The Financial Express

Upholding multilateral trade system serves the interests of ASEAN members

Published: June 30, 2019 18:09:19

Upholding multilateral trade system serves the interests of ASEAN members

The 34th ASEAN summit, held in Bangkok, Thailand from June 20 to 23, focused on building a people-centric ASEAN community. Leaders of the ASEAN members shared a vision to advance partnership for sustainability and cooperation to relieve disasters. They also set a target of completing talks for the Regional Comprehensive Economic Partnership (RCEP) by the end of 2019 so as to rally international trade, and all parties agreed to make more efforts to achieve this goal.

The US-launched trade war against China was one of the key concerns at the summit. The US is increasingly worried about China's growing influence in Southeast Asia. However, there is no space for unilateralism to develop in the region, and multilateralism and free trade represent the general trend.

It is difficult for Washington to realize its unilateralism and hegemony; rather, its diplomatic space in Southeast Asia will grow narrow. In accordance with their fundamental interests, most ASEAN members hold a neutral attitude between the two giants and dismiss the threat from the US.

According to the chairman's statement issued at the end of the summit, leaders of the ASEAN members "emphasized the importance of advancing partnership for sustainability to achieve a people-centered, people-oriented and forward-looking ASEAN Community that leaves no one behind in the rapidly changing regional and global environment."

The statement also reiterated ASEAN's strong commitment to "concluding the RCEP negotiations within 2019 to reinvigorate international trade." It also expressed concern over "the unabating tide of protectionism and anti-globalization sentiments that continue to plague the global economy and put the multilateral trading system under threat."

The RCEP is a trade pact between the 10 ASEAN members and China, Japan, South Korea, Australia, New Zealand and India. It aims to erase tariff and non-tariff barriers to establish a free trade zone. If successful, it will cover over 3 billion people and their combined GDP will reach around $21 trillion, accounting for about 30 per cent of world trade. It will bring more abundant trade and investment opportunities and huge benefits for the international market.

The Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership only covers roughly 13 per cent of the world's GDP. The RCEP will become an important mechanism to push Asian regional economic integration. ASEAN will cooperate with China and other countries to facilitate the RCEP negotiations, helping Asia to participate in global economic governance and further building a regional value chain in Asia.

There are three reasons why ASEAN will push the RCEP.

First, none of the 10 ASEAN members has sufficient power to affect Asian and international affairs. Via the RCEP, ASEAN will have the third-largest economy behind China and Japan in Asia, greatly consolidating and developing ASEAN's leading role in regional cooperation. An independent ASEAN benefits regional development and stability and will avoid taking sides in major power competition.

Second, the RCEP aims to upgrade the free trade agreement between ASEAN members and other countries in the deal, in order to build a high-quality free trade zone, altering the status quo in which there are too many rules.

Furthermore, ASEAN members hope to expand economic ties with China and enhance cohesion through the RCEP.

The ASEAN Economic Community was established in 2015 and the connection between the 10 members has since then been strengthened. Due to their diverse political, cultural and religious systems, some differences between the countries are inevitable. But thanks to the efforts of all parties, around 80 per cent of the RCEP negotiations have been completed. The stakeholders have achieved a consensus to promote free trade liberalisation and facilitation.

China is ASEAN's largest trade partner. The US-initiated trade war against a number of countries has put pressure on exports by ASEAN countries. Cooperation with the second-largest global economy is crucial for ASEAN. The China-proposed Belt and Road Initiative shares common interests with ASEAN. The RCEP negotiations, the ASEAN Outlook on the Indo-Pacific, the East Asia Summit and other ASEAN-led mechanisms can connect with China's development strategy. Promoting China-ASEAN economic cooperation can serve the interests of both China and the ASEAN members and will produce a positive effect for global economic development.

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