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POLICY AND PRACTICE REVIEWS article

Front. Mar. Sci., 13 March 2023
Sec. Marine Affairs and Policy
Volume 10 - 2023 | https://doi.org/10.3389/fmars.2023.1155452

China’s shipping market supervision system under theRCEP: Influence, challenges and countermeasures

  • International Law School, China University of Political Science and Law, Beijing, China

The entry into force of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement, has injected new vitality into multilateralism and free trade, against a background of global economic and political instability. Its core concept is to liberalize and facilitate trade. Regulation of the shipping market warrants attention. Under the RCEP, the international shipping industry is characterized by a digital development trend in shipping supervision, continuous upgrading of shipping management and supervision capabilities, and more open and transparent shipping market supervision. However, in the process of implementing new rules for shipping market supervision, there are still some challenges, such as logistics risks and loopholes in shipping supply chains, insufficient coordination of shipping supervision among RCEP member countries, and an imperfect legal and regulatory system. This paper therefore suggests that under the RCEP, China should strengthen the anti-risk ability of shipping supply chains, promote coordinated supervision among member countries, strengthen environmental protection, and promote the coordination of digital supervision.

1 Introduction

On January 1, 2022, the Regional Comprehensive Economic Partnership (RCEP) came into force. Having been initiated by the ten countries of the Association of Southeast Asian Nations (ASEAN) and formulated by China, Japan, South Korea, Australia, and New Zealand, the RCEP creates a free trade area with the largest population,the largest economic and trade scale, and greatest development potential. It fully embodies the determination and confidence of all member states to jointly safeguard multilateralism and free trade and promote regional economic integration. On this basis, the RCEP will make important contributions to regional and even global prosperity (Guang Ming Net, 2022). In recent years, against the background of deepening reform and opening wider to the outside world, the Chinese government has taken measures to innovate the operational and post-operational supervision system, achieving positive results. In the field of international shipping, China’s shipping market supervision system differs from other general supervision systems. Under various laws, regulations, and administrative rules, commercial enterprises in the international shipping market are supervised and managed by various government/administrative departments, industry organizations, and social organizations. This regime covers many aspects of these companies’ operations, such as shipping market entry and exit, law-abiding activities, and compliant competition. The implementation of the RCEP will help to modernize and improve shipping market supervision internationally and also set higher requirements for domestic shipping market supervision. However, many challenges will have to be overcome.

The rest of the paper is organized as follows. Section 2 is a literature review. Section 3 comprehensively introduces the influence of China’s shipping market supervision under the RCEP. Next, Section 4 deeply analyzes the main contents and features of the RCEP rules for shipping market supervision. Section 5 then finds out the problems existing in China’s international shipping market supervision system, and puts forward the challenges faced by the development of China’s shipping market supervision system. Section 6 expounds in detail the countermeasures for the development and improvement of China’s international shipping market supervision system, based on the thinking of historical background and present situation. Finally, the conclusion.

2 Literature review

Deepening the economic integration in the Asia-Pacific region and promoting trade and investment liberalization and facilitation have always been the common wishes and goals of all economies in the Asia-Pacific region. Domestic and foreign scholars have noticed that the establishment of the Asia-Pacific trade area is an important embodiment of economic integration in the Asia-Pacific region, and the effective implementation of RCEP is one of the main ways to realize economic integration in the Asia-Pacific region (Sun, 2022). Therefore, there are many literatures on RCEP from different perspectives.

The RCEP negotiations were launched by leaders from the ten ASEAN members and ASEAN’s FTA partners (Australia, China, India, Japan, Republic of Korea and New Zealand) on November 20, 2012. The Guiding Principles for the negotiations emphasize that the trade in services negotiations under RCEP will be comprehensive, of high quality and substantially eliminate restrictions and/or discriminatory measures (Anuradha, 2013). Before RCEP is signed and takes effect, some scholars have believed that RCEP would be a WTO-plus arrangement, which focuses on trade in goods, several types of services and investments. It generally considers the reality of the difference of development stages of member countries. At the same time, they further analyzed the impact of Regional Trade Agreements (RTAs) on China (He and Yang, 2015). Another scholars made a comparative analysis of China’s free trade agreements with ASEAN, South Korea and Japan, and they found that in the long term, China should pursue a regional-wide free trade agreement (Estrada et al., 2012). In addition, Findings Results show that RCEP will increase trade of China by 1.5 percent. The income of China will increase by 2.5 percent. (Li and Moon, 2018).Facing the trend of globalization, voices within Asia have been calling for deeper Asian integration. (Lewis, 2013). Some scholars pointed out that the potential success of the RCEP negotiation would depend on the extent to which countries that are part of this partnership can reach a consensus on substantial tariff elimination coverage, a common market access schedule, comprehensive coverage of WTO-plus issues and behind-the-border integration measures that enable both physical and institutional connectivity (Das et al., 2016).

