• Home
  • About RSIS
    • Introduction
    • Building the Foundations
    • Welcome Message
    • Board of Governors
    • Staff Profiles
      • Executive Deputy Chairman’s Office
      • Dean’s Office
      • Management
      • Distinguished Fellows
      • Faculty and Research
      • Associate Research Fellows, Senior Analysts and Research Analysts
      • Visiting Fellows
      • Adjunct Fellows
      • Administrative Staff
    • Honours and Awards for RSIS Staff and Students
    • RSIS Endowment Fund
    • Endowed Professorships
    • Career Opportunities
    • Getting to RSIS
  • Research
    • Research Centres
      • Centre for Multilateralism Studies (CMS)
      • Centre for Non-Traditional Security Studies (NTS Centre)
      • Centre of Excellence for National Security (CENS)
      • Institute of Defence and Strategic Studies (IDSS)
      • International Centre for Political Violence and Terrorism Research (ICPVTR)
    • Research Programmes
      • National Security Studies Programme (NSSP)
      • Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
    • [email protected] Newsletter
    • Other Research
      • Future Issues And Technology (FIT)
      • Science and Technology Studies Programme (STSP) (2017-2020)
  • Graduate Education
    • Graduate Programmes Office
    • Overview
    • MSc (Asian Studies)
    • MSc (International Political Economy)
    • MSc (International Relations)
    • MSc (Strategic Studies)
    • NTU-Warwick Double Masters Programme
    • PhD Programme
    • Exchange Partners and Programmes
    • How to Apply
    • Financial Assistance
    • Meet the Admissions Team: Information Sessions and other events
    • RSIS Alumni
  • Alumni & Networks
    • Alumni
    • Asia-Pacific Programme for Senior Military Officers (APPSMO)
    • Asia-Pacific Programme for Senior National Security Officers (APPSNO)
    • SRP Executive Programme
    • Terrorism Analyst Training Course (TATC)
  • Publications
    • RSIS Publications
      • Annual Reviews
      • Books
      • Bulletins and Newsletters
      • Commentaries
      • Counter Terrorist Trends and Analyses
      • Commemorative / Event Reports
      • IDSS Paper
      • Interreligious Relations
      • Monographs
      • NTS Insight
      • Policy Reports
      • Working Papers
      • RSIS Publications for the Year
    • Glossary of Abbreviations
    • External Publications
      • Authored Books
      • Journal Articles
      • Edited Books
      • Chapters in Edited Books
      • Policy Reports
      • Working Papers
      • Op-Eds
      • External Publications for the Year
    • Policy-relevant Articles Given RSIS Award
  • Media
    • Great Powers
    • Sustainable Security
    • Other Resource Pages
    • Media Highlights
    • News Releases
    • Speeches
    • Vidcast Channel
    • Audio/Video Forums
  • Events
  • Giving
  • Contact Us
Facebook
Twitter
YouTube
RSISVideoCast RSISVideoCast rsis.sg
Linkedin
instagram instagram rsis.sg
RSS
  • Home
  • About RSIS
      • Introduction
      • Building the Foundations
      • Welcome Message
      • Board of Governors
      • Staff Profiles
        • Executive Deputy Chairman’s Office
        • Dean’s Office
        • Management
        • Distinguished Fellows
        • Faculty and Research
        • Associate Research Fellows, Senior Analysts and Research Analysts
        • Visiting Fellows
        • Adjunct Fellows
        • Administrative Staff
      • Honours and Awards for RSIS Staff and Students
      • RSIS Endowment Fund
      • Endowed Professorships
      • Career Opportunities
      • Getting to RSIS
  • Research
      • Research Centres
        • Centre for Multilateralism Studies (CMS)
        • Centre for Non-Traditional Security Studies (NTS Centre)
        • Centre of Excellence for National Security (CENS)
        • Institute of Defence and Strategic Studies (IDSS)
        • International Centre for Political Violence and Terrorism Research (ICPVTR)
      • Research Programmes
        • National Security Studies Programme (NSSP)
        • Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
      • [email protected] Newsletter
      • Other Research
        • Future Issues And Technology (FIT)
        • Science and Technology Studies Programme (STSP) (2017-2020)
  • Graduate Education
      • Graduate Programmes Office
      • Overview
      • MSc (Asian Studies)
      • MSc (International Political Economy)
      • MSc (International Relations)
      • MSc (Strategic Studies)
      • NTU-Warwick Double Masters Programme
      • PhD Programme
      • Exchange Partners and Programmes
      • How to Apply
      • Financial Assistance
      • Meet the Admissions Team: Information Sessions and other events
      • RSIS Alumni
  • Alumni & Networks
      • Alumni
      • Asia-Pacific Programme for Senior Military Officers (APPSMO)
      • Asia-Pacific Programme for Senior National Security Officers (APPSNO)
      • SRP Executive Programme
      • Terrorism Analyst Training Course (TATC)
  • Publications
      • RSIS Publications
        • Annual Reviews
        • Books
        • Bulletins and Newsletters
        • Commentaries
        • Counter Terrorist Trends and Analyses
        • Commemorative / Event Reports
        • IDSS Paper
        • Interreligious Relations
        • Monographs
        • NTS Insight
        • Policy Reports
        • Working Papers
        • RSIS Publications for the Year
      • Glossary of Abbreviations
      • External Publications
        • Authored Books
        • Journal Articles
        • Edited Books
        • Chapters in Edited Books
        • Policy Reports
        • Working Papers
        • Op-Eds
        • External Publications for the Year
      • Policy-relevant Articles Given RSIS Award
  • Media
      • Great Powers
      • Sustainable Security
      • Other Resource Pages
      • Media Highlights
      • News Releases
      • Speeches
      • Vidcast Channel
      • Audio/Video Forums
  • Events
  • Giving
  • Contact Us
  • instagram instagram rsis.sg
Connect

