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Is RCEP The New Hope For ASEAN Post-Pandemic Recovery?

KUALA LUMPUR: With Malaysia experiencing an alarming nationwide resurgence of COVID-19 cases, Institute for Democracy and Economic Affairs (IDEAS) held a virtual forum on 24 November, 2020 to promote discussions that rethink the regional policy direction in creating an equitable ASEAN recovery plan.

The forum shares various researches and advocacy activities over the past year that have emerged from the pandemic, such as reconfiguration of supply chains in the region, the shifting of consumer behaviour towards sustainability along with accelerating digitalisation efforts to rejuvenate the local economy. 

One of them is the Regional Comprehensive Economic Partnership (RCEP), a recently signed free trade agreement between the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam that can become a potential solution to ASEAN’s weakening economy. 

Yusof Ishak Institute (ISEAS) in Singapore, Senior fellow Dr Jayant Menon touches on the control of local virus transmissions amongst ASEAN countries and the role they can play in moving forward and opening up the borders. 

“The government should narrow the gap between domestic and international restrictions,” he says, adding that with proper and strict health checking procedures through the collaboration of ASEAN member states and other RCEP members, opening international borders can outweigh the risks with the benefits of bringing a huge boost to economic recovery without significantly raising health risks.

“I’m not talking about a free for all, but a carefully calibrated reduction in international or border restriction to catch up with the domestic restriction,” he elaborates. 

“In fact, many countries experiencing new waves of infection are doing so because domestic restrictions have eased too fast ahead of international ones, and have done that because they need to support the economy,” he explains.

However, Asian Trade Centre, Associate Director Juan Sebastian Cortes-Sanchez expresses his reservations on RCEP, stating that the over-abundance of regional free trade agreements like ATIGA, ASEAN+1 and CPTPP will pose a challenge for corporate firms in selecting the most optimal agreement due to rules of origin, tariff schedules and certificate of origin requirements.

Although it is possible that RCEP can assist trade governance in the complex process of leveraging binding and non-binding commitments within multiple economic integration efforts, Cortes-Sanchez doubts that RCEP can offer any noticeable benefits to the post-pandemic world of ASEAN. 

Cortes-Sanchez also highlights the importance of streamlining various domestic approaches to regulated digital economy across each region, stating that without a common standard or baseline for regulatory approaches, MSMEs and businesses in general will not be able to develop a reliable module that allows them to sell or operate across multiple markets within the region.

On the other hand, Asia-Pacific Economic Cooperation (APEC) Secretariat, Executive director Tan Sri Dr Rebecca Sta Maria says even though RCEP was negotiated before the pandemic, it is a complex and living document that facilitates transparency and predictability in the investment environment. 

Although RCEP does not extend to current trade issues like government procurement access, human rights and IP, it is an inclusive agreement that unites diverse economic levels. 

As RCEP is still a relatively new free trade agreement, she states that it’s impossible to reap the benefits of the RCEP agreements in one or two years.

“Don’t diminish the work that has gone into RCEP when you compare it with older agreements that have been reinforced for the longest time,” she advices.

As things are yet to be set in stone, only RCEP can prove itself to be capable of recovering the ASEAN economy and bring together diverse economic modules along the course of time.