ASEAN’s Grand RCEPtion: World’s Largest Plurilateral Trade Agreement Affirms ASEAN Centrality

Caption: “ASEAN Centrality,” referring to Southeast Asia’s growing role in the global economy, seems more imminent given the successful signing of the RCEP. (WikiCommons)

The newly-signed Regional Comprehensive Economic Partnership (RCEP) is in a class of its own; encompassing around 30 percent of the global population and more than a quarter of global exports, it boasts the largest plurilateral free trade agreement ever. China, Japan, Australia, New Zealand, South Korea, and the ten ASEAN countries make up the agreement, which is seen by pundits as a signal that Asian states are taking their rightful place in designing the future of the new world trading order. 

The agreement, which was eight years and 31 rounds of negotiation in the making, successfully aligns a diverse set of economies into one regime beneficial for regional trade. It contains a harmonized and codified set of rules and regulations outlining product eligibility for lower tariffs, skirting what would be tedious red tape in the process. It also provides provisions for industry areas that have not been comprehensively covered in previous free trade agreements, such as intellectual property rights and e-commerce. 

RCEP’s members also hope that such an agreement would ensure the resilience of supply chains within the region through supporting more competitive production bases, thereby allowing the region to withstand sudden external economic shifts. Certainly, this regime will facilitate the smoother flow of goods and services and improve the overall business environment in the region—Peterson Institute, a think tank, predicts that the RCEP will boost regional trade by more than $500 billion within the next decade.

Commentators allege that the RCEP is Beijing finally finding a space to flex its economic muscle and dictate the flow of the regional economy. That view has some merit—the United States and India, two of China’s largest competitors, are excluded from the Beijing-backed deal. However, what is often overlooked is what RCEP signals about ASEAN centrality, and ASEAN’s budding role as an economic power broker between fierce competitors.

Rather than a China-led affair, negotiations for the free trade agreement were jump-started by the Southeast Asian 10-country bloc. Prior to the RCEP ASEAN, as a regional bloc, already had free trade agreements with the other five partners. The RCEP can be seen as ASEAN’s attempt to harmonize the five trade agreements into a regional regime and cement its position as a central economic actor in the region in the process. The agreement, which connects both geographical divides, such as between Oceania and Northeast Asia, and political fissures, such as between China and Japan, relies on ASEAN—which is both literally and figuratively the geopolitical center—to function. It is important to note that the RCEP was signed amidst not only a brutal U.S.-China trade war, but economic tensions between China and many of the agreement’s other parties such as Australia and Japan.

Moreover, by drawing China into this trade deal, some academics argue, ASEAN countries would also be able to enmesh Beijing in another clear-cut regime, further inhibiting China from ramping up aggressive and predatory political and economic practices. Conversely, ASEAN countries could also use RCEP as a bargaining chip with the United States, who, after withdrawing from the Trans-Pacific Partnership (TPP), seems to be slowly losing its economic grip over the region.

The RCEP, a monumental economic and political feat, is a hugely symbolic one as well. As the economies of Europe continue to slow down while those of Asia continue to thrive, the RCEP embodies the passing of the baton from the West to the East. The differences are even more stark given the havoc that COVID-19 has brought onto both regions—while Europe and the Americas are currently experiencing devastating second waves, Asian economies are already on the path to economic recovery. Certainly, the new free trade agreement will catalyze even further Asia’s growing weight in the international economy, possibly making Asia—and especially ASEAN—the architects of tomorrow’s global economic order.