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Pivot to ASEAN and RCEP for trade hub growth?

By Oswald Chan | HK EDITION | Updated: 2021-09-24 14:31
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ASEAN and RCEP

ASEAN was central in formulating the Regional Comprehensive Economic Partnership, which consolidated the bilateral free trade agreements of member countries with Australia, New Zealand, South Korea, Japan and China into a standardized framework for the ASEAN 10 countries with the five Asia-Pacific partners. It is less powerful than it could have been with India and the US missing. It gives China a valuable platform to reinforce its larger Belt and Road Initiative. China is the major trading partner for all the ASEAN countries.

Nevertheless, given the ASEAN penchant for consensus, the RCEP is considered a "low-level" free trade agreement that only addresses the traditional primary imports flow, for which 90 percent of trade tariffs will eventually be removed. It is to facilitate the movement of goods within these 15 countries with less bureaucratic hassles via simplified, consistent rules. It is the dialogue partner value that is strategically important for the member countries, as COVID-19 forces a global recession.

The RCEP avoids the 21st century issues of labor movement, strict intellectual property rights protection, internet rules, e-commerce taxation, competition policy, environmental protection, State-owned enterprises, government procurement transparency, minimum wage and labor standards, the services trade, industrial investment, etc.

RCEP will not innovate, or reform global trade practices. Climate change and enlightened labor practices are nowhere on its agenda. It promotes regional economic integration at a basic level, by removing trade barriers to physical goods. It will boost market access within its terms, across member countries.

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