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Insight: RCEP is about ASEAN’s initiative, not China’s
Negotiating countries of the Regional Comprehensive Economic Partnership (RCEP) recently agreed on a framework for an agreement, aiming for a final signing early next year
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span>Negotiating countries of the Regional Comprehensive Economic Partnership (RCEP) recently agreed on a framework for an agreement, aiming for a final signing early next year. The agreement would have been the largest regional trade pact, comprising around 30 percent of global trade and half of the world’s population.
Unfortunately, at the conclusion of ASEAN Summit in Thailand last month, India announced that it would be withdrawing from the agreement owing to concerns of its trade deficit and anticipated jump in imports.
In a surprising twist, Japan announced that it would not proceed with the RCEP if India was not part of the agreement. Tokyo sees New Delhi’s participation as beyond just economics. Economics, Trade and Industry Deputy Minister Hideki Makihara stated that India’s inclusion was “meaningful from an economic, political and potentially national security point of view”.
Apart from increasing its security cooperation and bilateral economic relations, Japan seems to view India’s participation in the RCEP as a means to counter China’s regional dominance.
That India was unable to proceed in the RCEP is regretful for ASEAN. And so is Japan not moving forward with the agreement for it.
First, the RCEP is the culmination of an ASEAN-centered regional economic integration that is inclusive of regional powers. It is instructive to go back to how the RCEP came to be. When the region was still recovering from the Asian financial crisis in the late 1990s, there was a proposal in 2001 for a free trade agreement for ASEAN Plus 3 (with China, Japan and the Republic of Korea), called the East Asia Free Trade Area (EAFTA).
In 2006, Japan proposed an agreement between ASEAN Plus 6 (plus Australia, New Zealand and India), called the Comprehensive Economic Partnership in East Asia (CEPEA).
As RCEP membership suggests, CEPEA won over EAFTA. In November 2011, under Indonesia’s chairmanship, ASEAN leaders officially endorsed the concept of RCEP. A year later in 2012, during the seventh East Asia Summit, RCEP negotiations commenced. The idea here is an economic integration with ASEAN as its center, involving all regional powers to prevent one dominating the region.
Second, ASEAN and partners should aim for further economic integration with India. The RCEP was supposed to be the vehicle for this. With India withdrawing, ASEAN should embark on more diplomatic efforts to invite India back in. If this is not possible, especially due to strong domestic opposition within Prime Minister Modi’s own party, it should think of other avenues for further economic engagement with New Delhi.
For ASEAN, the imperative is even clearer with the recent adoption of the ASEAN Outlook on Indo-Pacific. The Indo-Pacific Outlook will not amount to much if ASEAN only has meager economic activities in the Indian Ocean compared to the Pacific. This is also a goal that should be shared by ASEAN Plus partners.
Third, Japan not moving forward with the RCEP without India is a high-risk move not worth gambling over. So far, it seems that the domestic hurdles India faces if it joins RCEP remain. Japan’s threat of holding RCEP hostage will not affect these hurdles.
Pulling out of the RCEP will erode the ASEAN-centered regional economic integration. And furthermore, it might also undermine the goal of inclusion of regional powers in order to prevent one dominating the region, a goal that Japan shares.
It was indeed Japan that proposed the CEPEA in 2006 with this purpose in mind. As opposed to this high-risk gamble, Japan should support ASEAN’s efforts in inviting India back. And if no such path is available, Tokyo could also support ASEAN’s own further economic engagement and deepen its own bilateral economic relations with New Delhi.
In the midst of the ongoing trade war between the world’s two-largest economies, the United States and China, the completion of RCEP negotiations would send a powerful signal that Asia was committed to an open trade regime, centered upon ASEAN. And “Asia” here should also include South Asia, not just the Asia-Pacific.
But Japan’s move to exclude itself from an RCEP without India would just be counterproductive. Japan seems to forget that the RCEP is about ASEAN’s initiative, not about China’s.
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Researcher for the international relations department, Centre for Strategic and International Studies (CSIS)
