Stratagem Insights… a reset, more than just hope, a beginning with lots of hard work and renewed partnership.
20 20 is often understood as promising a clear vision and sight. Unfortunately, the year 2020 is rather murky. Still, I am not one that easily lose faith and hope.
Amidst the gloom, if not the doom, over most of 2020, when we faced the health challenges of COVID-19 and the economic slowdown and threats of unemployment now and post- COVID19, suddenly RCEP brightens the horizon and the sky.
The ten-member ASEAN regional cooperation platform spearheads this Regional Comprehensive Economic Partnership (RCEP) with five Asia Pacific countries – China, Japan, South Korea, Australia and New Zealand – with the wish of more, particularly India, and hopefully the US too, to join forces.
India, one of the largest countries and economies of the Asia Pacific, pulling out in the last laps of discussions, reminds us of the challenges ahead. The US, now facing its own murky unclear paths ahead post Nov 3 Presidential Election and amidst the US-China rivalry, putting it mildly, poses even more complex considerations.
Typical of ASEAN history, fervour and experience, it’s not empty talk. RCEP also symbolises hard work, lots of that, and a spirit of working on the pragmatic journey of cooperation and multilateralism for the future.
The size of the RCEP document itself would give you a sense of what was achieved. It was produced after 31 rounds of negotiations, 15 trade negotiating committee meetings and 19 ministerial rounds over eight years. It is truly a comprehensive agreement covering trade in goods, services, and digital commerce which runs to more than 14,000 pages over 20 chapters, plus annexes and schedules.
The signatories included Singapore, Japan, South Korea and Australia, countries which would be seen as relatively advanced, plus middle or upper middle economies like Malaysia and Thailand, but not forgetting also the less developed countries like Laos and Cambodia, which would make navigating the relationship complex and challenging. Intra ASEAN states’ cooperation, while predictable and stable, however, also saw individual states facing domestic political challenges, what more with differing priorities. China’s strong position, emerging as a key player in the region, but also faced with the challenges of global rivalry, particularly the US-China trade tensions, made it even more complex. The most disappointing though was India’s dramatic last minute pull out, ostensibly for its own domestic concerns. Some commentary places it to India’s fear of being overrun by a cheaper factory goods from China and farm produce from Australia and New Zealand, not forgetting its possible disappointment over not meeting expectations for greater services trade, where it enjoys a measure of competitiveness.
Those complex and complicating challenges, notwithstanding, and still to be managed and navigated, RCEP relatively is seen as a major feat for ASEAN.
It encompasses a third of the global population and 30 per cent of world gross domestic product. ASEAN alone has a population of 640 million people and a combined gross domestic product of US$2.57 trillion (S$3.47 trillion) and projected by some to become the fourth largest economy in the world by 2030.
Brunei’s Sultan HM Haji Hassanal Bolkiah called the signing “a landmark”.
President Joko “Jokowi” Widodo of Indonesia said: “This signing signals that commitment to multilateralism remains stringy”.
Senior Indonesian trade official who chairs the RCEP Trade Negotiating Committee, Iman Pambagyo, was quoted as saying that participating countries hope the agreement will drive the economic recovery in the next two years in the region, where a regional supply chain has been built, through existing free trade deals between ASEAN and its trading partners.
Ministers from the RCEP participating countries noted in June 2020 that the coronavirus pandemic has added the importance of the deal.
Mr Iman told the Straits Times: “Against the backdrop of low confidence in the multilateral trading system, ongoing trade tensions among a number of countries, rising protectionism and the impact of COVID-19, the signing of RCEP is a signal to the world and businesses that countries in the region remain optimistic and have a forward-looking orientation in terms of deepening and expanding regional economic integration to play a bolder role in the global value chain.”
What’s clear, as painted by Singapore’s Prime Minister Lee Hsien Loong, while attending virtually at the ASEAN Summit in Hanoi, was that the pact “is a major step forward for the world, at a time when multilateralism is losing ground, and global growth is slowing.”
RCEP, PM Lee emphasised, signals “our collective commitment to maintaining open and connected supply chains, and to promoting freer trade and close interdependence especially in the face of Covid-19 when countries are turning inwards and are under protectionist pressures”.
The Straits Times reported PM Lee saying that the pact also gives its members larger stakes in one another’s success and prosperity, while helping to strengthen regional peace and security.
It is also worth noting that PM Lee chose to highlight that the diversity of the participating RCEP countries show how economies of different stages of development can come together and contribute to one another’s development as well as to the multilateral trading system.
“This diversity, and the strong links that the participating countries have with the US, Europe and the rest of the world, also reflects the inclusiveness and openness of the agreement,” PM Lee said.
This happening in Hanoi, Vietnam, one of the more dynamic and fastest growing members of ASEAN, and to be followed by Brunei Darussalam as the South East Asian group chairman for the coming year, with equal if not stronger mission of “We Care, We Prepare, We Prosper”, RCEP bodes well for ASEAN and the region of Indo-Pacific, indeed the globalised world.
In his opening remarks, Vietnamese Prime Minister Nguyen Xuan Phuc said the COVID-19 pandemic has adversely impacted global and regional trade and investment flows, including the countries participating in the RCEP talks.
