TWO important decisions at the recently concluded 21st Asean Summit in
Phnom Penh were: the launch of the Asean Regional Comprehensive Economic
Partnership (RCEP) and delaying the launch of the Asean Economic Community
(AEC) by 12 months, from Jan 1 to Dec 31, 2015, to iron out pending issues and
prepare the necessary regulations.
RCEP is forged as an alliance
between Asean and its six dialogue partners - Australia, China, India, South
Korea, Japan and New Zealand — to create a free trade area with great potential
for gains through economic cooperation.
To date, numerous free trade
agreements (FTAs) and economic partnership agreements (EPAs) have been
concluded between single Asean member nations and by Asean as a group with
individual dialogue partners.
However, the overlapping
priorities, procedures and practices have reduced the effectiveness and the
potential benefits of these agreements since businesses have to observe the
different rules of these various arrangements while it has also increased the
cost of utilising preferential concessions.
It is in that context that the
Asean RCEP agreement, with its region-wide partners, has the potential to
reduce the complexity arising from the current multiplicity of agreements by
agreeing on a single package and focusing on Asean's centrality in the region.
Second, RCEP would be a basis for
more complementary regional integration initiatives, since the partnership is
to be built on the experiences, strengths and drawbacks of the many existing
FTAs and EPAs.
It is also hoped that the Asean
RCEP could spur efforts to set up an FTA between China, Japan and South Korea,
a prospect faced with several impediments still to be resolved.
Once established on a firm
footing among the three northeast Asian nations, it can certainly enhance
further regional economic integration.
All these positive aspirations
and moves to achieve effective regional economic integration pivot on the
countries concerned strengthening their commitment to, and being ready to work
towards, that very goal, both among Asean members and their dialogue partners.
And, it is here, that the
decision to delay by 12 months the launching of the AEC becomes critical. In
that time frame, all Asean members must make progress to fulfil and implement
the agreed road map and targeted actions for the AEC.
That must surely be a
prerequisite for realising the broader goal of regional economic integration.
One should also keep in mind that
RCEP might be perceived as a competitor to the United States-led Trans-Pacific
Partnership (TPP). At present, only Australia, Brunei, Malaysia, New Zealand,
Singapore and Vietnam are a part of the TPP, while several other Asean members
and dialogue partners, notably China, are not — a fact that could cause
conflict of interests and derail effective economic integration.
Such a situation, if not clearly
demarcated so that both the TPP and RCEP mutually benefit its members, could
easily complicate further the existing and planned business pacts in the
region, and frustrate efforts to achieve effective regional economic
integration.
Malaysia, as a founding Asean
member, having successful economic ties with all major countries and given its
presence in both the TPP and RCEP, can and should play a key role in helping to
promote the success of the AEC and the wider goal of regional economic
integration, especially in the current context of a globalised economic and
trading regime.
RUEBEN DUDLEY
Business & Investment Opportunities
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