ASEAN and the Regional Comprehensive Economic Partnership
Category: Column By : Jusuf Wanandi Read : 112 Date : Friday, November 10, 2017 - 08:21:37

President Trump is withdrawing the U.S. from global commitments: America is out of the TPP; jettisoned the Paris Agreement climate deal; and left UNESCO because of a perceived anti-Israel bias. Now, most dangerously, Trump is rejecting the 2015 Iran nuclear agreement between the U.S. and five other world powers. Not surprisingly, Trump is tearing up the global rule book, particularly on multilateral trade pacts.

As such, ASEAN has to prepare itself. The ASEAN chair, Philippine President Duterte, has made it a priority to complete the East Asian Regional Comprehensive (RCEP) negotiations. The RCEP is a coalition of countries including China, India and Japan. Achieving this deliverable would send a tremendous positive signal amidst uncertainty, and provide a crucial strategic direction for ASEAN, as it turns 50 this year. The world has changed profoundly since RCEP was first conceived, with uncertainties about trade, rising protectionism, technological disruption, and especially U.S. unilateralism. These factors all add urgency to closing the RCEP deal now.

The RCEP offers important benefits to deal with the challenges of the 21st century, but now also has the important purpose of helping check protectionism and boost trade policy certainty. The RCEP is the only game in town—and comprises half of the world’s population, and more than one third of global GDP and trade. Asia has a bigger stake than anyone else in combating protectionism, and securing the rules of the game. RCEP has put ASEAN in the box seat on what the whole region can do to protect Asian interests because, without ASEAN initiative, Asia collectively can’t step forward to defend its interests.

While a TPP ex-U.S. is on the table, it’s effectively a non-starter, while the RCEP was designed specifically to buttress regional trade and lift Asian growth. By some estimates, a sufficiently ambitious RCEP will lift regional incomes by between 2 and 9%, with higher benefits from deeper commitments. The same simulation also highlights the damage from increasing protectionism (up to 9% GDP loss for ASEAN).

The RCEP’s benefits are not confined to market access: it will build confidence in ASEAN as a center of global value chains and global investment. It can help job creation and innovation as well. Most importantly, the RCEP stimulates a cooperation agenda, building capacity for economic reform and reinforcing regional development over time. A strong ASEAN consensus within RCEP and East Asia will enhance ASEAN’s strategic and bargaining position with its larger East Asian neighbors, the EU and U.S.

Southeast Asia’s economic ministers have agreed on “key elements” to accelerate talks on a mega free trade deal at their Manila meeting in September. The ministers agreed that nations that join this mammoth agreement should remove barriers on at least 92% of their product lines over five to 10 years. All 10 ASEAN members have already signed up, while the group’s six trading partners, meanwhile, agreed to “recalibrate” before a new round of discussions in a month.