After RCEP is signed and takes effect, many scholars have made more researches in this field. As the world’s largest trading bloc, whether the capital markets of RCEP countries are able to jointly withstand risks is crucial to the post-pandemic recovery of the global economy (Zhang et al., 2023). There is a positive impact of the RCEP agreement on all member states, as empirically demonstrated (Ahmed et al., 2020). Some scholars argue that unbalanced economic relations, India’s self-reliant ideology, as well as China’s growing hegemony in the Asia-Pacific region are among the principle factors for India to back out from the RCEP. However, the door to participate in the future remains open for India (Wang and Sharma, 2021). Besides, some scholars argue that China has contributed significantly toward the conclusion of RCEP by engendering incentives for member countries to join through multiple cooperative structures. China turned to be more assertive in concluding the RCEP than in the early years of RCEP negotiations (Yoo and Wu, 2022). It is pointed out that the complex global value chains underlying the RCEP raise an important question on the macroeconomic (output, inflation, exchange rate, and interest rate) exposure of ASEAN to output shocks in the non-ASEAN-RCEP members, within the context of expanded regional architecture (Raghavan et al., 2022). However, the RCEP allows the huddling of Asian economies to weaken the influence of EU standards (Wu et al., 2022)

In the field of the impact of RCEP on international trade and shipping industry, some scholars inferred that the signing of RCEP has also had a significant impact on the shipping industry. It will significantly promote the increase in container shipping between Chinese coastal ports and Japan, South Korea, ASEAN, Australia and New Zealand, reduce export costs, and further increase the proportion of near-ocean container routes (Li et al., 2022).It is important to build international shipping hubs, use new technologies to promote the development of the shipping industry and related service industries and form a domestic and international dual-circulation industry development structure by the RCEP (Chang, 2022).At present, the recovery of the shipping industry in 2021 and the signing of RCEP make the reconfiguration and optimization of the container shipping network a very important task (Li et al., 2022). By establishing the international logistics risk measurement index system, it can hopefully play a preventive and guiding role in the research of international logistics risk assessment and the international logistics risk management of RCEP enterprises (Yan et al., 2022). Besides, we find that tariff reduction by RCEP has an effect of strengthening signatories’ global value chain positions and participation both in the short run and long run (Wen et al., 2022).

However, there are few researches about the influence of RCEP on shipping market regulation. After the signing of RCEP, the market access threshold can be lowered to reduce the cost of foreign enterprises to enter the region. However, at the same time, in order to ensure the economic security and development of the region, follow-up regulatory measures should also be strengthened (Liu et al., 2022).To promote China’s export trade, we should give full play to the functions of the customs of various countries and improve the efficiency of regulatory procedures (Fan et al., 2022). During the transitional period, soft law and non-state actors will play important roles in bridging the regulatory divide under the shadow of domestic regulation (Wang, 2022).

In a word, this paper fills a gap in the research on the impact of RCEP on shipping market regulation. RCEP states that the objectives of the agreement include progressive liberalization of trade in services and to create a liberal, facilitative and competitive investment environment in the region (Jusoh and Ramli, 2021). In the field of international shipping, RCEP has had a certain impact on the regulation of China’s shipping market, and it is also the purpose of Chinese government to provide investors with a transparent, predictable and effective regulation. Therefore, it is of great value to do this research in this field.

3 Influence: China’s shipping market supervision in the RCEP region

The global trade and economic situation is currently fluctuating, and the international shipping market faces many uncertainties. By fully understanding the international background of the RCEP with respect to shipping market supervision, member countries can better deal with these uncertainties.

3.1 East Asia’s regional integration has further deepened, but uncertainties persist over international cooperation

The RCEP was initiated by the ASEAN. After 31 rounds of “marathon” negotiations over eight years, and overcoming the huge recent difficulties brought by COVID-19, the parties finally reached consensus on market access and completed the legal review of over 14,000 pages of text, enabling the agreement to be signed on schedule (Ministry of Commerce of the People’s Republic of China, 2020a). The signing of the RCEP shows the common will of Asia-Pacific countries to maintain multilateralism and free trade. It is among the most important achievements of East Asian economic integration for over two decades, particularly since the implementation of China’s free trade zone strategy (Song, 2021). In recent years, the international environments have changed rapidly, with the on-going global recession, the protectionist behavior of some countries has intensified the global slow growth (Gaur, 2020). Rising protectionism and the US–China trade friction has great negative impacts on ASEAN and East Asia. Meanwhile, the purpose of the RCEP is to be a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement for East Asian nations (Shimizu, 2021). Besides, the RCEP is regarded as largely offsetting the significant impact of the US–China trade friction on the world at large. These rapidly changing international environments make China face a complicated environment that it has never encountered before, because China occupies an important position in the global industrial chain and supply chain (Wu et al., 2022). In a word, China has always unswervingly supported the multilateral trading system, and exhibited large firmness and patience throughout the RCEP negotiation process. This shows that multilateralism and free trade represent the direction for the world economy and human progress, and that openness and cooperation are the one of ways to achieve mutual benefit and win–win results for all countries (the State Council, 2020).

Through the RCEP, ten ASEAN member countries have committed to even greater opening up than is required under their “10+1” free trade agreements, thereby breaking down barriers to trade opening and releasing huge market potential (Li and Yao, 2022). Particularly among ASEAN members, the RCEP has further deepened the development of regional integration in East Asia. ASEAN members have unique geographical locations and labor forces, among other advantages, and so form important links in China’s international supply and value chains. They have also become China’s largest trade partner: in 2021, China–ASEAN trade volume hit a new record high of USD 878.2 billion, accounting for 14.5% of China’s total foreign trade (Poster News, 2022). The effective implementation of the RCEP will reinforce this trade relationship. However, Japan’s wavering attitude toward joining the RCEP and India’s last-minute refusal to do so reveal ongoing uncertainty over cooperation. As one of the founding members of the RCEP, India has also withdrawn from the RCEP on the grounds that trade import and export deficit and RCEP negotiations failed to address key concerns (Zhao et al., 2021). This paper claims that some ASEAN members have different starting point of interests and trade lacks reciprocity, thus making cooperation in a certain vulnerability. In addition, the implementation of RCEP agreement is still in the exploratory stage. Whether the interests of all RCEP members can be maximized and in-depth cooperation can be achieved remains somewhat unpredictable.

