RCEP Focus At 34th ASEAN Summit – Analysis


Thailand hosted the 34th ASEAN Summit on June 23 under the theme of “Advancing Partnership for Sustainability”. As the Asean chair, Thailand wanted to see member states forge closer ties on the basis of regional unity. The “advancing” part of the theme signified dynamic changes to be made in the future by capitalising on technological developments resulting from the “4th Industrial Revolution”, as well as enhancing competition and turning the region into a “fully digital ASEAN”.

The “partnership” aspect underscores the partnerships between Asean and its dialogue partners. “Sustainability” will also be promoted in the areas of sustainable security, economic growth, a green economy and sustainable development. The “advancing” part of the theme signifies dynamic changes to be made in the future by capitalising on technological developments resulting from the “4th Industrial Revolution”, as well as enhancing competition and turning the region into a “fully digital ASEAN”, observers say.

The region is confronted with critical security challenges on the maritime domain and the need was felt that the organization ought to tackle together such challenges with common viewpoints so that their mutual interests are not jeopardized by unilateral action by any outside powers. The South China Sea is the theatre that has emerged as the latest flashpoint. As some of the members of the grouping have contending claims on certain areas of the South China Sea and China claims almost in its entirety, control over this resource-rich area poses risks of maritime disputes. The need of the hour is to exercise self-restraint, especially when the prospects for the US-China trade war threaten escalation. If it spirals out of control, it could pose serious risk to the future of the economies of the countries in the region. In this sense, the annual summit of the ASEAN steeped in diplomacy, protocol and cultural color in the Thai capital of Bangkok is seen as a savior to diffuse such potential flashpoint from erupting into a conflict.

The region also faces other internal problems in certain member countries. For example, one regional predicament that the organization faces is the Rohingya refugee crisis in Myanmar. Therefore, as host of the summit this time, Thai Prime Minister Prayuth Chan-ocha took the lead making the leaders clasp their hands together in a trademark ASEAN handshake to project unity. This symbolism and his call for regional unity was relevant in the context of the 10-nation bloc to push for concluding a massive free trade pact with China and five other Asia-Pacific nations to cushion any impact from America’s trade conflicts with China. Being aware of the winds of protectionism battering the multilateral system, the grouping felt greater need now than ever before to remain together strong so that the new challenges are met appropriately.

The Regional Comprehensive Economic Partnership (RCEP) is being negotiated now and slated for completion by the end of 2019. The pact involves ASEAN, China, Japan, South Korea, India, Australia and New Zealand, and when inked it will form the world’s largest trading bloc, making up a third of the global gross domestic product. In his remarks, the Singapore Prime Minister Lee Hsien Loong urged the members to make a “renewed push”. An “expeditious conclusion” of the trade pact will send a strong message of ASEAN’s commitment to uphold the global trading system. When inked, the RCEP can make a big difference because it brings together all the key countries on the western side of the Pacific, including Northeast Asia and India, Australia and New Zealand.

Indeed, it is in ASEAN’s interest to look for “new and non-traditional” opportunities for economic cooperation, like the ASEAN Agreement on E-Commerce and Asean Smart Cities Network. These initiatives enable businesses and consumers to easily access and move data across borders, and deepen ASEAN’s integration and proposition as a single digital market. Such efforts could make the stakeholders competitive, create new jobs and cushion the impact of external shocks.

The US under Trump, which has been pursuing bilateral deals over multination trade accords, is not included in the RCEP, which when materialises, would encompass the world’s largest free trade region. The significance of the RECP can be gauged from the fact that the US and China are locked in a bitter trade conflict, creating uncertainty in the region and the world. If not resolved soon, this conflict would take a toll on global growth and hinder the ongoing processes of economic integration. The onus lies on both Trump and Xi to resolve their differences before the situation spirals out of control. Though the leaders at the summit avoided naming the US and China or specific nation embroiled in controversies in a show of their conservative protocols, the issue was nevertheless raised in closed-door and informal discussion.

India has some concerns over elements of RCEP. Though Indonesia is t he RCEP coordinator and leads the troika that also comprises Thailand’s trade minister and the ASEAN secretary-general has also some concerns. Efforts are being made to address them and the interests would be safeguarded.

Intense negotiations are scheduled ahead of the deadline by the end of 2019. A meeting was just concluded in Australia and another one scheduled in late July in China. Besides, a ministerial meeting is planned in August. India still has reservations if the mega regional agreement will be a win-win situation for all. For India, duty concession issues with China for Indian goods are “particularly problematic” at the RCEP trade pact. India feels that it made “asymmetrical sacrifice” in its previous trade pacts, including the one with ASEAN, and would not let that happen again. India feels that the agreement should be balanced overall and everyone must be as constructive as possible. In particular, domestic textile and automobile industries have cautioned the government to not cede space to China while aluminum and copper industry associations have raised concerns at the likely rise in trade deficit with China due to likely “alarming” spike in imports and a potential threat to the ‘Make in India’ initiative.

The biggest takeaway of the summit is the vision document “ASEAN’s Outlook on the Indo-Pacific” that was issued. This has been widely welcomed. The document recognizes that Indo-Pacific is a seamless maritime space encompasses the Asia-Pacific and Indian Ocean regions and it is “closely integrated and interconnected region”. It also reinforced ASEAN’s centrality, about which questions are often asked because of various levels of development but bound by geographical incongruity.

Dr. Rajaram Panda

Dr. Rajaram Panda, Former Senior Fellow at Nehru Memorial Museum and Library, a think tank under the Ministry of Culture, Government of India, Former ICCR India Chair Professor, Reitaku University, Japan, and former Senior Fellow, IDSA, New Delhi E-mail: [email protected]

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