
16 Ibid.
17 Amokura Kawharu, ‘The Admission of Foreign Investment under the TPP and RCEP’ (2015) 16 JWIT 105.
18 Lewis (n 11).
19 Heng Wang, ‘The RCEP and its Investment Rules: Learning from Past Chinese FTAs’ (2017) 3 CJGG 160; Diane A Desierto, ‘ASEAN Investment Treaties, RCEP, and CPTPP: Regional Strategies, Norms, Institutions, and Politics’ (2018) 27 Wash Int'l LJ 349; Elms (n 6); Chaisse and Hsieh (n 8).
20 See Kawharu (n 17); Julien Chaisse and Richard Pomfret, ‘The RCEP and The Changing Landscape of World Trade: Assessing Asia-Pacific Investment Regionalism Next Stage’ (2019) 12 Law Dev Rev 159; Julien Chaisse and other, ‘Drafting Investment Law: Patterns of Influence in the Regional Comprehensive Economic Partnership (RCEP)’ (2022) 25(1) J Intl Econ L 110.
21 See Todd Allee, Manfred Elsig and Andrew Lugg, ‘Is the European Union Trade Deal with Canada New or Recycled? A Text-as-data Approach’ (2017) 8(2) Global Policy 246; Todd Allee and Andrew Lugg, ‘Who Wrote the Rules for the Trans-Pacific Partnership?’ (2016) 3(3) Res Politics, <https://doi.org/10.1177/2053168016658919>accessed 8 November 2023.
22 Juan A Marchetti, ‘Financial Services in the TPP’ in Jorge A Huerta-Goldman and David A Gantz (eds), The Comprehensive and Progressive Trans-Pacific Partnership: Analysis and Commentary (Cambridge University Press 2021); Anna Gelpern, ‘Financial Services’ in Cathleen Cimino-Isaacs and Jeffrey J Schott (eds), Trans-Pacific Partnership: An Assessment (Peterson Institute for International Economics 2016); Andrew Lang, Financial Services in EU Trade Agreements (European Parliament DG for Internal Policies 2014).
23 Marchetti (n 22).
24 Alschner and Skougarevskiy, ‘The New Gold Standard?’ (n 7); Enda Curran, ‘Asia Leaders Push Regional Trade Pact’, Wall Street Journal (19 November 2012), <http://www.wsj.com/articles/SB10001424127887323622904578128650479355368>accessed 8 November 2023; Shintaro Hamanaka, ‘TPP vs. RCEP: Control of Membership and Agenda Setting’ (2014) 18 J East Asian Econ Integr 163.
25 Chapter 8: Trade in Services & Annex 8A: Financial Services of RCEP.
26 Para 5, Art 8.2: Scope, Chapter 8 of RCEP.
27 Annex II: Schedule of Specific Commitments for Services of RCEP; Annex III: Schedule of Reservations and Non-Conforming Measures for Investment of RCEP. See Sydney J Key, Financial Services in the Uruguay Round and the WTO (Group of Thirty 1997); Dilip K Das, ‘Trade in Financial Services and the Role of the GATS’ (1998) 32 J World Trade 79.
28 Xingxing Yang, ‘The New Development of Financial Service Rules in the US–Mexico–Canada Agreement: A Comparative Perspective from GATS And CPTPP’ (2019) 4 Econ Trade Law Rev 45.
29 Art 1: Definition, Annex 8A of RCEP.
30 Art 3: New Financial Service & Art 11: Payment and Clearing Systems, Annex 8A of RCEP.
31 Since the RCEP Financial Services Annex itself does not specifically provide for the listing approach, it follows the RCEP Chapter 8 arrangements for trade in services. Asian Development Bank, ‘The Regional Comprehensive Economic Partnership Agreement: A New Paradigm in Asian Regional Cooperation?’ (May 2022) <https://www.adb.org/publications/rcep-agreement-new-paradigm-asian-cooperation> accessed 8 November 2023.
32 Elms (n 6).
33 Ibid. See Art 8.12: Transition of RCEP.
34 Art 8.12: Transition of RCEP.
35 Ibid.
36 Ibid.
37 Elms (n 6).
38 Ibid.
39 Para 1, Art 3: New Financial Service, Annex 8A of RCEP.
40 For example, Art 17.7: New Financial Services of USMCA.
41 Para 1, Art 3: New Financial Service, Annex 8A of RCEP.
42 Art 11.7: New Financial Services of CPTPP.
43 Para 2, Art 3: New Financial Service, Annex 8A of RCEP.
44 Art 11.7: New Financial Services of CPTPP.
45 Art 4: Prudential Measures, Annex 8A of RCEP.
46 Andrew D Mitchell, Jennifer K Hawkins and Neha Mishra, ‘Dear Prudence: Allowances Under International Trade and Investment Law for Prudential Regulation in The Financial Services Sector’ (2016) 19 J Int Econ Law 787.