3.2 COVID-19 has caused severe shocks to global supply chains, and RCEP will boost confidence

COVID-19 has seriously disrupted the circulation of global supply chains. According to the United Nations Conference on Trade and Development (UNCTAD), The year of 2020 saw global economic output decrease by 3.5%, commodity trade fall by 5.4%, and world shipping trade drop by 3.8%. While world shipping trade is expected to continue recovering from 2022 to 2026, the medium and long-term outlook is still uncertain (UNCTAD, 2022). However, the signing and implementation of the RCEP is boosting the development of regional integration and deepening cooperation among member countries, thereby ensuring the stability of regional supply and industrial chains. The RCEP projects a strong signal against trade protectionism and unilateralism; by promoting multilateralism and free trade, it will strongly boost the confidence of RCEP members in economic growth and regional cooperation and development. According to forecasts by internationally renowned think tanks, RCEP members’ exports, foreign investment stock, and GDP will increase on average by 10.4%, 2.6%, and 1.8%, respectively, from the baseline year to 2050 (Ministry of Commerce of the People’s Republic of China, 2020b). At present, with the continuous optimization and adjustment of epidemic prevention and control measures by the government of China, China has achieved a major and decisive victory in epidemic prevention and control (Xinhuanet, 2023). The recovery of the global industrial chain and the stability of the supply chain have provided a more solid guarantee for promoting economic in the Asia-Pacific region in the future.

Nearly one year since its implementation, the RCEP has already produced positive results. On the one hand, it is conducive to optimizing the Asia-Pacific business environment by promoting the coordination of economic and trade rules and systems and significantly reducing the cost of intra-regional trade and enterprise operations. For example, if a Korean-funded enterprise in the Yantai area of Shandong Pilot Free Trade Zone purchases parts from Japan and repackages them for sale in China, the RCEP rules will reduce the tax cost by 100,000 yuan. On the other hand, the RCEP is also conducive to building a regional industrial chain division system with inclusive development and complementary advantages, and to promoting the integration and upgrading of regional industrial and supply chains. With the wide application of tariff reductions and cumulative rules of origin under the RCEP, some manufacturing enterprises will form an industrial chain division mode that first develops and designs in China then purchases, produces, and processes in Southeast Asian countries such as Vietnam and Indonesia, before finally exporting finished products to other parts of the world. This serves the purpose of reducing enterprise costs by extending regional industrial chains (China Free Trade Zone Service Network, 2022a). The final deal matches the original objective of the RCEP, which is to knit the region together and allow firms to build supply chains across the region to deliver goods, services, and investment to Asian markets more seamlessly (Elms, 2021). In this process, the RCEP is promoting economic recovery and the revival of interregional maritime transport services.

3.3 The RCEP connects with China’s supervision rules and systems to promote development of the shipping industry

3.3.1 Comparison of the shipping market supervision system in China before and after the establishment of RCEP

Some scholars recognize that the RCEP’s relaxation of market access and the elimination of tariffs will deepen the cooperation among countries and improved the ability of participating countries’ capital markets to withstand risks (Zhang et al., 2023). Before RCEP taking effect, it has been known that RCEP will be a WTO-plus arrangement, which focuses on trade in goods, several types of services and investment (He and Yang, 2015). The objective of the RCEP agreement include progressive liberalization of trade in services. So, it is necessary to create the necessary environment for all forms of investments, streamline and simplify procedures for investment applications (Jusoh and Ramli, 2021). As we know, the RCEP negotiations were launched by leaders from the ten ASEAN members and other five ASEAN’s partners in 2012, while China Shanghai Pilot Free Trade Zone (FTZ) was first established in 2013. We can find that, the construction of FTZs shoulders the important mission of accelerating the transformation of government functions, innovating government management methods, speeding up the transformation of government management system from prior to in-process and post-event supervision, and promoting trade and investment liberalization (Xiao and Zhang, 2017). China’s domestic reform and the RCEP negotiations are carried out simultaneously, which is a long process.

After the establishment of RCEP, the Chinese government proposed to give full play to the functions and roles of the government, adhere to the rule of law thinking and ways to perform market supervision functions, strengthen Operational and Post-operational Oversight, and promote the institutionalization, standardization and proceduralization of market supervision (the State Council, 2014). In September 2020, the Ministry of Transport promulgated the Guiding for Strengthening and Regulating Operational and Post-operational Oversight (China Maritime Safety, 2020). In this background, combined with the characteristics of the international shipping market, this paper holds that the ultimate goal of China’s current international shipping market supervision system is to establish an open, competitive, honest and law-abiding modern shipping system with strong supervision. In the field of international shipping, the Chinese government’s supervision on the shipping market has also changed before and after the signing of RCEP (See Table 1).

TABLE 1
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Table 1 Comparison of China’s shipping market supervision before and after the establishment of RCEP.

3.3.2 The main embodiment of the connection between RCEP agreement and China’s shipping market supervision system

Of the 15 RCEP member countries, most are close to the sea and some have vast coastline. China is the world’s largest trading country in maritime transport services and has the second largest number of registered ships. Alongside Japan, South Korea, and Singapore, it plays a key role in regional maritime transport. The RCEP sets shipping-related rules concerning customs procedures, trade facilitation, and other matters, prioritizing the predictability, transparency, convenience, and efficiency of regulation (Chang, 2022). In recent years, China has attached great importance to constructing pilot free trade zones throughout the country and the Hainan Free Trade Port, as well as implementing a series of innovative policies in the shipping field.

