fukunagfukunaga-2015-asia_&_the_pacific_policy_studiesa-2015-asia & the pacific policy...

Original Article

ASEAN’s Leadership in the Regional ComprehensiveEconomic Partnership

Yoshifumi Fukunaga*

Abstract

Association of Southeast Asian Nations(ASEAN) centrality was one of the biggestmotivations for ASEAN’s proposal of theRegional Comprehensive Economic Partner-ship (RCEP) in 2011. In order to gain bothpolitically and economically, ASEAN shouldplay proactive roles in the RCEP negotiationas the driver of substance. ASEAN has alreadystarted exercising its influence over the sub-stances of ASEAN + 1 free trade agreements(FTAs). In order to further strengthen its lead-ership in the RCEP, ASEAN should utilise theASEAN Economic Community (AEC) as themodel for RCEP. AEC has achieved a muchdeeper level of integration than the existingASEAN + 1 FTAs by setting high ambitionswith processes to induce reform initiatives ofmember states. By using familiar AEC mea-sures, ASEAN can create a single and commonposition despite the large development gapsamong its member states. If modelled afterAEC, the RCEP will enforce ASEAN’s reformefforts.

Key words: ASEAN centrality, ASEAN Eco-nomic Community, Regional ComprehensiveEconomic Partnership, ASEAN + 1 FTAs,Trans-Pacific Partnership

1. Introduction

In November 2011, the Association of South-east Asian Nations (ASEAN) proposed a newregional free trade agreement (FTA) initiative1

called the Regional Comprehensive EconomicPartnership (RCEP). It was the moment whenASEAN tabled its first proposal on an EastAsian regional FTA. Until then, major propos-als, that is, China’s initiative on East AsianFree Trade Area (EAFTA) and Japan’s pro-posal of Comprehensive Economic Partner-ship for East Asia (CEPEA), had come fromits FTA partners despite ASEAN’s hope forcentrality.2 The RCEP idea, however, camefrom ASEAN itself and was subsequently sup-ported by the 16 national leaders in November2012.3

One of the biggest motivations in proposingthe RCEP was ASEAN’s desire for its central-ity.4 ASEAN leaders declared in the ASEAN

* Research Department, Economic ResearchInstitute for ASEAN and East Asia, Senayan,Jakarta Pusat 10270, Indonesia; email�[email protected]�.

1. ASEAN Framework for Regional Comprehensive Eco-nomic Partnership (hereafter ‘ASEAN Framework forRCEP’), adopted at the 19th ASEAN Summit, Bali, Indo-nesia, 17 November 2011.2. Three major ASEAN documents emphasise the impor-tance of ASEAN centrality: ASEAN Charter (Arts 1.15,2.2(m), 32 and 41.3), ASEAN Political Security Blueprint(C.1) and ASEAN Economic Community Blueprint(para. 65).3. Leaders’ Joint Declaration on the Launch of Negotia-tions for the RCEP, Phnom Penh, Cambodia, 20 November2012.4. Wang (2013) pointed out that boosting the ASEANcentrality was the main motivation behind ASEAN’sRCEP proposal, rather than deepening regional economiccooperation. Das (2012) also explained ASEAN’s strategy

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Asia & the Pacific Policy Studies, vol. 2, no. 1, pp. 103–115doi: 10.1002/app5.59

© 2014 The Author. Asia and the Pacific Policy Studiespublished by Wiley Publishing Asia Pty Ltd and Crawford School of Public Policy at The Australian National University.This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License,which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial

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Framework for RCEP in November 2011 thefollowing:

[We resolve] to establish an ASEAN-led processby setting out principles under which ASEANwill engage interested ASEAN FTA partners inestablishing a regional comprehensive economicpartnership agreement and, subsequently, withother external economic partners [. . .]. (Under-line was added by the author.)

They also explicitly mentioned the ASEANcentrality as a key principle of RCEP.5 On theother hand, some ASEAN observers are scep-tical about ASEAN’s capacity in exercising theASEAN centrality in the RCEP negotiation.Amidst this background, this article examinesthe following questions: Can ASEAN lead theRCEP negotiation? If so, how?

