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et’s take a moment to examine the challenges in protracted negotiations on the Regional Comprehensive Economic Partnership (RCEP) between ASEAN and its Free Trade Agreement (FTA) partners Australia, China, India, Japan, New Zealand and South Korea.

Commencing in 2013, negotiations over the RCEP were initially targeted for completion by the end of 2015. In November 2015, the leaders decided to move back the deadline to 2016. The 2016 Joint Leaders’ Statement, however, called for a “swift conclusion” to the negotiations. By 2017, the RCEP members had agreed to conclude negotiations by the end of 2018.

What has significantly changed in the RCEP negotiations that its conclusion had to be postponed three times in four consecutive years?

Despite some skepticism over the implications of the RCEP on the domestic market, this mega trade bloc will serve the region’s economic prospects. Built on the existing ASEAN+1 FTA framework, the RCEP aims to address the complexity of the “noodle bowl effect” amid the proliferation of FTAs in the region.

While recognizing the different development levels and some flexibility in commitments, this regional architecture with a combined gross domestic product (GDP) of US$22.4 trillion and total trade of up to $11.9 trillion in 2015 is expected to broaden and deepen economic ties among member countries. The RCEP should also become the world largest mega trade bloc, contributing up to 30 percent of the world GDP and more than a quarter of world exports.

Even so, all these benefits will go down the drain under “endless” negotiations. Two major challenges are perceived to have caused the deadlock. The first challenge is applying the “single undertaking” approach, wherein “every item of the negotiation is part of a whole and indivisible package and cannot be agreed separately”. In other words, nothing can be agreed until every chapter of the RCEP is agreed.

The Expert Roundtable for RCEP negotiations released a recommendation to avoid taking the “single undertaking” approach.

Although the guiding principles do not mention a “single undertaking” approach, it remains an essential practice. This principle came into play when India insisted on it to ensure positive gains from the RCEP trade liberalization. In the ASEAN-India FTA, Indian agricultural products are “immune to liberalization because they are either excluded or scheduled under the sensitive track”, whereas India has strong concessions for liberalizing labor mobility (trade in services), which permit the high mobilization of its professionals. India has suffered a trade deficit in goods under the ASEAN+1 FTA framework and, accordingly, wanted to avoid the same under the RCEP.

Nonetheless, this principle is not the root cause of the deadlock. In comparison, the World Trade Organization (WTO) and Trans-Pacific Partnership (TPP) employed the “single undertaking” approach, yet they managed to conclude their negotiations. WTO took 14 years (2001 to 2015) to conclude negotiations and thee TPP finalized all rounds within five years (2010 to 2015). Thus, this issue likely serves as a disabling factor in successfully concluding the RCEP negotiations.

The second challenge is the development gap issue. While the RCEP’s goal is to minimize the development gap among its members, the issue instead discourages its least-developed members from committing deeply to economic integration. For instance, ASEAN is reluctant to agree on a proposal in the services sector to include Mode 4, “movement of natural person”, for the “greater ambition” of market access.

Although the development gap remains an outstanding issue, surprisingly, it is also not the core problem. The development gap issue also emerged in other ASEAN+1 FTA negotiations, but those negotiations were concluded. In the ASEAN-Australia New Zealand FTA negotiations, for example, the services outcome varied across members, wherein Australia and New Zealand were less restrictive in terms of services offered (with less than 10 restricted sectors each) compared to ASEAN members

It is imperative to understand the nature of ASEAN. ASEAN always positions itself as the central actor over any external parties within the context of the regional architecture. ASEAN centrality, for example, is underscored in the RCEP’s guiding principles. ASEAN also prescribes “flexibility” and “special and differential treatment” in the RCEP as well as in its ASEAN+1 FTAs framework; things that rarely appear in such ambitious trade blocs like the TPP. While the objective of economic partnerships is to promote market openness and substantive benefits (normally by giving commitments beyond WTO standards), ASEAN’s nature instead undermines such objectives.

The rationale of ASEAN’s nature lies in analyzing its regional development. ASEAN was formed when the region was overwhelmed by the political tensions of the 1960s and Southeast Asian countries sought a “balancing mechanism” to promote stability in the region. This mechanism has had a pragmatic implication in that ASEAN has a tendency to maximize benefits and minimize threats to its members.

That is why the ASEAN constitutions, from the 1967 Bangkok Declaration to the ASEAN Charter, prescribe the principle of “sovereign equality” and “non-intervention” as prerequisites for peace and stability. Consequently, when it comes to ASEAN, cooperation should pose no threat and should be “predicated on equality and non-intervention”. This gives an idea as to why ASEAN always puts forward “ASEAN Centrality” and “flexibility” in its economic partnerships.

The problem with the RCEP is that ASEAN is not ready for the ambitious commitments its partners have set. In the services sector, for instance, ASEAN’s partners are generally committed to offer market access to more than 100 sectors, whereas ASEAN members are prepared to give less. Moreover, the RCEP has “too many” chapters compared to the ASEAN Free Trade Area (AFTA): the RCEP has 18 chapters, whereas the AFTA has only nine. For instance, while the RCEP has a chapter on e-commerce, ASEAN does not have an e-commerce policy. As a result, ASEAN has no “guideline” that could lead them “confidently” in dealing with external partners on that matter.

But why are the ASEAN+1 FTAs more progressive than the RCEP? Until 2001, the AFTA was the only economic cooperation platform among ASEAN members, yet it was deemed insufficient, since some members were not committed to the AFTA guidelines. This situation then led to establishing the Agreement between New Zealand and Singapore for a Closer Economic Partnership, the first comprehensive economic partnership that involved an ASEAN member.

The emergence of such a partnership triggered a “domino effect” of bilateralism between other ASEAN members and external parties. As a result, ASEAN members changed their stance to be more open to bilateral economic cooperation. China is the first ASEAN+1 FTA partner, which was followed by five other countries until the RCEP negotiations commenced.

In short, while the AFTA’s lack of ambition and the bilateralism trend provide the impetus for negotiate the ASEAN+1 FTAs, in contrast, “too many” ambitions and the pragmatic nature of ASEAN dominate the challenges in the RCEP negotiations.