The connection between the RCEP and China’s shipping regulatory rules and systems is mainly reflected in the following aspects. On the one hand, in terms of market access, China established the pre-entry national treatment and negative list system by the Foreign Investment Law in 2019 (Cui and Wu, 2019). Some scholars pointed out that, under the RCEP, China’s services trade liberalization level reaches the highest level of existing free trade agreements (Wang et al., 2021). We find that the RCEP adopts two commitment models: positive list and negative list. In the short term, China has adopted a positive list in the field of services trade, improving the openness up of the promised areas to a higher lever. While China also undertake to transform the positive list into a negative list within six years following the RCEP’s entry into force. This requires China to accelerate the improvement of market supervision, including for the shipping market, and improve the level of trade facilitation. On the other hand, the RCEP is promoting the coordinated development of the supervision mechanism for China’s domestic shipping market. The Chinese government will strengthen operational and post-operational supervision and risk prevention. This is in harmony with the government’s supervision system during and after the reform of China’s pilot free trade zones. At the same time, RCEP member countries are influenced by different geographical locations and economic development levels. This may lead some RCEP members to consider adjusting their respective shipping market supervision models, so as to further reduce trade costs and promote the development of advantageous industries in the region (Zhai, 2021). In short, the shipping industry plays an indispensable role in connecting the domestic and international double cycle. The RCEP will promote the further development of China’s shipping industry through trade facilitation and more suitable customs procedures and shipping rules (Chang, 2022).

4 The main contents and features of new shipping market supervision under the RCEP

Although the RCEP contains no special chapter of relevant regulatory content, regulatory issues—including on shipping market supervision, cannot be ignored in implementing the agreement. Based on the above background, this section mainly expounds the principal contents and features of RCEP shipping market supervision.

4.1 Shipping supervision contents of the RCEP

The RCEP agreement covers new liberalization commitments in goods, services, investment, and addresses some emerging behind-the-border trade issues, to forge more transparent, open, and inclusive trade rules. Its aim is to build a comprehensive, modern, inclusive, and high-quality free trade agreement (Sheng and Jin, 2022). At the same time, the RCEP is an important component of China’s free trade area strategy. To date, China has signed 19 free trade agreements with 26 countries and regions. Compared with other free trade agreements, the RCEP has obvious advantages in the degree of openness. Accordingly, it will help China to achieve greater institutional openness and participate more effectively in constructing an integrated regional market. The written agreement includes a preface, 20 chapters and 4 annexes. Among them, the chapters are related to supervision mainly including: customs procedures and trade facilitation (Chapter 4), standards, technical regulations and conformity assessment procedures (Chapter 6), and competition (Chapter 13). Chapter 4 sets three objectives: first, to ensure the predictability, consistency, and transparency of each contracting party’s application of customs laws and regulations; second, to promote the effective management of customs procedures by each contracting party and the rapid customs clearance of goods; and third, to simplify the customs procedures of each contracting party and make them as consistent as possible with relevant international standards. In addition, Chapter 4 contains specific provisions on pre-adjudication and risk management1. Chapters 6 strengthens information exchange and cooperation between all parties in the focal fields (China Free Trade Zone Service Network, 2022b). Chapter 13 contains specific provisions on competition legislation, law enforcement cooperation, consumer protection, and other aspects. Through strengthening regional cooperation in formulating and implementing competition laws and regulations, the contracting parties can effectively promote market competition, thereby improving economic efficiency and increasing consumer welfare.

Importantly, RCEP rules fully reflect the inclusiveness and flexibility of the agreement. In particular, considering differences in the economic development level of each member country, the RCEP provides a reasonable transition period for Brunei, Cambodia, Laos, Myanmar, and other RCEP member countries to strengthen their domestic legislation and improve their market supervision systems. In addition, the market access provisions and negative list model for trade in goods (Chapter 2), trade in services (Chapter 8), and investment (Chapter 10) also indirectly involve market supervision.

4.2 Main characteristics of shipping market supervision system under the RCEP

4.2.1 Obvious digital development trend in shipping supervision

China attaches great importance to the open rules and policies contained in the RCEP, and is determined to implement its requirements on the basis of conforming to China’s actual conditions. Notably, the RCEP helps to promote and strengthen the establishment and implementation of e-commerce and digital trade in the Asia-Pacific region (Wu et al., 2021). Specifically, on the one hand, in addition to traditional provisions, the RCEP also proposed to include new provisions on data flow, information storage, and related matters for the first time under the premise of compliance with national laws and regulations. Meanwhile, to promote rapid development of the digital economy, the RCEP includes specific provisions on transparency, network security, economic and technological cooperation, and many other areas. It also proposes to maintain the practice of not imposing tariffs on e-commerce, and promotes mutual trust in policies and mutual recognition of rules and enterprise interoperability among RCEP members. On the other hand, COVID-19 has accelerated the development of digital trade. Chapter 12 of the RCEP not only encourages domestic digital trade within member countries but also requires the promotion of cross-border digital trade among members2. Although the RCEP contains no specific chapter on strengthening supervision of digital shipping, all members are legally obliged to abide by the goal of the agreement and protect the healthy development of digital trade. This is highly relevant to the development of digital shipping supervision in China.