47 Footnote 3 includes issues such as maintenance of the safety, soundness, integrity, or financial responsibility of individual financial institutions or financial service suppliers in the category of ‘prudential exceptions’, which is more in line with the need for governments to take preventive risk management measures in response to the chain reaction that may arise when a crisis occurs in an individual large financial institution in financial practice.
48 Art 11.11: Exceptions, Chapter 11 of CPTPP. Mitchell, Hawkins and Mishra (n 46).
49 Prohibition on localization of computing devices has been one of the core contents of international digital trade rules in American FTAs for a long time. The new rules of ‘Location of Computing Facilities’ (Art 17.18) in the USMCA reflects a new solution adopted by the US Treasury Department after lobbying from the domestic financial industry. See Para 1, Art 17.18: Location of Computing Facilities, Chapter 17 of USMCA.
50 Art 9: Transfers of Information and Processing of Information, Annex 8A of RCEP.
51 Para 3, Art 9: Transfers of Information and Processing of Information, Annex 8A of RCEP.
52 Section B: Transfer of Information, Annex 11-B of CPTPP.
53 See also Yoshinori Abe, ‘Data Localisation Measures and International Economic Law: How Do WTO and TPP/CPTPP Disciplines Apply to These Measures?’ (2020) 16 Public Policy Review 1; Susannah Hodson, ‘Applying WTO and FTA Disciplines to Data Localisation Measures’ (2019) 18 World Trade Rev 579.
54 Todd Allee, Manfred Elsig and Andrew Lugg, ‘The Ties Between the World Trade Organization and Preferential Trade Agreements: A Textual Analysis’ (2017) 20 J Intl Econ L 333.
55 Joost Pauwelyn and Wolfgang Alschner, ‘Forget About the WTO: The Network of Relations between Preferential Trade Agreements (PTAs) and “Double PTAs”’ in Andreas Dür and Manfred Elsig (eds), Trade Cooperation: The Purpose, Design and Effects of Preferential Trade Agreements (Cambridge University Press 2015) 497.
56 According to the 'Domino Effect' theory, East Asian regionalism is essentially a defensive response to the FTAs reached in Europe and the Americas. See more in Richard E Baldwin, ‘The Causes of Regionalism’ (1997) 20 World Econ 865; Mireya Solís, Barbara Stallings and Saori Katada, Competitive Regionalism: FTA Diffusion in the Pacific Rim (Springer 2009).
57 Beth A Simmons, ‘The International Politics of Harmonization: The Case of Capital Market Regulation’ (2001) 55(3) Intl Org 589.
58 Wang Yuzhu, ‘The RCEP Initiative and ASEAN Centrality’ (2013) 42 China Int'l Stud 119.
59 Chaisse and others, ‘Drafting Investment Law’ (n 20); Elms (n 6); Chaisse and Pomfret, ‘The RCEP and The Changing Landscape of World Trade’ (n 20).
60 Lloyd Gruber, ‘Power Politics and the Free Trade Bandwagon’ (2001) 334(7) Comp Pol Stud 703; Daniel W Drezner, All Politics is Global-Explaining International Regulatory Regimes (Princeton University Press 2007).
61 Keith Bradsher and Ana Swanson, ‘China-Led Trade Pact is Signed, in Challenge to US’ New York Times (2020); Hamanaka (n 24).
62 For example, recognizing the possible economic value to Japan brought by regional integration through BIT and FTA, Japan announced that it would implement a ‘multi-layered trade policy’ in the future to strengthen the multilateral trading system and promote regional cooperation. See METI, International Trade White Paper<https://www.meti.go.jp/english/report/index_whitepaper.html#trade> accessed by 8 November 2023; METI, ‘The Economic Foundations of Japanese Trade Policy—Promoting a Multi-Layered Trade Policy’ (August 2000).
63 Simmons (n 57).
64 Wolfgang Alschner, Joost Pauwelyn and Sergio Puig, ‘The Data-Driven Future of International Economic Law’ (2017) 20 J Intl Econ L 217; David Lazer and others, ‘Life in the Network: The Coming Age of Computational Social Science’ (2009) 323(5915) Science 721.
65 Kenneth J Vandevelde, US International Investment Agreements (Oxford University Press 2009).
66 Wolfgang Alschner and Dmitriy Skougarevskiy, ‘Mapping the Universe of International Investment Agreements’ (2016) 19 J Intl Econ L 561.
67 Alschner and Skougarevskiy, ‘The New Gold Standard?’ (n 7); Allee and Lugg, ‘Who Wrote the Rules for the Trans-Pacific Partnership?’ (n 21).