To answer these questions, this article firstdivides the ASEAN centrality concept into twoaspects: ‘facilitator of process’ and ‘driver ofsubstance’ (Section 1). Then, this articleargues that ASEAN should drive the sub-stances not just for political reasons but alsofor economic gains (Section 2). Section 3 illus-trates that ASEAN has started leading substan-tive discussions on RCEP.6 This article furtheradvocates that the rich experiences in theefforts towards ASEAN Economic Commu-nity (AEC) 2015 give a special advantage forASEAN in ‘driving the substance’ of RCEP(Section 4). It then cites in Section 5 threespecific areas in which AEC experiencescan be particularly useful: trade facilitation,services liberalisation and non-tariff mea-sures (NTMs). Section 6 briefly discusses thethreats to the ASEAN centrality. Section 7concludes.

2. ‘ASEAN Centrality’: ASEAN as theDriver of Substance

‘ASEAN centrality’ is a key concept in under-standing ASEAN’s aspiration for RCEP. In theeconomic context, ASEAN consciouslypursues maintaining ASEAN centrality in itsexternal economic relations mainly by estab-lishing FTA networks with them. Thus, theRCEP proposal was clearly an extension ofsuch policy. The concept was also accepted byall the non-ASEAN members of the RCEP.7

However, as an undefined concept, it is criticalto start from analysing it. Fukunaga et al.(forthcoming) point out that the two aspectsof ASEAN centrality should be distinguished:ASEAN as ‘the facilitator of process’; andASEAN as ‘the driver of substance’.8

The first role that ASEAN can play in theregional architecture is as facilitator ofprocess. It is useful to look at the ASEANPolitical Security Community (APSC) Blue-print (ASEAN 2009) in understanding thisaspect of ASEAN centrality. The APSC Blue-print provides that ASEAN should strengthenASEAN centrality in regional cooperation andcommunity building. The first concrete actionis ‘initiate, host, Chair and/or Co-Chair activi-ties and meetings with Dialogue Partners,other external parties [. . .]’ (ASEAN 2009, pp.17–18). Thus, the primary understanding ofASEAN centrality looks at the meetingformats rather than the substances discussed inthe forums.9

ASEAN has been successful in this firstcomponent of the ASEAN centrality in theregional FTA evolution. ASEAN has been pro-viding a variety of opportunities for leader-level and minister-level meetings. At the leader

from its centrality consideration in addition to the noodle-bowl problem caused by the coexistence of multipleASEAN + 1 FTAs. Such centrality consideration waspartly stimulated by a joint proposal made by China andJapan in July 2011 as evidenced from the ASEAN Tem-plate discussion at the ASEAN Economic Ministers’Meeting in August 2011.5. ASEAN Framework for RCEP.6. Guiding Principles and Objectives for Negotiating theRegional Comprehensive Economic Partnership (herein-after ‘RCEP Guiding Principles’), adopted at the RCEPMinisters Meeting, Siem Reap, 30 August 2012.

7. RCEP Guiding Principles.8. Petri and Plummer (2013, p. 7) also analysed theASEAN centrality concept and stated that the centrality isboth a goal and potentially a formula for achieving it.Here, ‘formula’ looks more at the process of obtaining the‘goal’ (substance).9. One may interpret this item to include ASEAN’s inten-tion to lead substances rather than just hosting and chair-ing meetings because ‘initiating’ is also included. On theother hand, the verbs of ‘hosting’ and ‘chairing’ as well asobject (‘meetings’) clearly look at formalities than thesubstances.

Asia & the Pacific Policy Studies January 2015104

© 2014 The Author. Asia and the Pacific Policy Studiespublished by Wiley Publishing Asia Pty Ltd and Crawford School of Public Policy at The Australian National University

level, these include ASEAN + 1 Summits,ASEAN + 3 Summit and East Asia Summit,which enable the leaders to discuss key policyissues, including both political strategic andeconomic agendas. In the trade area, all theASEAN + 1 FTA10 negotiations as well as pre-RCEP discussion of EAFTA and CEPEA tookplace in the AEM-related meetings.11

ASEAN is successfully playing this role inthe current RCEP negotiations as well. ASEANproposed the RCEP concept in the ASEANSummit in 2011. The RCEP Guiding Principleswere agreed upon at the margin ofAEM-relatedmeetings in August 2012. Not surprisingly, thelaunch of RCEP negotiation was announced bythe 16 national leaders in the margin of anASEAN Summit. The Trade Negotiation Com-mittee (TNC), seven RCEP working groups aswell as four sub-working groups are all chairedby ASEAN member states (AMSs).12 WhileASEAN centrality was agreed in 2012,however, the chairmanship of RCEP meetingswas not a given. Rather, it was an actual nego-tiation issue at the first TNC meeting in May2013.13 At the meeting, ASEAN insisted ontaking the chairmanship because of ASEANcentrality. On the other hand, some ofASEAN’s FTA partners demanded forco-chairmanship taken by them. At the end, theTNC agreed on ASEAN’s chairmanship rolewithout co-chairmanship by the partner coun-

tries. In short, ASEAN has initiated, hosted,chaired and co-chaired activities and meetingsin the RCEP.