4.2.2 Ongoing improvement in shipping management and supervision capabilities

In recent years, shipping management and supervision capabilities of major Chinese ports have been continuously improving. In Shanghai, for instance, the Yangshan Maritime Safety Administration has been committed to innovating in information services and auxiliary shipping management. Through big data, China has independently researched and developed the BeiDou Navigation Satellite System, navigation support, and other technical means; continuously improved navigation security; strengthened risk prevention and control and early warning capabilities; and constantly improved shipping supervision methods (Wang, 2021). With new impetus from the RCEP, members’ shipping management and supervision capabilities will continue to improve. The shipping management departments of member countries have established real-time information sharing and interconnection with shipping enterprises, ports, and other parties involved in the shipping market. This will promote the upgrading of existing domestic shipping management and shipping supervision methods. Moreover, shipping data interconnections can promote independent reform and innovation by governments of RCEP members, giving primacy to open and shared digital shipping supervision, helping port and shipping enterprises improve operational efficiency, and further promoting the healthy and orderly development of the shipping industry.

4.2.3 More open and transparent shipping market supervision

Effective implementation of the RCEP will promote further improvement of openness in various fields, including the shipping industry. The RCEP has simplified customs clearance procedures and requires members to manifest their commitment to liberalizing trade in goods within a relatively short time, with the ultimate aim of zero tariffs on 90% of goods. China’s commitments to openness for trade in services are higher under the RCEP than under any other free trade agreement the country has signed. Notably, further improving the openness of the shipping sector must be accompanied by stronger but also more transparent and open supervision of the shipping market. The RCEP requires improvements in regulatory transparency and approval efficiency for trade in services, and also imposes requirements for the openness and transparency of self-regulatory organizations. These provisions will help members actively improve their business environment and ensure that shipping market supervision becomes more open, fair, and just.

4.2.4 Members are allowed to set a transition period for improving their domestic legislation and regulations

The RCEP takes full account of each member country’s actual conditions and tailors requirements for market opening accordingly. The guiding principles of RCEP negotiations emphasize that the differences between countries and their different environments should be recognized through the adoption of appropriate and flexible forms providing special treatment to least-developed members. The RCEP embodies the principle of gradual and pragmatic opening on the basis of the World Trade Organization, and seeks to balance interests in market access and rules in various fields. For example, less-developed countries such as Laos, Myanmar, and Cambodia can maintain a negative list for trade in services for a longer transition period (Yu et al., 2022), giving them more time to improve domestic legislation and regulatory systems. These flexible requirements also suggest directions for reform and development in some RCEP member countries. Some scholars contend that, compared with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the RCEP accommodates the different needs of developing countries within the framework of a traditional free trade agreement (Quan and Gao, 2022). The RCEP comprehensively integrates and upgrades market access rules for trade in services from the original General Agreement on Trade in Services and the China–ASEAN Free Trade Agreement. The model of both using a positive list and a negative list has been adopted for trade in services, taking into account the actual development needs of member countries.

5 Challenges confronting the development of China’s shipping supervision under the RCEP

The RCEP’s implementation is not only injecting new vitality into true multilateralism and free trade but also reinvigorating the shipping industry. However, shipping supervision under the RCEP faces several challenges in the process of development.

5.1 There are still risks and loopholes in shipping supply chains

RCEP agreement was concluded in a time of heightened uncertainty in the global economy and in the middle of the largest economic downturn in almost a century from a pandemic-induced global recession (Drysdale and Armstrong, 2021). As we know, RCEP began in late 2012 as an effort to unravel what has often been called the “spaghetti or noodle bowl” of overlapping and inconsistent rules that can impede trade. While most of the countries in the region have extensive experience in trade and are outward oriented, trade in Asia has been bedeviled with challenges. This includes a range of both tariff and non-tariff obstacles that have made it more difficult than might be expected to trade, especially for final products, within the region (Elms, 2021). In addition, within the RCEP region, low-end industrial chains are predominant in Southeast Asia whereas high-end industrial chains predominate in Northeast Asia. These industrial chains need to establish efficient supply chain management, and the shipping industry plays a key role in providing supply chain services in the region.

However, there are several risks and loopholes in the development of shipping supply chains. On the one hand, the influence of uncertain factors, such as the COVID-19 pandemic, can adversely affect the security and stability of regional industrial and supply chains. COVID-19 has not only aggravated the risk of supply chain disruption but also driven up shipping costs. In April 2022, China’s efforts to control the epidemic significantly impacted on domestic supply chains, especially with the escalation of containment measures in Shanghai. Consequently, foreign trade through all Chinese ports has declined. According to China Port Network, national foreign trade cargo throughput decreased by 4.2% from April 2021 to April 2022, while the decrease in coastal foreign trade cargo throughput was 3.1% (China Port Network, 2022). At present, with the great victory of epidemic prevention and control in China, the stability of supply chain contributes to the recovery of regional and global economy. On the other hand, in the past few years, the world trade environment has changed dramatically. International markets, global industrial chains and supply chains have undergone structural changes under the influence of COVID-19.Some of the world’s larger economies have had diverse reactions to the RCEP. The United States has a mixed attitude towards the RCEP, arguing that it strengthens the ties between Asian economies but at the same time intensifies competition between major powers (Chatterjee, 2021). Currently, rising protectionism and the US-China trade friction has great negative impacts on ASEAN and East Asia. The signing of the RCEP is expected to trigger the gradual overcoming of the challenging global economic situation characterized by protectionism and the COVID-19 pandemic (Shimizu, 2021). In a word, These rapidly changing international environments make China face a complicated environment that it has never encountered before, because China occupies an important position in the global industrial chain and supply chain (Wu et al., 2022).

