Authors: Shiro Armstrong, ANU and Yose Rizal Damuri, SCRS
The East Asia Regional Comprehensive Economic Partnership (RCEP) entered into force in 2022 as the world‘s largest free trade agreement. It was ratified despite great international trade and political uncertainties and constitutes a significant boost for the global trading system. This is just the beginning. Its greatest potential lies in its economic cooperation program which could transform RCEP beyond a negotiated agreement into a dynamic regional partnership.
RCEP unites Australia, China, Japan, South Korea and New Zealand in an agreement centered on the 10 members of ASEAN and represents approximately 31% of the world’s GDP and population and 27% of the world trade in goods. The deal keeps markets open and updates trade and investment rules in East Asia, a major center of global economic activity, at a time of growing protectionism and a threatened WTO.
One of the pillars of RCEP is an economic cooperation program that has its antecedents in ASEAN’s approach to engaging its less-developed members. The program builds on the experience of capacity building within APEC and technical cooperation under the ASEAN Free Trade Agreement with Australia and New Zealand. At a minimum, the Economic Cooperation Program will help members implement RCEP commitments.
But it is possible to go well beyond capacity building and technical cooperation. RCEP could create a framework that facilitates deeper economic cooperation involving the sharing of experiences and the creation of a framework for expanding rules and membership and political cooperation.
RCEP expands ASEAN’s modes of cooperation and strengthens its institutional ecosystem with an RCEP Secretariat, regular meetings of ministers and an annual leaders’ summit around the ASEAN-led East Asia Summit. The political path opens the door to a broad and ambitious conception of economic cooperation and the ASEAN-based secretariat. The scope and structure of the secretariat remains to be defined, but it will provide the venue for coordination among members. It can become a platform from which Asia-wide liberalization and integration is managed.
In addition to the political component, there will be joint commissions of senior officials and subsidiary commissions. The involvement of companies and experts can be institutionalized to achieve specific objectives. These processes are important to help build trust in a geopolitical landscape where it is evaporating.
RCEP’s new disciplines extend to e-commerce and digital trade, trade facilitation, rules of origin, investment and intellectual property. Liberalization of goods and services and common “rules of origin” mean that global value chains will continue to deepen. Unlike the Trans-Pacific Partnership Agreement and its successor the Comprehensive and Progressive Trans-Pacific Partnership Agreement to which it is often compared, RCEP does not include disciplines on state-owned enterprises and environmental and labor standards. As new rules are developed in other agreements, they may be considered for adoption within RCEP as part of the economic cooperation process.
Anything that affects the flow of international trade cannot or should not be negotiated and legally bound by agreements. ASEAN’s voluntary consensus-building approach to deeper economic integration requires a flexible economic cooperation program that allows working groups to report to ministers on pressing issues that go beyond the negotiated RCEP outcomes. . These issues include principles and standards for infrastructure investment, dispute mediation, energy transition, digital economy, supply chain resilience, sovereign debt management and recovery protocols and travel related to the COVID-19 pandemic. The agenda and mode of cooperation will be distinct from ASEAN and different from cooperation within APEC.
The process of economic cooperation can help socialize potential members and facilitate membership. A flexible approach combined with the ASEAN philosophy of inclusivity that has shaped the thinking behind RCEP gives immediate priority to opportunities to embrace non-members where there is interest in RCEP’s work. This interest is particularly marked with regard to India, to which the door to membership has been left open. India’s eventual membership would be more likely if India was committed to cooperation on issues of common concern, such as pandemic recovery.
Bangladesh has also expressed interest in joining RCEP and increased participation from South Asia will help expand East Asia’s global value chains and enable finer specialization in the comparative advantage of countries in the region. ASEAN. As China rapidly abandons its low-cost manufacturing advantage, there are many alternatives that need to be developed and integrated into value chains.
Regional agreements in East Asia have been voluntary and have not come at the expense of non-members. This type of non-binding cooperation within ASEAN and APEC has been a model for the G20. RCEP is changing that, but its economic cooperation program remains a natural champion of an open regionalism that could promote global goals. Open and flexible structures can engage outside interests and new initiatives and, given RCEP’s economic clout, strengthen global systems.
Just as ASEAN has done over time, RCEP can multilateralize its market access and other arrangements. If the framework is used creatively, the economic cooperation program will provide the platform to build consensus and support concerted unilateral action towards this goal.
These opportunities could be overlooked. Getting the right framework in place will not happen automatically or overnight, but its scope and ambition can be defined and agreed upon before ministers and leaders meet at the end of 2022. The entry into force of RCEP is a meaningful start – the next step is to define its strategic framework. direction.
Shiro Armstrong is director of the East Asian Bureau of Economic Research at the Australian National University.
Yose Rizal Damuri is Executive Director of the Center for Strategic and International Studies in Jakarta.
This article appeared in the latest edition of East Asia Quarterly Forum“East Asia Economic Agreement”, vol 14, n° 1.