The second aspect of ASEAN centrality is as‘driver of substance’. The second action item inthe APSC Blueprint (p. 18) is ‘explore, initiateand implement concrete cooperation activi-ties’. Thus, it looks at more concrete measures(that is, substances) rather than the meetingformats and emphasises the role that ASEANshould play in this respect. ASEAN centralitymeans more than ‘sitting on the driving seat’:that is setting directions, engineering compro-mises and providing leadership (Petri &Plummer 2013, p. 8). This is highly relevant inthe RCEP context as well.Acountry (or a groupof countries) may shape the substances of inter-national negotiation outcomes no matter whohosts or chairs the meetings.14

It should be noted here that the boundarybetween process facilitation and substancecomposition is sometimes blurred. As Wang(2013) explains with ‘functional centrality’concept, ASEAN often gains the functionalrights by acting as a platform for cooperation.In Wang’s thinking, the role of process facili-tator itself creates indirect but important influ-ence on substantive discussion. However,‘functional centrality’ can be achieved onlywhen proactive engagement is made in sub-stantive discussion. In other words, althoughoriginally proposed by ASEAN, if ASEANdoes not effectively lead the substantive dis-cussion and rests as a mere process facilitator,the RCEP outcomes may not bring large ben-efits to ASEAN.

This article examines this second aspect ofASEAN centrality in further detail in the fol-lowing sections. Why should ASEAN lead thesubstantive discussion of RCEP rather thanrely on its partners? Has ASEAN appropriatelyplayed this role as a driver of substance in theRCEP process? If so, what strategy shouldASEAN further strengthen in its leadership inthe RCEP? These questions are hereinanalysed in detail.

10. The existing ASEAN + 1 FTAs, as of June 2014, areASEAN–Australia–New Zealand FTA (AANZFTA),ASEAN–China FTA (ACFTA), ASEAN–India FTA(AIFTA), ASEAN–Japan Comprehensive Economic Part-nership Agreement (AJCEP) and ASEAN–Korea FTA(AKFTA). ASEAN plans to start a negotiation of ASEAN–Hong Kong FTA in July 2014, but Hong Kong has notjoined the RCEP negotiation.11. ‘AEM’ stands for the ASEAN Economic MinistersMeeting.12. The information on the chairmanship in the RCEPmeetings is based on communications with several gov-ernment officials of RCEP members as well as the ASEANSecretariat. ASEAN also chaired the four ASEAN-PlusWorking Groups from 2009 to 2011. On the other hand,the chairmanship role was played by non-ASEAN coun-tries in the EAFTA and CEPEA discussions. See Fukunagaet al. (forthcoming).13. Communications with government officials of theRCEP members.

14. For example, TPP is driven by the United States,although the chair countries change from time to time.

Fukunaga: ASEAN’s Leadership in RCEP 105


3. Why Should ASEAN Drivethe Substances?

3.1 Political Consideration

Wang (2013) argues that ASEAN prioritisesASEAN-led process over RCEP substances.The increasing usage of ‘ASEAN centrality’(or similar languages) in official documents inthe last several years indicates that ASEANperceives its centrality to be challenged. Thefirst time the word of ‘centrality’ was used inASEAN’s external economic relationshipcontext was in 2006.15 Since then, the word hasoften been used in ASEAN documents, forexample, AEC Blueprint and ASEAN Charter(ASEAN 2008a),16 as well as other documentsof ASEAN plus process.