5.2 Transport supervision and coordination among RCEP members is insufficient

After the RCEP came into effect, the Chinese government issued guiding opinions on how to implement the agreement on January 28, 2022, advocating a series of measures to promote the convergence of domestic market regulatory rules with international economic and trade rules and obligations. These opinions also called for active use of the RCEP as a multilateral mechanism to promote cooperation (China Quality News, 2022). However, a big gap persists in the consistency and coordination of RCEP members’ respective policies. The agreement has imposed consistency on rules in some fields but not yet sufficiently aligned policies in others. One reason is the significant development gap between member countries, explained by geographic location, economic features, and other relevant factors; moreover, each RCEP member has distinct regional advantages and industrial structure characteristics. The signing of the RCEP agreement will certainly bring about a collision of cultures, policies, and technologies among various countries. A series of new issues and debates will continue to emerge (Liu et al., 2022). Another reason is that member countries adopt different regulatory models according to their respective national conditions. For China, opening up needs to expand and achieve a high level to promote effective interconnections with Southeast Asia. Other RCEP member countries are also obliged to formulate a higher standard open arrangement policy, and joint efforts in this regard will produce positive results (Chi, 2022). In the field of shipping, RCEP members’ shipping market supervision needs to be further coordinated and running- in. To increase mutual trust and recognition, the management mode of each special customs supervision area may be appropriately adjusted.

5.3 China’s domestic legal system for shipping supervision is imperfect

In substance, the RCEP allows the Parties to have more autonomy to cultivate consensus and re-adjust the regional legal order as it reasserts the dominance of domestic regulation (Wang, 2022). The RCEP requires all members to promptly publish relevant policies, laws, regulations, rules, and management measures to ensure transparency and openness and that all members abide by them. To conform with these requirements, all RCEP member countries will have to improve their domestic legislation. In the field of shipping, laws and regulations need to effectively guarantee supervision of the international shipping market.

At present, however, China’s shipping laws and regulations are deficient and need improvement. It lacks a special economic law of shipping market for the government to effectively regulate and control the operation rules of shipping market in China. Some scholars have found that the Shipping Law has been absent for a long time in China’s marine legal system (Zhu, 2022). The international shipping market is regulated by China’s Anti-Monopoly Law, Anti-Unfair Competition Law, and International Maritime Regulations. The Anti-Monopoly Law is a general law that applies to the international shipping market, systematically stipulating the scope, types, and composition of monopolistic behavior and the applicable investigatory procedures. There law proscribes three kinds of monopolistic behaviors: monopoly agreement, abuse of market dominance, and concentration of operators. Although these provisions of the Anti-Monopoly Law all apply to international shipping, effective institutional connections are still lacking at the operational level. Relatively speaking, the International Maritime Regulations and the Detailed Rules for the Implementation of the International Maritime Regulations are highly targeted normative legal documents. However, as they are administrative in nature, rather than specifically focused on the shipping market, these regulations are relatively ineffective. Moreover, they are subordinated to the Anti-Monopoly Law, Anti-Unfair Competition Law, and other superior laws in China’s legislative system, and obstacles are often encountered in the enforcement process. Even if the International Maritime Regulations impose strict provisions, they will not apply where the Anti-Monopoly Law or other superior laws are also violated. Therefore, China needs to promulgate a Shipping Law as soon as possible, with the main function of regulating shipping economic activities. The RCEP will play an important role in establishing the value position of China’s shipping market legislation, and will guide improvements in effectively supervising the shipping market and resolving shipping disputes.

5.4 Environmental-protection problems in shipping supervision

RCEP is becoming the largest free trade agreement with nearly half of world’s CO2 emissions. As its members are also important participants in global value chains, it is of great significance to realize the impact of global value chains participation on CO2 emissions in RCEP countries (Qian et al., 2022). As reported by UNCTAD in 2021, the International Maritime Organization (IMO) has carried out a series of actions targeting greenhouse gas emissions, aiming to reduce carbon emissions from international shipping to no more than 40% of the 2008 level by 2023. For example, in June 2021 the IMO adopted an amendment to Annex VI of the International Convention for the Prevention of Pollution from Ships, setting energy efficiency targets and introducing other requirements to reduce the carbon density of ships. The IMO also planned to set up a non-governmental organization, namely the International Maritime Research and Development Board(IMRB) (UNCTAD, 2021). In particular, developing countries should pay attention to environmental protection in the process of shipping supervision. Some scholars pointed out that the zero tariff orientation of the RCEP agreement would certainly accelerate the flow of low value-added products from the regional countries. Therefore, special attention needs to be paid to the pollution and emissions brought about in the opening up to the outside world to mitigate the corresponding negative externalities of environmental pollution (Liu et al., 2022).

Over recent years, China has attached great importance to environmental protection in the shipping field. For example, the State Council promulgated the Regulations on the Prevention and Control of Marine Environment Pollution by Ships in March 2018; The Ministry of Transport promulgated the Regulations for the Management Emergency Preparedness and Emergency Disposal of Marine Environmental Pollution in People’s Republic of China in January 2011,and it was revised in May 2015;Then, the China Maritime Safety Administration promulgated the Implementation Plan of the 2020 Global Marine Fuel Sulfur Limit Order in October 2019 (Sohunet, 2022). Through the promulgation of this series of policies, the Chinese government is actively tackling the environmental problems associated with shipping. At the same time, under relevant regulations of the Ministry of Transport, the Maritime Supervision Department is supervising and managing the pollution-prevention activities of shipping companies. However, shipping companies often encounter supervision by multiple governments and duplicated inspections. Whether it can achieve the stronger supervision and more efficient operation needs further evaluation.

