JOHN TAN. Australia joins the RCEP: Challenges and opportunities ahead.

Australia has joined the Regional Comprehensive Economic Partnership, which will come into being in 2020; 15 countries just to the north; a huge potential market of nearly half the world’s population and over a quarter of the world’s GDP.

But what does it mean for traditional alliance relationships and will it be plain sailing for businesses?

The background is that the RCEP was first proposed by the Association of South-east Asian Nations (Asean) way back in 2011 as a framework to rationalise trade, investment, disputes and other cross-border rules among the 10 Asean members and its six FTA partners. Fifteen countries have agreed to be in; India choosing not to join initially but retaining the option to do so later. The US, which could have joined, has declined.

Whether or not to join must have exercised some minds in Canberra. Will joining weaken the US alliance? Will the US consider Australia disloyal and be less inclined to come to Australia’s aid if necessary? Perhaps the answer might lie in the way that Asean handles big-power rivalry.

Asean’s history accounts for its unusual structure. Born in 1967 in the midst of the cold war and just after the Indonesian war of confrontation with Malaysia and Singapore, it sought peace and stability without getting sucked into big-power contests. Asean provided a forum for “engagement” on issues that might lead to intra-Asean conflict, and examined ways to cooperate on economic growth and other common problems.

While the region is relatively poor, it is strategically important, both in its economic potential and position straddling key trade routes.

As a body, Asean shuns military alliances and coalitions, but members individually are free to enter bilateral military arrangements; for example, the Philippines and Thailand with the US. So, there is a strong US military presence in some Asean countries even as China has become No.1 trading and economic partner.

Asean members continue to be highly nationalistic, probably more so over time, and will not cede any degree of sovereignty or national identity to a regional body, so it is unlikely Asean will ever become an integrated model like the EU with an overriding central government, nor a military alliance model like Nato.

Some international critics are scornful of its structure. They call Asean useless, having failed to solve the Rohingya problem in Myanmar, for example, and just a “talk-shop” not worthy of attention. But they miss the point that Asean was never meant to solve individual members’ internal problems. The aim, initially and now, has been that group cohesion is paramount so no interference in the internal affairs of members, and decision-making is by consensus. The group moves only if every member is comfortable.

Some international relations theorists would call Asean a constructivist model; it constructs institutions based on common norms and aims (1). The common norms are peace in the region, stability that will allow economic development for its masses, fair play among members, and the need for small states to stick together. In contrast, theorists call the US a model of realism, which emphasises overwhelming military power in relation to others.

But Asean does see itself as a growing power in a multipolar world even though its military is minuscule. In Asean and many other regions, the definitions of power and polarity have shifted. Traditionally, power was defined in military terms and the US was premier in a unipolar world. But power is now defined in broader terms, including economics, culture and diplomacy. This shift is implicitly recognised even by the US, which calls China a strategic competitor even though China’s military capability is far less than both the US and Russia’s. If one believes the broader definition, the world has been multipolar for some time as the US share of world GDP has shrunk steadily. The formation of the RCEP, with Asean at the helm, is an expression of its economic and diplomatic power.

It may be of interest to note that Asean has a broader idea of the term “security”. While the US sees security in traditional military terms, much-less developed Asean focuses on non-traditional security (NTS), which includes responding to more-commonplace challenges like natural disasters, economic downturns, terrorism, piracy and disease (2).

So far, Asean has resisted being sucked into any external conflicts. Its position on trade routes means that both the US and China are very interested in maintaining good relations, allowing Asean to balance one against the other.

The US vs. China debate among Asean members is not about Marxism vs. capitalism, or one-party vs. multiparty systems, or the “Red” threat from the north. After all, China has dumped Marx and embraced markets with so much enthusiasm that even the government is heavily invested in it. The debate is about reality politics, the best illustration of which is one-party communist Vietnam entering into a comprehensive partnership with historical-foe the US in 2013; and according to Bich Tran (3), may upgrade that to a strategic partnership this year.

“Strategic partnerships can be understood as a security practice although such partnerships do not always lead to alignments,” he wrote. “The main purposes of strategic partnerships are to address common challenges and seize joint opportunities, rather than countering a specific country or group.

“Strategic partnerships are flexible, non-binding, and multidimensional in nature. Therefore, participating countries can gain benefits, such as economic or security assistance, without risk of entrapment or loss of autonomy. These features make strategic partnerships more attractive than alliances, and as a result, they have proliferated in recent years,” he wrote.

Tran does admit that the difference between “comprehensive” and “strategic” partnerships is not clear and the words are often used interchangeably. It’s probably more about the optics for the benefit of third parties.

The reality of politics in small states is that regardless of whether government is formed in a one-party or multiparty system, or whether governments are “leftist” or “rightist”, whichever big power is ascendant will have a big influence on foreign and domestic policy; and small states will seek to balance that influence by moving closer towards other powers.

Katsumata and Nagata: “ASEAN is little more than an association of minor powers with insignificant military and economic capabilities. However, in its dealings with the BRI (China’s belt and road initiative), it has proactively advanced its own interests by skilfully conducting equidistant diplomacy with China and the US, without becoming too remote from or too close to either one of them, thereby reaping benefits from its favourable relations with each of them.” (4)

Will the RCEP mean plain sailing for Australian businesses and entrepreneurs? The final text has not been completed but one Chinese report says it is aimed at removing intra-regional trade barriers, creating a liberal investment environment, and expanding trade in services. RCEP will also cover intellectual property rights protection and competition policies. It promises “significant” improvements over the existing FTAs between Asean and its partners “while recognising the individual and diverse circumstances of the participating countries”.

No one should expect businesses to have an easy time from the RCEP. East Asia is a fiercely competitive region with plenty of local undercurrents; but it is also the fastest growing, most vibrant region in the world today and for the foreseeable future. Rules for businesses will be rationalised and easier to navigate. And there should be plenty of opportunities for persistent entrepreneurship and those Australian enterprises with a competitive advantage.

Notes:

(1) Pennisi, D. F. A. (2015). The Asean regional security partnership : Strengths and limits of a cooperative system.

(2) Arase, D. (2010). Non-traditional security in China-ASEAN cooperation: The institutionalization of regional security cooperation and the evolution of east Asian regionalism. Asian Survey, 50(4), 808-833

(3) Tran, Bich T. “From ‘Rebalance to Asia’ to ‘Free and Open Indo-Pacific’: The Development of the U.S.-Vietnam Comprehensive Partnership.” Asia – Pacific Issues, no. 141, 2019, pp. 1-8.

(4) Katsumata, Hiro, and Shingo Nagata. “ASEAN and the BRI: The Utility of Equidistant Diplomacy with China and the US.” Asian Journal of Peacebuilding, vol. 7, no. 2, 2019, pp. 333-348.

(John Tan was a deputy editor in the Straits Times newspaper in Singapore. He has been foreign editor and business editor.)

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John Tan was a deputy editor in the Straits Times newspaper in Singapore. He has been foreign editor and business editor.

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