In the context of trade regimes, two initia-tives can be recognised to be threatening theASEAN centrality: the Trans-Pacific Partner-ship (TPP)17 and the China–Japan–Korea FTA(CJK-FTA).18 With the US participation in2009, TPP has gained momentum and success-fully expanded its negotiation members to 12.TPP is generally understood as a US-led (orAsia Pacific Economic Cooperation (APEC)-centred at best) process where only four AMSs(Brunei, Malaysia, Singapore and Vietnam)have access to confidential (or secretive) nego-tiation documents as original negotiatingmembers. Cambodia, Lao PDR and Myanmarare not even APEC members, and are not eli-gible to join the current TPP negotiation. Whilethe TPP negotiation has recently missed itsconclusion target (by the end of 2013), it stillkeeps the momentum as evidenced by frequentministerial-level negotiations. CJK-FTA isanother important initiative when considering

ASEAN centrality.19 The three countries,including two of the world’s top three econo-mies, naturally have large influences on theeconomic integration process in East Asia.While the three trade ministers meet in themargin of the AEM, they also have their ownmeetings independently and separately fromthe AEM process.20 CJK has signed the trilat-eral investment treaty in May 2012 and isaiming at concluding the trilateral FTA by theend of 2015.21 Needless to say, ASEAN doesnot have any direct involvement in the CJKprocess. If the three large economies haveagreed among themselves on certain rules,ASEAN will have a lesser influence in thediscussion of the RCEP.22Although neither TPPnor CJK-FTA is free from challenges, theirsteady progress has attracted investors’ atten-tion. Neither of them is an ASEAN-centredprocess, which poses a question on ASEAN’scentrality in the EastAsia region. In contrast, allthe 10 AMSs are the original negotiatingmembers of RCEP, and the RCEP negotiationsrecognise a special position of ASEAN. Byproposing an ASEAN-centred platform of amega-FTA negotiation, ASEAN is trying tohave a balance with non-ASEAN initiatives.

3.2 Economic Consideration

While smaller attention has been paid to theeconomic aspect relative to political consider-ation, ASEAN should be more conscious ofthe economic rationales behind RCEP.ASEAN has already signed FTAs, sometimesnot only ASEAN + 1 FTAs, but also bilateralFTAs (for example, Thailand–Australia FTA),with all the RCEP members. On the other

15. Joint Media Statement of the Thirty-Eighth ASEANEconomic Ministers’ (AEM) Meeting, Kuala Lumpur, 22August 2006, para. 19. (‘[The ministers] also reiterated thecentrality of ASEAN in external economic relations.’)16. See footnote 3.17. General information about TPP is available at awebsite of the Office of US Trade Representative �http://www.ustr.gov/tpp�.18. In general, see relevant websites of the three govern-ments, such as China’s Ministry of Foreign Commerce�http://fta.mofcom.gov.cn/topic/chinarh.shtml�.

19. Terada (2012, p. 55) interprets that RCEP was a reac-tion to the evolution of CJK-FTA.20. Terada (2012, p. 55) explains that the CJK countriespay attention to the sensitivity between the trilateral coop-eration and ASEAN centrality. For example, the CJKcountries announced the launch of CJK-FTA negotiationin the margin of the ASEAN Summit because of ASEANcentrality consideration. In contrast, the United States haspaid little attention to the ASEAN centrality notion (Petri& Plummer 2013).21. Xinhua News, 26 November 2013.22. Fukunaga and Isono (2013), p. 3. Petri and Plummer(2013), pp. 22–23.



http://www.ustr.gov/tpp

http://www.ustr.gov/tpp

http://fta.mofcom.gov.cn/topic/chinarh.shtml

hand, ASEAN’s FTA partners do not haveFTAs with each other for most combinations.23

Thus, ASEAN is currently enjoying the hubposition in the ‘hub-and-spoke’ structure ofFTA, which gives an export advantage to theFTA hub countries.24 Why should ASEANpush for RCEP? How can RCEP benefitASEAN economically?

There are three major economic reasons forASEAN to pursue RCEP (Fukunaga & Isono2013). First, some of the current ASEAN + 1FTAs do not provide high-level market accessopportunity for ASEAN. Thus, RCEP canpotentially provide an opportunity to deepenthe liberalisation commitments in trade ingoods, services and rules of origin (ROO).25

Second, the coexistence of ASEAN + 1 FTAsitself is creating the ‘noodle-bowl’ situation,which hinders the full utilisation of preferentialschemes. RCEP can potentially ease the‘noodle-bowl’situation in a variety of rules andcommitments in the ASEAN + 1 FTAs26 notonly in ROO, but also in other rules. Third,economic simulation result shows that ASEANwill lose its potential economic gains if theCJK-FTA is signed but RCEP is not (Itakura2013). This negative effect comes from prefer-ence erosion that ASEAN is currently enjoyingin its hub position (Petri & Plummer 2013, pp.22–3). If RCEP is successfully concluded, onthe other hand,ASEAN can mitigate such nega-tive effects and further expand its economicopportunities (Itakura 2013).