6 Suggestions for improving China’s shipping market supervision under the RCEP

The above analysis shows that although there are challenges for shipping market supervision under the RCEP, China is capable of overcoming difficulties and coping with crises. This paper offers the following suggestions for meeting these challenges.

6.1 Enhance the anti-risk capability of shipping supply chains

With the ongoing impact of trade protectionism and COVID-19 on the global economy, the circulation of industrial chains is blocked and risks to shipping supply chains have been amplified. Strengthening the anti-risk capability of shipping supply chains in the RCEP region is crucial to ensuring the stability and security of global industrial and supply chains. China should actively contribute in three main respects. First, in terms of domestic circulation, it is necessary to further promote the cluster of industrial chain, thereby reducing the political, production, and logistics risks posed by potential changes in the international environment. Second, in terms of international circulation, we should build a new pattern of shipping supervision with a higher degree of openness. Supported by the cooperation platform of the IMO and RCEP, some green channels should be added to ensure smooth supply chains for key goods. Third, China’s opening should be wider and deeper to attract more high-quality foreign capital into the country while also encouraging domestic enterprises to go global. Such endeavors will help to build a more stable and secure regional and even global supply chain system.

Shipping is the primary channel of cargo transportation and important for ensuring the security of supply chains. However, confronted by rapidly changing global supply chain demand, the shipping industry must not only adjust and adapt constantly to changes but also overcome the impact of many unpredictable and uncontrollable external factors, such as geographical conflicts, etc. The global international shipping market needs more cooperation from all parties in industry and supply chains to guarantee the healthy and orderly development of the entire industry. For RCEP members, it is crucial to strengthen communication and cooperation between shipping and cargo enterprises in the shipping market. Only through coordinated development of upstream and downstream supply chains in the region, focused on building resilience, can a win–win situation be achieved.

6.2 Promote coordinated supervision of shipping among RCEP members

With the RCEP providing an important platform for aligning regional markets, all member countries need to strengthen and ensure the fairness of legislation and law enforcement, in terms of equal access, fair competition, protection of property rights, and transparency of supervision. It is also necessary to promote the realization of regional market supervision, as well as information sharing and multilateral mutual recognition among customs departments. When conditions are ripe, start mutual recognition consultation among RCEP member countries on trade service rules, management and standards (Chi, 2022). China should strengthen its cooperation with RCEP countries in trade facilitation and cross-border e-commerce to better achieve complementary regional economic development (Cai et al., 2022).

RCEP members should also actively engage in international exchanges and cooperation to promote coordination in shipping supervision. In particular, when facing complex challenges to competitive order in the regional shipping market, RCEP members should communicate, cooperate, and strive to reach agreement. This paper suggests that it is necessary to hold regular summits on international shipping regulation in the region, improve mechanisms for information exchange and feedback, and absorb the international beneficial shipping supervision legislation and law enforcement concepts. Furthermore, in strengthening regional cooperation on shipping supervision, all RCEP members’ interests should be fully protected. Besides, the RCEP Joint Committee should prioritize devising and establishing a special regional shipping supervision and cooperation mechanism, with all member states represented in this process. It is responsible for formulating the plan for cooperative regulation of the shipping market, implementing the regulation plans, and setting up an expert committee to provide decision-making suggestions. To the end, the government should actively resolve disputes and provide reasonable solutions, reflecting the government’s regulatory role and function. For disputes that require arbitration and judicial proceedings, choose arbitration institutions and recognized international certification bodies in advance (Liu et al., 2022).

6.3 Further improve China’s domestic legal system for shipping supervision

Only by establishing a good shipping legal system can China strengthen effective supervision of the international shipping market and guarantee its good operating order. All of the world’s developed shipping countries attach great importance to establishing robust shipping laws and regulations based on their respective national conditions. For example, the United States has laws and regulations for shipping enterprises, shipping transportation and other links, and its legal and regulatory system for shipping was established very early. Besides, the United States is represented by case law, meaning that maritime and shipping laws have strong practicality in specific practice process. In China, by contrast, the Detailed Rules for the Implementation of the International Maritime Regulations (revised in 2017) not only include substantive rules on international shipping market supervision but also procedural rules for supervision, inspection, and other matters. In addition, the superior Anti-Monopoly Law applies to any anti-competitive behavior in the international shipping market. Revised in 2016, the International Maritime Regulations include a special chapter on “Investigation and Handling,” which gives the State Council’s Transportation Department responsibility for investigating and handling behaviors that may damage fair competition in the international shipping market, where necessary by implementing prohibitive or restrictive measures.

Notably, although China joined the 1974 Convention on a Code of Conduct for Liner Conferences and so is theoretically bound by its provisions, the Convention has not been translated into China’s domestic law. In addition, the Convention has been marginalized internationally, and its importance for and influence on the international shipping industry have greatly decreased. China needs a complete shipping law to effectively regulate monopolistic and anti-competitive behavior in the international shipping market, given the limited operability of the general Anti-Monopoly Law. Overall, China should establish and improve its legal system for supervising the international shipping market, including stronger regulation to preserve the competitive order and a robust guarantee for the healthy, sustainable development of China’s shipping industry.