Getting to RSIS

Map

Address

Nanyang Technological University
Block S4, Level B3,
50 Nanyang Avenue,
Singapore 639798

View location on Google maps Click here for directions to RSIS

Get in Touch

    Connect with Us

      rsis.ntu
      rsis_ntu
      rsisntu
    RSISVideoCast RSISVideoCast rsisvideocast
      school/rsis-ntu
    instagram instagram rsis.sg
      RSS
    Subscribe to RSIS Publications
    Subscribe to RSIS Events

    RSIS Intranet

    S. Rajaratnam School of International Studies Think Tank and Graduate School Ponder The Improbable Since 1966
    Nanyang Technological University Nanyang Technological University

    Skip to content

     
    • RSIS
    • Publication
    • RSIS Publications
    • RCEP: Turning Point for ASEAN?
    • Annual Reviews
    • Books
    • Bulletins and Newsletters
    • Commentaries
    • Counter Terrorist Trends and Analyses
    • Commemorative / Event Reports
    • IDSS Paper
    • Interreligious Relations
    • Monographs
    • NTS Insight
    • Policy Reports
    • Working Papers
    • RSIS Publications for the Year

    CO21172 | RCEP: Turning Point for ASEAN?
    Dipinder Singh Randhawa

    24 November 2021

    download pdf
    RSIS Commentary is a platform to provide timely and, where appropriate, policy-relevant commentary and analysis of topical and contemporary issues. The authors’ views are their own and do not represent the official position of the S. Rajaratnam School of International Studies (RSIS), NTU. These commentaries may be reproduced with prior permission from RSIS and due credit to the author(s) and RSIS. Please email to Editor RSIS Commentary at [email protected].

    SYNOPSIS

    RCEP can be a turning point for Southeast Asia if ASEAN takes initiatives to further boost coordination and collaboration to meet the challenges that lie ahead in a post-pandemic world.


    Source: RCEP MEETINGS, SATURDAY 3 AUGUST 2019, Department of Foreign Affairs and Trade, CC BY 2.0

    COMMENTARY

    ON 2 NOVEMBER 2021, following the endorsement of the Regional Comprehensive Economic Partnership (RCEP) by Australia and New Zealand, the proposed new regional arrangement reached the required threshold of ratification by six ASEAN member states and three non-ASEAN nations. With this, the RCEP will come into force on 1 January 2022, or less than two months away. The signatories to the agreement include all the ten member states of ASEAN as well as Australia, China, Japan, New Zealand, and South Korea.

    During a period of protectionist fervour and retreat from globalisation, RCEP sends a clear signal to the global community that the region is open for business. The largest Free Trade Agreement (FTA) ever signed, RCEP members accounted for 31% of global GDP, 28% of global trade and 29% of world population in 2020. RCEP is the first trade agreement linking China, Japan, and South Korea.