He lauded efforts made by relevant sides to address issues in the negotiations, saying he is delighted as after eight years of working hard, the sides have completely concluded the negotiations, enabling the signing of the agreement within the framework of the 37th ASEAN Summit and Related Summits.
The global and regional economies are facing huge obstacles and challenges caused by not only COVID-19 but also the decreased global trade, he said.
Prime Minister Prayut Chan-O-Cha welcomed the conclusion and signing of the RCEP Agreement and expressed his support for its early implementation to enhance regional competitiveness and investment opportunities as well as accelerate economic recovery from COVID-19. In addition, the Prime Minister emphasised the importance of India’s participation in RCEP and Thailand’s readiness to cooperate with all partners to bring India back to the RCEP Agreement in the future.
Cambodian Deputy Prime Minister Aun Pornmoniroth said that RCEP has been “a remarkable achievement”.
“In a world full of uncertainties, we will embrace exciting opportunities,” said Aung San Suu Kyi, Myanmar’s State Counsellor. In her statement, the State Counsellor stressed that the landmark trade pact will serve as a strong signal to the world that we are committed to maintaining the credibility of regional cooperation architecture, retaining the trust of business community and contributing to regional economic recovery. She also added that the RCEP will provide a new driving force which will accelerate the facilitation of trade and investment as part of a well-functioning, highly efficient, rules-based multilateral trading system.
In his intervention during the 23rd ASEAN-China Summit, Prime Minister Tan Sri Muhyiddin Yassin said the signing of the RCEP will reflect Malaysia’s unwavering support for the multilateral trading system and regional integration. “Malaysia trusts that RCEP will be a game-changer in our efforts to increase the flow of investments and to encourage intra-trade within the region. As the global growth rate is expected to slow at roughly 3.5 per cent between 2021 and 2025, we should double our efforts to ensure the sustainability of economic activities,” he said. Mr Muhyiddin also stressed that focus should be given to promoting trade and investment and maintaining the regional and global supply chains by tapping into the digital economy.
ASEAN secretary-general Lim Jock Hoi said: “The signing of the RCEP Agreement is a historic event as it underpins ASEAN’s role in leading a multilateral trade agreement of this magnitude, despite global and regional challenges and eight years of negotiations.”
“RCEP will give a much-needed boost for a swift and robust recovery for businesses and peoples in our region, particularly during the current Covid-19 pandemic crisis.”
Premier Li Keqiang of China said the signing of RCEP, the world’s largest free trade area with the largest population, diversified members and the greatest development potential, shows that multilateralism and free trade are still the mainstream and right road for the world’s economy and the people.
“In the face of challenges, people should unite for cooperation instead of conflicts and confrontation, and help each other through difficult times rather than adopting a beggar-thy- neighbour approach or wait-and-see attitude,” Premier Li said. “This has shown that opening up and cooperation are the only way to achieve mutual benefits and win-win results for all countries.”
It’s not the purpose of this article to go into the specifics of RCEP and challenges for ASEAN and the greater region, but suffice to say that we hope to touch and dwell on them in the future, in this Stratagem Insights series.
Even the G20 Summit hosted by the Kingdom of Saudi Arabia after the celebration of RCEP Pact seems to add value to the rallying call on the global front for greater collaboration and cooperation. The global support for efforts to tackle the COVID-19 vaccine projects head on is a good start. More need to be done on the economic front. While reactions are still mixed as to how the US-China trade tension and geo-political rivalry will pan out, many if not most are hopeful that the post-Trump Biden era will help brighten the 2021 horizon to a better future.
The world has changed a lot since President J Biden was Vice President under the Obama era and many are kept to know how Biden will behave towards China. Watching the video when PM Lee Hsien Loong visited the US and was hosted by VP Biden then, the chemistry showed that Singapore could play a bridging role for a better understanding between the US and China, indeed the US with the Indo-Pacific region.
The Obama-Biden administration gave much importance to ASEAN in the US foreign policy. Going forward, even if Biden could not attend the future ASEAN Summit, Vice President Kamala Harris might bring some impact by her presence too.
China, many hope too will play its complementary role, in tandem with RCEP, and tagging India along. The more the merrier, the more meaningful, for a more cohesive, compact and harmonious world. The globalised and multilateral world certainly look forward to the US playing a balanced role, with greater reliability and predictability.
Yes, disruptions and challenges abound as we prepare for 2021 and beyond, and indeed all the more we need greater understanding and insights as we prepare ourselves for the future. Stay hopeful.
Even as we see attempts by some to divide the East from the West, we remain hopeful when we see positive signals in developments such as RCEP, and also from West Germany. Its Foreign Minister Heiko Maas was quoted as warningin early December against decoupling and an East-West split as the European Union and the US mull over joint front against China. Amidst anxieties in Asia that the coming together of the US and EU could usher in a new Cold War and provoke a reaction from a hemmed-in China, he told The Straits Times that inclusiveness could be an element of the crystallising joint approach.
Indeed, let inclusiveness and cooperation be the spirit, going forward.
We hope to persuade and inspire more among the Pinnacle members and stakeholders and others who will be sharing this platform to consider contributing, debating and challenging some of the ideas which will surface from time to time.
After all, the platform is for you, for us to share, to learn, to contribute and to bring about the better understanding that is needed, as look forward to 2021.
Zainul Abidin Rasheed