6.4 Pay attention to and strengthen environmental protection in shipping supervision

Some scholars have pointed out that economic and trade can only play a role in a favorable environment: for instance, if the manufacturing industry is expanded without considering the environmental impact, no matter how many new markets the RCEP opens up, it will definitely affect trade development and regional integration process in the end. This is a key challenge in promoting regional integration, and can only be solved by RCEP members reaching consensus on issues of environmental protection and strengthening cooperation to address them (Chi, 2022). Some scholars have found that it will be useful in developing carbon-neutral plans for various countries as well as coordinated sustainable development for RCEP regions. The fundamental issue regarding low-carbon economic development in RCEP countries at the moment is how to reduce resource consumption (Zhang et al., 2022).

In China, it is worth emphasizing that the governments’ participation is key to realizing their active supervision and shipping enterprises’ use of clean energy to protect the environment (Xu et al., 2021). First, Chinese governments should issue relevant laws, regulations, and policies from the top-level system design level to ensure the supervision of environmental protection. At the same time, they need to publicize relevant port and shipping enterprises to raise the environmental awareness of all parties in the shipping market. Second, shipping market entities that violate relevant environmental-protection regulations should be punished according to the law, through fines, exposure, suspension of business pending rectification, and other sanctions. Those shipping companies unwilling to cooperate with or even hindering the development of clean energy industry should more severely punished. Finally, RCEP member governments can attract investors to finance the construction of local ports and terminals by setting up projects and providing a supportive policy environment. In combination, shipping enterprises that use clean energy can be given financial subsidies. Ultimately, all parties in the shipping market will benefit from environmental protection.

6.5 Realize the coordination of digital port and shipping supervision among RCEP members

Varied institutional designs of the RCEP’s inner-FTAs suggest that uneven liberalization of data flows and regulatory fragmentation are prominent among the parties, but the inner-FTAs are still rooted in the conventional rationale of embedded liberalization (Wang, 2022). While, Digitalization is an important goal for the future development of the global port and shipping industry around the world. The outbreak of COVID-19 has accelerated the digital development of the shipping industry. International shipping centers such as Singapore, London, and Los Angeles, as well as various countries and regions, are actively implementing measures to accelerate the transformation and development of digital shipping (Wang, 2021). The digitalization of shipping supervision entails new approaches and contents. In China, it is necessary to establish a dedicated digital platform for shipping supervision. Moreover, it is important to assemble a multidisciplinary team of experts and scholars in anti-monopoly law, shipping law, digital technology, and other relevant domains, tasked with studying and deepening understanding of the digital development trend in shipping. This team should focus on issues such as shipping blockchain, and provide timely and reliable information on the international shipping market to RCEP members. On this basis, digital shipping supervision in the RCEP region will eventually be unified. China should strengthen its cooperation with RCEP countries in trade facilitation and cross-border e-commerce to better achieve complementary regional economic development (Cai et al., 2022). In this process, Chinese government can contribute China’s plans to RCEP member countries and make due contributions to international cooperation in the region.

Besides, through the digitization of shipping supervision, supervising authorities will be able to grasp the actual situation by accessing real-time data on all shipping links and participants, and communicate with supervised parties at any time (Fan and Zhou, 2020). Thus, the digital development of shipping supervision will promote the digital development of industries, including shipping trade. The shipping industry itself needs to further strengthen the management of transportation supply chains through digital technologies such as big data, cloud computing, and artificial intelligence. This will promote the objectives of improving efficiency and service levels.

7 Conclusion

The RCEP brings together developed, developing, and less-developed countries. The terms of the agreement fully recognize differences in members’ economic development level and system differences, and give certain comfort to all member countries, especially the underdeveloped. However, due to the flexibility and differences in rules and standards, it is difficult to implement and supervise the standards of the RCEP agreement, and the same is true in the field of international shipping. Therefore, much more progress is needed to achieve effective supervision of the shipping market in the RCEP region. China must strengthen its supervision of all aspects of the international shipping market and constantly improve its system for supervising the domestic shipping market. Moreover, all RCEP members must jointly endeavor to improve their respective supervision systems, and cooperate in promoting and safeguarding the effectiveness and fairness of the RCEP supervision system. By doing so, it will be helpful to promote regional stability and prosperity in Asia.

Author contributions

YS participated in conception of research ideas and study design. YS: original idea and writing up. YS approved the submitted version.

Funding

This work was supported by the Academic Exchange Program of China’s Postdoctoral International Exchange Program in 2022,Grant No.46 (presided over by the author).

Acknowledgments

Thanks to all the colleagues in International Law School of China University of Political Science and Law for their supports.

Conflict of interest

The author declares that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

Footnotes

  1. ^ RCEP Chapter 4 Customs Procedures and Trade Facilitation, Article 4.10 Advance Rulings and Article 4.14 Risk Management.
  2. ^ Chapter 12 of the RCEP

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Keywords: Regional Comprehensive Economic Partnership (RCEP), shipping market, supervision, digital shipping, new rules

Citation: Shi Y (2023) China’s shipping market supervision system under theRCEP: Influence, challenges and countermeasures. Front. Mar. Sci. 10:1155452. doi: 10.3389/fmars.2023.1155452

Received: 31 January 2023; Accepted: 27 February 2023;
Published: 13 March 2023.

Edited by:

Shih-Ming Kao, National Sun Yat-sen University, Taiwan

Reviewed by:

Tsung Han Tai, Law School, Shandong University, China
Huey-Shain Chung, National Taiwan Ocean University, Taiwan

Copyright © 2023 Shi. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Yuanhong Shi, CU214018@cupl.edu.cn

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