    RCEP and CPTPP

    A comprehensive regional free trade agreement, RCEP consolidates the ‘spaghetti bowl’ of trade agreements across East and Southeast Asia. It covers trade in goods and services, investment, and economic and technical cooperation. RCEP is expected to eliminate about 90% of the tariffs on imports between its signatories within 20 years of coming into force.

    It will also establish common rules for e-commerce, trade, intellectual property, government procurement, competition, and small and medium-sized enterprises (SMEs).

    Often compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), RCEP’s aims are modest. It asks for fewer commitments than CPTPP. Some 30% of RCEP’s text duplicates CPTPP provisions. It eliminates fewer tariff lines and allows substantial exemption in services trade.

    As is the case with most modern FTA agreements, RCEP members agreed on several points in e-commerce, but it offers exceptions to prevent data localisation requirements and cross-border data transfers for national security and public policy reasons. This means RCEP signatories may prevent data on and information of their citizens/companies from being transferred abroad by electronic means.

    Unlike CPTPP or other regional agreements involving the EU, it does not address labour, human rights, and environmental sustainability issues or the intense competition for foreign investment across the region that is accompanied by increasing tax and other concessions.

    RCEP does not offer a dispute settlement mechanism on most issues, though there is an option to review it after five years. However, RCEP substantially simplifies procedures and lowers the costs of trade in the region, laying foundations for further integration, and prepares ASEAN for the challenges that lie ahead.

    Implications for ASEAN

    ASEAN’s strength lies in its ‘geopolitical’ centrality, as an open and inclusive Southeast Asian grouping with a focus on regional stability and economic prosperity. With its remarkable growth performance, ASEAN has drawn more powerful countries into trade and investment agreements, achieving results through multilateral cooperation and the rules-based regime.

    RCEP’s impact will be felt through deepening regional and intra-ASEAN economic integration as it offers a stepping-stone for signatories to join higher-standard FTAs. RCEP’s attractiveness is reflected in the enthusiasm for the partnership from countries such as Australia and China which have serious unresolved bilateral issues. ASEAN Centrality in RCEP will be critical for the sustenance of the partnership.

    Trade agreements do not automatically deliver benefits to signatories. Gains from FTAs are shaped by a country’s level of development, its economic and political stability, the availability of a healthy skilled labour force, and an investor-friendly investment regime.

    Benefits from FTAs are contingent upon how well companies in the private sector can capitalise on the opportunities offered in the relevant accords. This in turn is shaped by the firm’s efficiency, innovativeness, and its ability to anticipate market needs, especially in the export sector.

    Many SMEs are seldom able to enjoy all the benefits offered by FTAs, primarily on account of information gaps and the costs of compliance. Herein lies a profoundly important role for governments as intermediaries to create awareness of new opportunities opened by RCEP to SMEs and to design relevant frameworks for foreign investors, to develop links with domestic firms.

    Impact of RCEP on ASEAN

    RCEP’s framework can help boost resilience of supply chains and in developing new competitive production lines resistant to sudden imposition of trade restrictions, as was the case with PPE goods during the COVID-19 pandemic.

    For regional businesses, RCEP’s most significant component are the unified and common rules of origin that govern how much of a product must be produced within the region to qualify for tariff benefits. Instead of the myriad of rules, firms in ASEAN will follow a single set of rules, that will ease business and boost ASEAN’s attractiveness as a destination for trade and investment.

    Intra-ASEAN trade is 25 percent of the grouping’s total trade with the world, and there is high potential for growth as the region embarks on services liberalisation and digital transformation. Some of the needed measures are under way.

    RCEP will help plug gaps in intra-ASEAN trade agreements. At the same time, ASEAN should scale up support to boost trade and investment in the region. There is currently a lethargic implementation of the provisions in the blueprint of the ASEAN Economic Community (AEC).

    As a preferred destination for investors from across the world, with coordinated measures and support from public agencies, ASEAN firms can broaden their links with regional companies as well as those in other parts of the world. This would require a commitment from ASEAN member states to harmonise and digitise trade facilitation measures, customs clearance, reduce non-tariff barriers, and help SMEs bridge the financing, information, and logistics gaps.

    Experience with past FTAs points to the sizeable impact industry associations and state agencies can play in highlighting the benefits of FTAs to SMEs, catalyse foreign investment, and facilitate cross-border collaboration. As RCEP gains traction and tariffs are progressively lowered, consumers across ASEAN will see benefits of lower prices and a wider range of goods.

