On 9 April, Singapore became the first country to ratify the Regional Comprehensive Economic Partnership (RCEP). RCEP is the world’s largest trade deal, covering a market of 2.2 billion people and contributing to 30 per cent of the world’s GDP.
China Development Institute and KSI Strategic Institute for Asia Pacific organised a webinar on 17 June 2021, to discuss the future of the relationship between ASEAN and China with the steady ratification of the Regional Comprehensive Economic Partnership (RCEP). The webinar, titled: “The RCEP Signing: Common Future and Shared Prosperity Towards Regional Cooperation”, brought together academics, public representatives and professionals who shared their thoughts on what lies ahead for the region’s economic integration.
In the first session, speakers spoke about the benefits of RCEP and how it is the first step to building closer regional cooperation. The synergy between RCEP and the Belt and Road Initiative (BRI) was the focal point of the discussion during the second session, where experts have highlighted how BRI complements RCEP.
RCEP: Benefits and Potential Issues
As the world’s largest trade deal, it is no surprise that RCEP reaps forth tons of economic benefits. This includes increasing access to foreign markets for small and medium enterprises (SMEs) by lowering barriers to entry. In addition, the introduction of an e-commerce chapter also promotes e-commerce take-up and cooperation in the region which would advance the digital economy. The panel also emphasised how the agreement strengthens the regional supply chain which would also boost economic growth, increase employment and reduce poverty.
Despite the boons of RCEP, some signatories are still slow to ratify the agreement as many ASEAN states are still dealing with a new wave of COVID-19 infections. Furthermore, some countries are still uncomfortable about deepening economic relations and risking dependence on China. Political tension between signatories could spill over to the economic considerations. Sino-Australian relations have been extremely tense given trade disputes. China has recently imposed $10 billion worth of tariffs on Australian goods. In addition, relations between South Korea and China are also becoming increasingly tense, as anti-China sentiments among South Koreans have become high. Speaking at the panel discussion, Associate Professor Simon Tay, Chairman of the SIIA, suggested for countries to avoid politicising the agreement, in order for RCEP to continue to progress.
For further cooperation between ASEAN and China, speakers have highlighted that countries should seize the development opportunities brought about by the digital economy. Professor Tay also proposed pushing forward with the digital economy through bilateral agreements like Singapore’s Digital Economy Agreement (DEA) with Australia. While RCEP has provisions that include e-commerce and better intellectual property rights protection which would benefit the digital economy, DEAs offer provisions that are more comprehensive. This includes encouraging the sharing of research and information with regards to artificial intelligence, submarine telecommunication cable systems and data information as well as encouraging cooperation on FinTech and RegTech. Thus, DEAs can be used as a model for further cooperation in the digital economy.
How the Belt and Road Initiative complements RCEP
While RCEP aids in the economic integration between ASEAN and China, connectivity remains an issue. Thus, this is where BRI can step in by offering opportunities to reduce bottlenecks on connectivity through its infrastructure projects. Some speakers brought up e-commerce as an area where BRI supplements RCEP as they believe that it could complement RCEP’s e-commerce efforts through the soft and hard infrastructures offered by BRI. In summary, RCEP mainly focuses on trade liberalisation and facilitation while BRI focuses on cooperation and connectivity. Together, they allow for seamless regional integration.