3.3 ASEAN Needs a High-Quality FTA

RCEP is potentially beneficial forASEAN bothpolitically and economically. When consider-ing the ASEAN centrality only from a politicalperspective, any agreement seems to be asuccess for ASEAN once concluded so long asan ASEAN-centred process is achieved.However, a low-quality FTA will bring almost

no additional economic gains to ASEANbecause of the ASEAN + 1 FTAs, but will stilldeliver fruits for the FTApartners.As explainedabove, ASEAN’s FTA partners have incentivesto sign the RCEP even when it is low qualitybecause they can expand the geographical cov-erage of their respective FTA networks. Theinterests of ASEAN and its partners signifi-cantly differ in this point. In order for ASEANto gain meaningful benefits, the contents ofRCEP should be designed well to have ‘signifi-cant improvements over the existingASEAN + 1 FTAs’, as ASEAN leaders cor-rectly proposed in 2011.27 It is ASEAN whoshould pursue a high-quality FTA. Processfacilitation is not enough for ASEAN. As Wang(2013) pointed out, process facilitation is oftenassociated with ‘functional power’ in influenc-ing the substances. Yet it requires proactiveproposals in substantive contents to ensure thatASEAN can benefit from the new economicpact. Thus, ASEAN should take the lead indriving the substances and overcome the poten-tial opposition from its trading partners.

4. ASEAN’s Influence in the Record

ASEAN has already started exercising itsspecial influence in driving the way forward ofRCEP. First, several features of intra-ASEANeconomic integration were adopted in theASEAN + 1 FTAs. As the RCEP negotiationoften refers to the existing ASEAN + 1 FTAs,this implies a possibility ofASEAN’s influenceon RCEP substances indirectly via theASEAN + 1 FTAs. Second, ASEAN’s influ-ence can be observed in a more direct mannerwhen comparing the specific elements ofASEAN’s RCEP proposal in 2011 with thecurrent RCEP negotiation. All the RCEPmembers accepted the ASEAN’s ideas on sub-stances and not only the concept of RCEP.

4.1 ASEAN’s Influence on theASEAN + 1 FTAs

Some key features of the existing ASEAN+ 1 FTAs were originally introduced for

23. As of February 2014, the six ASEAN’s FTA partnershave signed five FTAs out of 15 possible combinations.These are Australia–Korea, Australia–New Zealand,China–New Zealand, India–Japan, and India–Korea.24. Alba et al. (2010).25. Fukunaga and Isono (2013).26. Das (2012) also emphasises this point. 27. ASEAN Framework for RCEP.



intra-ASEAN integration and subsequentlyadopted in the ASEAN + 1 FTAs. For example,the ‘common concession approach’ in tariffliberalisation of theAgreement on the CommonEffective Preferential Tariff Scheme for theASEAN Free Trade Area (AFTA-CEPTAgree-ment) was subsequently accepted by all theASEAN + 1 FTAs in principle.28 Second, allthe ASEAN + 1 FTAs set longer transitionperiod for the newer ASEAN members (alsocalled the CLMV countries)29 rather than allow-ing lower liberalisation ambition. This featurewas introduced in theAFTA-CEPT followed byall the ASEAN + 1 FTAs. Third, packageapproach in services liberalisation was ‘inno-vated’ by ASEAN and adopted by AKFTA aswell as ACFTA.30 Such influence can be foundin other areas as well, for example, co-equalROO,31 negotiation sequencing (trade in goodsfirst) as well as longer transition period for hightariff products.32

RCEP is perceived as an exercise to con-verge the ASEAN + 1 FTAs.33 Thus, there is apotential channel of substantive componentsof FTA from ASEAN to the ASEAN + 1 FTAs,and then to RCEP. Although it is too early tojudge whether such channel actually works,this possibility is more than just a possibilityconsidering the actual discussion among the16 governments.34

4.2 ASEAN Framework for RCEP (2011)and RCEP Guiding Principles (2012)

In August 2011, the ASEAN Economic Min-isters tasked its Senior Economic Officials tocraft a template for the ‘ASEAN++ FTA’(which later became RCEP).35 All the FTApartners recognised the ASEAN template dis-cussion and thus deferred their decision on theChina–Japan joint proposal to set up threeworking groups on CEPEA and EAFTA.36 Theoriginal template idea included a lot of details,but in the end the work resulted in a moreconceptual proposal, that is, the ASEANFramework for RCEP in November 2011. TheFramework nonetheless included many keypoints on substances that ASEAN wished topursue in the RCEP.