    Strategic Benefits

    RCEP should be seen, not as an end, but as an important stepping-stone to greater engagement within the region and beyond. Aside from the benefits of larger markets, expansion of trade, and greater participation in global value chains, RCEP offers ASEAN an opportunity and a platform to enhance policy coordination among member states.

    This will boost ASEAN community building and Southeast Asian resilience to future economic shocks and pandemics. RCEP will boost the attractiveness of the region for supply chains; prepare the ground for meeting the challenges of the Fourth Industrial Revolution; and strengthen the resolve in seeking more cross-border solutions in mitigating the economic impact of climate change and non-traditional security threats.

    In the post-pandemic world, these are strategic concerns which ASEAN must manage in a collective manner on a multilateral and sustainable basis.

    About the Author

    Dipinder Singh Randhawa is an Adjunct Senior Fellow at the Rajaratnam School of International Studies (RSIS) at Nanyang Technological University (NTU), Singapore.

    Categories: Commentaries / Country and Region Studies / International Political Economy / International Politics and Security / Regionalism and Multilateralism / East Asia and Asia Pacific / Global / South Asia / Southeast Asia and ASEAN

    Last updated on 24/11/2021

    comments powered by Disqus
    RSIS Commentary is a platform to provide timely and, where appropriate, policy-relevant commentary and analysis of topical and contemporary issues. The authors’ views are their own and do not represent the official position of the S. Rajaratnam School of International Studies (RSIS), NTU. These commentaries may be reproduced with prior permission from RSIS and due credit to the author(s) and RSIS. Please email to Editor RSIS Commentary at [email protected].

    SYNOPSIS

    RCEP can be a turning point for Southeast Asia if ASEAN takes initiatives to further boost coordination and collaboration to meet the challenges that lie ahead in a post-pandemic world.


    Source: RCEP MEETINGS, SATURDAY 3 AUGUST 2019, Department of Foreign Affairs and Trade, CC BY 2.0

    COMMENTARY

    ON 2 NOVEMBER 2021, following the endorsement of the Regional Comprehensive Economic Partnership (RCEP) by Australia and New Zealand, the proposed new regional arrangement reached the required threshold of ratification by six ASEAN member states and three non-ASEAN nations. With this, the RCEP will come into force on 1 January 2022, or less than two months away. The signatories to the agreement include all the ten member states of ASEAN as well as Australia, China, Japan, New Zealand, and South Korea.

    During a period of protectionist fervour and retreat from globalisation, RCEP sends a clear signal to the global community that the region is open for business. The largest Free Trade Agreement (FTA) ever signed, RCEP members accounted for 31% of global GDP, 28% of global trade and 29% of world population in 2020. RCEP is the first trade agreement linking China, Japan, and South Korea.

    RCEP and CPTPP

    A comprehensive regional free trade agreement, RCEP consolidates the ‘spaghetti bowl’ of trade agreements across East and Southeast Asia. It covers trade in goods and services, investment, and economic and technical cooperation. RCEP is expected to eliminate about 90% of the tariffs on imports between its signatories within 20 years of coming into force.

    It will also establish common rules for e-commerce, trade, intellectual property, government procurement, competition, and small and medium-sized enterprises (SMEs).

    Often compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), RCEP’s aims are modest. It asks for fewer commitments than CPTPP. Some 30% of RCEP’s text duplicates CPTPP provisions. It eliminates fewer tariff lines and allows substantial exemption in services trade.

    As is the case with most modern FTA agreements, RCEP members agreed on several points in e-commerce, but it offers exceptions to prevent data localisation requirements and cross-border data transfers for national security and public policy reasons. This means RCEP signatories may prevent data on and information of their citizens/companies from being transferred abroad by electronic means.

    Unlike CPTPP or other regional agreements involving the EU, it does not address labour, human rights, and environmental sustainability issues or the intense competition for foreign investment across the region that is accompanied by increasing tax and other concessions.

    RCEP does not offer a dispute settlement mechanism on most issues, though there is an option to review it after five years. However, RCEP substantially simplifies procedures and lowers the costs of trade in the region, laying foundations for further integration, and prepares ASEAN for the challenges that lie ahead.

    Implications for ASEAN

    ASEAN’s strength lies in its ‘geopolitical’ centrality, as an open and inclusive Southeast Asian grouping with a focus on regional stability and economic prosperity. With its remarkable growth performance, ASEAN has drawn more powerful countries into trade and investment agreements, achieving results through multilateral cooperation and the rules-based regime.

