RCEP seen to usher in new era of East Asian economic cooperation

The Regional Comprehensive Partnership Cooperation (RCEP), which the Philippines is a member of but has yet to ratify, has the potential to shape outcomes in East Asia, particularly in the area of economic cooperation, according to an international economic expert.

The RCEP, the world’s largest regional economic agreement, is remarkable for coming into force at a time of great uncertainty, said Shiro Armstrong, an associate professor at the Australian National University, in a recent online presentation.

The RCEP came into force on January 1, 2022 in the midst of the COVID-19 pandemic and historic global recession, geopolitics and US-China strategic competition, rising protectionism, and the threat to the World Trade Organization and multilateralism.

The partnership is made up of the 10 ASEAN member states and Australia, China, Japan, South Korea, and New Zealand. It encompasses 30% of the world population, around 30% of global gross domestic product, and nearly 28% of global trade.

So far, six ASEAN member states—Brunei Darussalam, Cambodia, Lao PDR, Singapore, Thailand, and Vietnam—as well as four non-ASEAN signatory states—Australia, China, Japan, and New Zealand—have ratified the deal.

In the Philippines, relevant agencies and private sector stakeholders have been seeking the ratification of the RCEP, a prerequisite for the country to join the accord. They cautioned that further delay will result in the loss of growth momentum and cast doubts in the region about the Philippines’ openness to trade and investment.

Just recently, trade assistant secretary Allan Gepty reiterated that the country cannot afford to miss out on RCEP given the opportunities it will bring.

Meanwhile, the Philippine Exporters Confederation, Inc. (PHILEXPORT), an umbrella group of Philippine exporters, has likewise expressed the urgency for the immediate ratification of RCEP, which is expected to bolster exports to key FTA Partners.

With nearly half of its 2,000 active members exporting to RCEP countries, the exporters group cited the importance of the Philippines being a part of the world’s largest trade bloc as soon as possible and not miss out on the opportunities presented by the Agreement.

According to PHILEXPORT president Sergio R. Ortiz-Luis Jr., “There are concrete benefits to the Philippines being part of RCEP that we cannot dismiss such as the harmonized rules of origin and modern origin certification procedures under RCEP. This is a key takeaway for our members that do business in the RCEP countries as it is expected to reduce administrative cost and facilitate the movement of our exports in the region.”

Armstrong in his briefing said the RCEP, as the first region-wide legally binding agreement, will usher in a new era of East Asian economic cooperation that is expected to enable new market openings through trade liberalization and new rules.

It also consolidates and multilateralizes the ASEAN+1 free trade agreements and strengthens ASEAN centrality, while also allowing Southeast Asia to continue to play a neutral broker role in a region surrounded by great powers engaged in strategic competition, Armstrong said.

Moreover, RCEP brings China, Japan and South Korea into an agreement for the first time, this despite the political ups and downs between Japan and China and Japan and South Korea.

The potentials under the RCEP’s economic cooperation agenda in particular are significant, Armstrong said.

Specifically, this pillar presents an opportunity to engage South Asia, including India, Bangladesh and other new members, for eventual membership and further expansion of Factory Asia, said the expert.

Under the economic framework as well, a venue is provided for multilateralizing some of the RCEP’s provisions and supporting trans-Asian and trans-Pacific economic integration.

The economic agenda can also accelerate capacity building, technical cooperation, experience sharing and political cooperation.

“The experience sharing, the cooperation can over time deepen reform and tackle behind-the-border issues,” Armstrong continued.

If the economic framework is implemented properly, it likewise gives the opportunity to negotiate new rules and offers a way for countries to build trust, understanding and confidence in cooperation towards further market opening, while providing a platform for concerted unilateral action, he added.

Looking ahead, he suggests a number of issues for tackling under the economic cooperation agenda, including COVID recovery coordination relating to travel and vaccine protocols, digital economy compatibility and multilateral principles, energy transition particularly regarding financial coordination and cooperation, and infrastructure investment principles and dispute mediation.

“Going forward, implementation is going to be very important for RCEP, but for this grouping, the weight and scale and the diversity in interests suggest that this is an excellent framework for projecting Asia’s multilateral interests globally,” said Armstrong.

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