ASEAN should take the RCEP reins to strengthen economic and political security
In Brief
Global security and economics are increasingly intertwined, leading to more insular actions and complicating efforts to address challenges like climate change and digital technology advancement. ASEAN's reliance on global value chains means it's more exposed to growing security risks and securitisation, prompting the need for a more strategic, comprehensive response. The Regional Comprehensive Economic Partnership (RCEP), the world's largest trade bloc, has been an important part of these efforts. Having successfully led RCEP negotiations to conclusion, ASEAN should now prove its leadership in ensuring RCEP's effective implementation.
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The world is faced with heightened uncertainties, including from growing interlinkages between economics and security. Weakened rules-based multilateralism has led to a rise in unilateral actions and minilateralism that undermines the system. The eroding appetite for global rules and multilateral actions may toughen efforts to overcome common challenges arising from climate change and rapid technological change. Fragmenting external markets and elevated security risks are driving countries to strengthen their individual and collective security.
ASEAN’s economy, with its embeddedness in global value chains, is disproportionately exposed to the impact of growing securitisation. This calls for a comprehensive look at regional security and informed responses at both the strategic and technical levels that help to strengthen it.
The development of a new framework in ASEAN demands time and resources. ASEAN will need to leverage existing frameworks to build resilience to shocks and to shifts arising from geostrategic competition. One extant framework is the Regional Comprehensive Economic Partnership (RCEP), a mega-regional free trade agreement (FTA) among the 10 ASEAN member states, Australia, China, Japan, South Korea and New Zealand.
Though India actively participated in the RCEP negotiations from its start in 2012, it eventually pulled out at the final stage. Text-based negotiations were concluded in November 2019, prior to the COVID-19 pandemic and as the US–China trade tensions escalated during Trump’s presidency. Following its signing in November 2020, RCEP entered into force in January 2022 as geostrategic competition peaked.
Evidence about the utilisation and impact of RCEP is still patchy. Anecdotal observations indicate that China, Japan and South Korea are RCEP’s biggest, early beneficiaries, as it acts as a surrogate FTA among the three countries which previously had no free trade agreement among them. Also, within ASEAN, socialisation and promotion of RCEP is uneven, with Cambodia and the Philippines among the more active members.
The lack of promotion of RCEP may be due in part to the slow establishment of the RCEP Support Unit, an interim arrangement for the RCEP Secretariat, which provides support to the RCEP Joint Committee and its subsidiary bodies as envisaged under the agreement. Countries often allocate less resources for FTA implementation than negotiations given the latter’s greater visibility and scrutiny.
Still, RCEP can be a powerful instrument to boost security in Southeast Asia given its economic weight, binding rules and potential for shaping future regional economic governance. As an ASEAN-driven undertaking, RCEP’s implementation can contribute to regional security and reaffirm ASEAN centrality in broader regional architecture.
Following the United States’ exit from the Trans-Pacific Partnership (TPP) in 2017, RCEP has become the world’s largest trading bloc, accounting for 30 per cent of the global population and the global economy and 28 of global trade in 2023. Recent events and policy trajectories highlight rising threats to supply chain security and resilience. These developments raise the value of a clear and binding cooperation framework like RCEP.
Trade intensity measures how much countries trade with each other compared to their total trade with the world and the significance of their trade relationship relative to their overall trade. In 2023 trade intensity among RCEP parties stood at 1.76, meaning that RCEP parties are trading more than expected from their share in global trade with each other. In the same year, the region attracted almost US$460 billion in foreign direct investment, or over a third of global inflows. The economic significance and interdependence among RCEP partners means there is a great deal at stake that encourages cooperation and collective stability.
A common criticism of RCEP is its lack of ambition, especially compared to the TPP and its post-United States successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This claim fails to recognise RCEP’s success in navigating political and economic sensitivities and in bringing together — under shared and binding rules — 15 economies as diverse as Japan and Australia on the one hand and Cambodia and Laos on the other.
During a time of widespread unilateralism, RCEP offers a rules-based trade and investment framework that supports the multilateral system as well as policy certainty for businesses in the region. The cumulative rules of origin in RCEP facilitate regional supply chain development and region-wide sourcing. Its provisions on security exceptions restrict them to legitimate usage.
RCEP’s institutional mechanisms include RCEP ministers’ meeting, the RCEP Joint Committee and its committees on goods, services and investment, sustainable growth and business environment. RCEP summits may also be convened to bring together the governments of RCEP member states to discuss shared concerns. These arrangements serve as platforms to discuss RCEP implementation and other issues of common concern. RCEP also includes a built-in agenda and compels periodic general review with a view to updating the agreement and ensuring its continued relevance. This provides room for emerging issues — such as supply chains, digitalisation and the green economy — to be considered by RCEP in the future. This gradual approach, starting small before expanding in scope, is common in ASEAN economic cooperation and hence unsurprising as RCEP is an ASEAN-centric agreement.
ASEAN’s long experience in bringing together partner countries in forums, such as ASEAN Plus Three and the East Asia Summit, despite their differing stances on non-economic issues can be applied to RCEP. The priority is to build mutual understanding of the importance of mitigating conflicts through a rules-based framework and of fully implementing RCEP to strengthen supply chain connectivity and resilience in the region.
RCEP signals not only continued commitment to markets and rules-based multilateralism, but also the use of rules and procedures to address differences instead of resorting to unilateral actions. Within the context of RCEP, dialogue is prioritised over the escalation issues into conflict. This holds strategic value for many RCEP parties — particularly middle powers such as ASEAN, Australia and South Korea — that are more exposed to the risk of rising unilateralism and global fragmentation.
The benefits of RCEP can only be realised if it is fully implemented and utilised by businesses. A competent RCEP Support Unit with sufficient capacity is paramount to enforce and monitor RCEP implementation. RCEP needs to be promoted and socialised so that businesses and investors can easily understand and utilise the agreement.
The full and effective implementation of RCEP has the potential to reinforce regional security by promoting rules-based conduct, mutual trust and confidence and building shared understanding of emerging issues and concerns. Having successfully led RCEP negotiations to their conclusion, ASEAN should now prove its leadership in the full and effective implementation of RCEP.
Julia Tijaja is Associate Senior Fellow at the ASEAN Studies Centre, ISEAS–Yusof Ishak Institute.
Iman Pambagyo is former chair of the RCEP Trade Negotiating Committee.
The Authors would like to thank Riky Maulana Ikhwan for the support rendered on data.