Regional Comprehensive Economic Partnership and the Challenges of ASEAN Centrality

Introduction

The signing of the RCEP on 15 November 2020 signified the establishment of the largest free trade agreement (FTA) in the world. The agreement comprises ten members of the Association of Southeast Asian Nations (ASEAN), Australia, New Zealand, China, Japan and South Korea. Even after the exit of India, the RCEP constitutes no less than 30 percent of world’s gross domestic product (GDP). The deal also covers 27.4 percent of world’s trade, only a little smaller than the European Union (EU) that makes 29.8 percent.

An interesting element of the RCEP is the vaunted “ASEAN centrality” principle. RCEP’s 2012 Guiding Principles and Objectives document states that “negotiation for the RCEP will recognize ASEAN centrality in the emerging regional economic architecture”. Likewise, the FTA’s Joint Leaders’ Statement, launched in November 2020, also explicitly mentions that “the RCEP agreement is the most ambitious FTA initiated by ASEAN, which contributes to enhancing ASEAN centrality in regional frameworks and strengthening ASEAN cooperation with regional partners”.

How is ASEAN centrality defined? What is the position of RCEP’s ASEAN centrality amidst economic and political dynamics of Asia-Pacific region? What are the challenges for ASEAN leaders to maintain centrality in trade sector? While RCEP is an economic agreement, the involvement of regional major and secondary powers makes it imperative to analyse the deal from a

(geo)political perspective.

Defining ASEAN Centrality

There are at least two definitions on ASEAN centrality. First, centrality means ASEAN as a forum provider. RCEP is a part of ASEAN “Plus X” forums that gather and arrange cooperation with external powers. In the security ar

ena, ASEAN’s most high-profile forums are the East Asia Summit (EAS) and the ASEAN Regional Forum (ARF). EAS’ membership includes powerful countries such as the United States (US), China, Russia and India, whereas the ARF even includes the EU and North Korea. Meanwhile, in trade sector, in addition to the RCEP that convenes five ASEAN’s dialogue partners, the Association has developed six separate ASEAN “Plus One” FTAs. Second, centrality means the driver of substance. ASEAN should develop substantial cooperation within its various forums. For example, there have been expectations for the RCEP to negotiate a truly substantial (rather than a mere rhetoric) “high-quality agreement”, meaning to comprehensively liberalise trade barriers in substantially all sectors, so that it would maximize economic gains and domestic reforms. Among these two definitions, many academics evaluate that ASEAN has only shown a modest progress in achieving centrality, by preferring forum membership to substance.

Why has ASEAN centrality emerged? In a region where rivalry has persisted between China and Japan, China and the US, China and India, and South Korea and Japan, any regional initiatives from one will be treated suspiciously by another power. ASEAN has met this challenge by projecting open, inclusive and non-confrontational images to its “Plus X” frameworks, therefore making these external powers convenient to accept ASEAN’s initiatives. Southeast Asian countries have benefited from this situation since, as a collection of small and medium powers, they have had the opportunity to voice their concerns among these external giants.

The Three Challenges

After the RCEP, ASEAN confronts three challenges to maintain centrality in trade regionalism: the first relates to being a forum provider and the next two pertains to centrality of substance.

Apart from the homework to lure India back to the RCEP (and perhaps, in the long run, to entice the US and Russia to join the FTA), ASEAN should be watchful of any possible forum alternatives. ASEAN’s forums will remain attractive in so far as rivalry and distrust among external powers continue to exist. Should external powers achieve some degree of understanding and develop a common platform to cooperate, there will no longer be a need for ASEAN to be an honest broker. A case in point is the possible conclusion of the long-stalled China-Japan-Korea (CJK) FTA. After the finalisation of RCEP, both Japan and China have expressed their optimism regarding the prospect of CJK-FTA. The trilateral FTA is difficult since it involves the long-standing Japan-China and Japan-Korea rivalries. ASEAN’s proponents may exultantly declare that the RCEP has become the first FTA between these politico-economic rivals. Yet, a successful negotiation of CJK-FTA may potentially reduce the tension among the three countries, and even evolve into a distinct Northeast Asian institution that is independent from ASEAN forums. Another case in point is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The FTA was once named Trans-Pacific Partnership (TPP), and was politically strategic to serve US’ engagement policy in the Asia-Pacific under President Barrack Obama. President Donald Trump pulled the country out of the deal in 2017, however, the new President-elect Joe Biden had indicated US’ return. Interestingly, soon after RCEP’s signing, Chinese President Xi Jinping has also expressed his country’s interest in joining the deal. If this scenario comes true, then the CPTPP will economically far outweigh the RCEP. Geopolitically, the CPTPP may serve as a platform to negotiate cooperations and future relations among the two most powerful countries, and these prospects will likely make the ASEAN centrality run out of stream. At the time being, it is definitely too early to tell the likely occurrence of these dim scenarios (from ASEAN’s view) of CJK-FTA and CPTPP. However, in the long run, ASEAN needs to cautiously observe these regional developments.

Second, ASEAN leaders need to emphasize the substantive contribution of ASEAN centrality. RCEP is oft-repeatedly described as of a lower quality than the CPTPP for its less ambitious agendas in regulating investment and intellectual property rights, as well as the absence of labour and environmental chapters. However, the RCEP has actually provided different substantial contributions. Rather than simply an economic agreement that promises economic benefits, RCEP is essentially a part of ASEAN’s geopolitical instrument to ent

angle conflicting external powers in a joint platform of cooperation. To be clear, RCEP may not extirpate the gamut of profound politico-military conflicts in the Asia-Pacific. Yet, providing a platform for communication and collaboration is a necessary stepping stone to conflict reduction. Therefore, RCEP is an instrument of peace. Another area of contribution is the representation of developing countries’ interests in the RCEP. Substantively, RCEP incorporates special and differential treatment (SDT), economic and technical cooperation, and trade facilitation mechanism. These points are easily overlooked, or even underestimated, given the massive “high-quality FTA” narratives from developed countries and large businesses. Not all developing countries are comfortable with such a demand since it potentially brings massive distributional costs and structural adjustments. While it is indeed true that the RCEP also aims to be a “high-quality” FTA, the incorporation of the above-mentioned elements mean that the developing members still retain some room for policy and pace of adjustments. Politically, joining a regional agreement is a typical strategy of weak developing countries as it allows them to build a common bargaining position against the more powerful developed countries. Therefore, ASEAN has indeed provided some substantial contribution to ASEAN centrality, and the challenge here is to elevate these frequently neglected achievements more widely.

Third, substantively, the principle of ASEAN centrality should be directed to engage civil society organizations (CSOs). Despite the people-centred rhetoric, many ASEAN meetings, especially FTA negotiations, are held secretively without sufficient public deliberations. During RCEP’s negotiations, it was only when the hosts (as Indonesia did) initiated a separate forum for CSOs that the latter could directly express their concerns, yet as testified by a Jakarta-based CSO activist, the forum was brief and its content was too general

. Such a top-down process is a typical ASEAN’s reach-out strategy to the CSOs, in which the former limits the latter’s participation in “ASEAN-created spaces” only. ASEAN should consult the CSOs more meaningfully. It is indeed true that ASEAN centrality processes are of high-level security nature, nevertheless, trade is different. FTAs, including the RCEP, will affect the livelihood of small farmers, labours, and other ordinary citizens, hence the opportunity to create a more inclusive ASEAN centrality.

Conclusion

The completion of the RCEP is a milestone for ASEAN centrality. However, the road ahead is still a hard slog. ASEAN leaders should rivet to address the above-mentioned challenges to maintain future relevance in the Asia-Pacific.