The 10 leaders of the Asean member states meet in Phnom Penh for the 21st Asean Summit from November 18-20, to mark yet another milestone in the region's journey towards greater economic integration.
We will witness the region taking a lead role in expanding regional economic integration through the launch of the negotiations of the Regional Comprehensive Economic Partnership Agreement or RCEP.
The RCEP is Asean's initiative to leverage on the strengths of the region, and drive regional economic growth, counter-balancing the lethargy in the EU (European Union) and the United States. RCEP is envisaged as an open economic integration agreement, initially involving Asean's FTA (free trade agreement) partners, namely, Australia, China, India, Japan, South Korea and New Zealand, and later, expanding to include other dialogue partners.
Obviously there are questions about the rationale for such an initiative, given that the Asean Economic Community (AEC) is still a work-in-progress. Why start on RCEP? What's in it for Asean?
In essence, it means there is no letting up on the work that Asean is doing. Yes, Asean's own internal economic integration is important and, should at all times, take priority. However, ours is an open economic region, dependent on trade and foreign direct investment. We have to be pragmatic. The AEC cannot be the end game. Asean has to continue playing a key role in regional economic assimilation, so that we commonly shape our individual economic destinies.
So what is RCEP? One, it is an initiative driven by Asean. Two, it builds on the existing Asean FTAs with our dialogue partners. Three, it has an open accession clause, which means that in the first phase dialogue partners with FTAs with Asean, willing and able to take on the commitments, can sign on; later, RCEP may be open to other dialogue partners. Four, economic and technical cooperation will be an integral part of the agreement to support Asean member states. And, five, it shall provide for special and differential treatment for Asean member states, especially Cambodia, Laos, Myanmar and Vietnam.
Asean and its six dialogue partners have decided on the guiding principles and objectives for negotiating the RCEP. The negotiations are expected to cover trade in goods; trade in services; investments; economic and technical cooperation; intellectual property rights; competition policy; dispute settlement; and, new and emerging issues.
In short, RCEP brings together the leading economies in Asia. It is one of the most ambitious regional economic integration initiatives. Upon realisation, it could see an alliance of a region populated by more than three billion people, with a combined GDP (gross domestic product) of more than US$17 trillion, and over 40%of world trade.
RCEP, aside, the Asean Summit will also record important economic deliverables of 2012, including:
● The entry into force of the Asean Comprehensive Investment Agreement, which provides for the progressive liberalisation of the investment regimes in Asean, protection of investments and joint promotion of the region as an integrated investment area;
● The completion of the 8th Package of Services liberalisation under Asean Framework Agreement on Services covering 80 services sub-sectors;
● The conclusion of the Asean Agreement on Movement of Natural Persons, which will enable the increased mobility of skilled persons, service providers and professionals within the region;
● A new framework on Asean banking sector integration to enhance the liberalisation of banking services in the region, including the establishment of Qualified Asean Banks in each member state by 2020; and
● The Asean Infrastructure Fund which has been operationalised and lending activities expected to commence later this year.
Clearly, the 21st Asean Summit is not just another photo opportunity for the 10 leaders and their counterparts. When the 10 Asean Leaders and their six counterparts meet, they will set the stage for yet another important phase in the growth of the region and the significance of Asean on the global economic stage.
Rebecca Fatima Sta. Maria
Business & Investment Opportunities
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