    RCEP’s impact will be felt through deepening regional and intra-ASEAN economic integration as it offers a stepping-stone for signatories to join higher-standard FTAs. RCEP’s attractiveness is reflected in the enthusiasm for the partnership from countries such as Australia and China which have serious unresolved bilateral issues. ASEAN Centrality in RCEP will be critical for the sustenance of the partnership.

    Trade agreements do not automatically deliver benefits to signatories. Gains from FTAs are shaped by a country’s level of development, its economic and political stability, the availability of a healthy skilled labour force, and an investor-friendly investment regime.

    Benefits from FTAs are contingent upon how well companies in the private sector can capitalise on the opportunities offered in the relevant accords. This in turn is shaped by the firm’s efficiency, innovativeness, and its ability to anticipate market needs, especially in the export sector.

    Many SMEs are seldom able to enjoy all the benefits offered by FTAs, primarily on account of information gaps and the costs of compliance. Herein lies a profoundly important role for governments as intermediaries to create awareness of new opportunities opened by RCEP to SMEs and to design relevant frameworks for foreign investors, to develop links with domestic firms.

    Impact of RCEP on ASEAN

    RCEP’s framework can help boost resilience of supply chains and in developing new competitive production lines resistant to sudden imposition of trade restrictions, as was the case with PPE goods during the COVID-19 pandemic.

    For regional businesses, RCEP’s most significant component are the unified and common rules of origin that govern how much of a product must be produced within the region to qualify for tariff benefits. Instead of the myriad of rules, firms in ASEAN will follow a single set of rules, that will ease business and boost ASEAN’s attractiveness as a destination for trade and investment.

    Intra-ASEAN trade is 25 percent of the grouping’s total trade with the world, and there is high potential for growth as the region embarks on services liberalisation and digital transformation. Some of the needed measures are under way.

    RCEP will help plug gaps in intra-ASEAN trade agreements. At the same time, ASEAN should scale up support to boost trade and investment in the region. There is currently a lethargic implementation of the provisions in the blueprint of the ASEAN Economic Community (AEC).

    As a preferred destination for investors from across the world, with coordinated measures and support from public agencies, ASEAN firms can broaden their links with regional companies as well as those in other parts of the world. This would require a commitment from ASEAN member states to harmonise and digitise trade facilitation measures, customs clearance, reduce non-tariff barriers, and help SMEs bridge the financing, information, and logistics gaps.

    Experience with past FTAs points to the sizeable impact industry associations and state agencies can play in highlighting the benefits of FTAs to SMEs, catalyse foreign investment, and facilitate cross-border collaboration. As RCEP gains traction and tariffs are progressively lowered, consumers across ASEAN will see benefits of lower prices and a wider range of goods.

    Strategic Benefits

    RCEP should be seen, not as an end, but as an important stepping-stone to greater engagement within the region and beyond. Aside from the benefits of larger markets, expansion of trade, and greater participation in global value chains, RCEP offers ASEAN an opportunity and a platform to enhance policy coordination among member states.

    This will boost ASEAN community building and Southeast Asian resilience to future economic shocks and pandemics. RCEP will boost the attractiveness of the region for supply chains; prepare the ground for meeting the challenges of the Fourth Industrial Revolution; and strengthen the resolve in seeking more cross-border solutions in mitigating the economic impact of climate change and non-traditional security threats.

    In the post-pandemic world, these are strategic concerns which ASEAN must manage in a collective manner on a multilateral and sustainable basis.

    About the Author

    Dipinder Singh Randhawa is an Adjunct Senior Fellow at the Rajaratnam School of International Studies (RSIS) at Nanyang Technological University (NTU), Singapore.

    Categories: Commentaries / Country and Region Studies / International Political Economy / International Politics and Security / Regionalism and Multilateralism

    Last updated on 24/11/2021

    Back to top

    Terms of Use | Privacy Statement
    Copyright © S. Rajaratnam School of International Studies. All rights reserved.
    This site uses cookies to offer you a better browsing experience. By continuing, you are agreeing to the use of cookies on your device as described in our privacy policy. Learn more
    OK
    Latest Book
    RCEP: Turning Point for ASEAN?

    SYNOPSIS

    RCEP can be a turning point for Southeast Asia if ASEAN takes initiatives to further boost coordination and collaboration to meet the challenges th ...
    more info