68 Pauwelyn and Alschner, ‘Forget About the WTO’ (n 55).
69 See WTO database on RTAs <http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx> accessed 6 August 2023.
70 These keywords included ‘financial services’, ‘banking’, ‘insurance’, ‘financial cooperation’, ‘financial regulation’, and ‘prudential measures’.
71 The RTAs in this study mainly includes the following categories: 125 RTAs include provisions that are related to financial service and in force (among which 118 RTAs include specific financial service provisions; 2 in force for at least one party; and 7 RTAs that only include provisions pertaining to continuing negotiation on financial service); 10 RTAs that are inactive; and 4 RTAs that are early announcement-signed.
72 The purpose of the text normalization process is mainly to remove numbers, punctuation, and capitalization in the text that may interfere with the analysis. To minimize interference with word order, we removed the use of the pre-set stop words package function in the natural language tool.
73 Dipanjan Sarkar, Text Analytics with Python: A Practical Real-World Approach to Gaining Actionable Insights from your Data (Apress 2016).
74 If a more complex and accurate comparison of term similarity and clustering analysis is needed for the dataset, the TF-IDF weight feature model can be further combined in the programme to take into account the importance of effective words or word blocks in the text. The intervention of the TF-IDF model can help to improve the accuracy of text feature extraction and avoid being misled by many non-legal text language noises. Moreover, this technique connects and intersects with subsequent similarity measurement techniques. See Karen Spärck Jones, ‘A Statistical Interpretation of Term Specificity and Its Application in Retrieval’ (1972) 28(1) J Document 16.
75 Wolfgang Alschner, ‘Sense and Similarity: Automating Legal Text Comparison’ in Whalen Ryan (ed) Computational Legal Studies (Edward Elgar Publishing 2020).
76 Christopher D Manning, Prabhakar Raghavan and Hinrich Schutze, Introduction to Information Retrieval, vol. 3(Cambridge University Press 2008); Alschner and Skougarevskiy, ‘Mapping the Universe of International Investment Agreements’ (n 66).
77 Ibid.
78 Alschner and Skougarevskiy, ‘Mapping the Universe of International Investment Agreements’ (n 66); Arthur Spirling, ‘'US Treaty Making with American Indians: Institutional Change and Relative Power, 1784–1911’ (2012) 56 AJPS 84, 93–94.
79 The n-value in this research represents that only consecutive N-words in the two texts are the same will be marked as overlapping, which is similar in function to commercial plagiarism detection programs. Thus, if an N value is too low, it might cause a large number of ordinary phrase blocks of less legal significance to be marked as overlapped, while if an N value is too high, it might make the criteria defined as overlapped too high and inflexible. Therefore, referring to other previous studies, such as Alschner and Skougarevskiy and the value (13) usually adopted by commercial plagiarism detection program, a relatively intermediate value, namely ten, is adopted in this study.
80 Chaisse and others, ‘Drafting Investment Law’ (n 20).
81 Wael H Gomaa and Aly A Fahmy, ‘A Survey of Text Similarity Approaches’ (2013) 68 Intl J Comp Appl 13.
82 WTO Document: Note on the Meeting of 3 July 2013, WT/REG/M/69, 15 July 2013.
83 Asian Development Bank, ‘The Regional Comprehensive Economic Partnership Agreement’ (n 31).
84 Allee, Elsig and Lugg, ‘The Ties Between the World Trade Organization’ (n 54).
85 Chaisse and others, ‘Drafting Investment Law’ (n 20).
86 Alschner and Skougarevskiy, ‘The New Gold Standard?’ (n 7); Allee and Lugg, ‘Who Wrote the Rules for the Trans-Pacific Partnership?’ (n 21).
87 Including currently in force and invalid RTAs which have been notified by WTO.
88 Elms (n 6).
89 Chaisse and others, ‘Drafting Investment Law’ (n 20).
90 Including Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Thailand, Viet Nam.
91 Chaisse and others, ‘Drafting Investment Law’ (n 20).
92 Chaisse and others, ‘Drafting Investment Law’ (n 20).
93 Hamanaka (n 24); David Vines, ‘The BRI and RCEP: Ensuring Cooperation in the Liberalization of Trade in Asia’ (2018) 6(3) Econ Pol 338; Bradsher and Swanson (n 61).
94 Chaisse and others, ‘Drafting Investment Law’ (n 20).
95 Alschner and Skougarevskiy, ‘The New Gold Standard?’ (n 7); Allee and Lugg, ‘Who Wrote the Rules for the Trans-Pacific Partnership?' (n 21).
96 Gruber (n 60).
97 Solís, Stallings and Katada (n 56).
98 Ibid.
99 Chaisse and others, ‘Drafting Investment Law’ (n 20).