28. In the ‘common concession approach’, each countryhas a single schedule that is applied to all the other part-ners in the FTA. Some of the ASEAN + 1 FTAs havelimited deviation from the common concession approach.See Kuno, et al. (forthcoming). On the contrary, someregional FTAs (for example, North American FTA) allowbilateral concessions. In the TPP, the United States ini-tially proposed the bilateral concession approach becauseof its preference ‘not to have to make new commitments toits current FTA partners’ (Lewis 2012). Thus, ‘commonconcession’ is not a given, and hence ASEAN’s influencecan be observed in the ASEAN + 1 FTAs.29. CLMV countries refer to Cambodia, Lao PDR,Myanmar and Viet Nam.30. Section 5 of this article further elaborates ASEAN’sapproach in services liberalisation.31. The relationship between ASEAN and ASEAN + 1FTAs is more complex in the ROO. In 1992, AFTA intro-duced ‘RVC40’ as the general rule, which was adopted byACFTA in 2005. Then, AFTA started changing its ROO to‘RVC40 or CTH’ in limited products in the mid-2000s,which became a general rule in AKFTA in 2007. ASEANalso expanded the coverage of ‘RVC40 or CTH’ in 2008,followed by AJCEP and AANZFTA. So far, China has notagreed to take the coequal rule in the ongoing review ofROO. India did not agree on the coequal rule and persistedin applying the ‘RVC35 + CTSH’ rule, which is the moststringent ROO among the ASEAN + 1 FTAs.32. Terada (2009) pointed out that ACFTA and AKFTAfollowed some approaches taken earlier in the AFTA-CEPT: longer transition period for high-tariff products and‘trade in goods first’ negotiation.

33. While the RCEP Guiding Principles do not explicitlymention this word, this understanding is evident implicitlyin its frequent reference to the ASEAN + 1 FTAs. In thepre-RCEP discussion of EAFTA, three different appro-aches were compared initially (EAFTAPhase I Study 2006,pp. 29–31), and then the ‘convergence’ approach wasselected as optimal (EAFTA Phase II Study 2009, p. 22).The reports are available at: �http://www.thaifta.com/thaifta/Portals/0/eafta_report.pdf�, and, �http://www.thaifta.com/thaifta/Portals/0/eafta_phase2.pdf�,respectively.34. ASEAN Plus Working Groups from 2009 to 2011participated by all the RCEP member states started theirstudy from the comparison of ASEAN + 1 FTAs. Whilethe final reports are not publicly available, Japanese Min-istry of Economy, Trade and Industry uploads a briefsummary of activities on its website: �http://www.meti.go.jp/policy/trade_policy/east_asia/dl/4WG.pdf� (in Japanese).35. Joint Media Statements of the 43rd ASEAN Eco-nomic Ministers (AEM) Meeting Manado, Indonesia,10–11 August 2011, para. 33.36. Joint Media Statements of the Informal Consultationsof EAS Economic Ministers Manado, Indonesia, 13August 2011, para. 9.



http://www.thaifta.com/thaifta/Portals/0/eafta_report.pdf


http://www.thaifta.com/thaifta/Portals/0/eafta_phase2.pdf

http://www.thaifta.com/thaifta/Portals/0/eafta_phase2.pdf

http://www.meti.go.jp/policy/trade_policy/east_asia/dl/4WG.pdf



The principles that ASEAN proposed in2011 were largely accepted by its FTA partnersin 2012. They include (i) recognition ofASEAN centrality, (ii) broader and deeperengagement with significant improvementsover the existing ASEAN + 1 FTAs, (iii) openaccession clause, (iv) emphasis of economicand technical cooperation, (v) importance oftrade and investment facilitation (in addition toliberalisation), and (vi) special and differentialtreatment for ASEAN especially the CLMVcountries.37 Some of them are common ele-ments in the existing ASEAN + 1 FTAs (forexample, special and differential treatment forthe CLMV countries). Some others wereemphasised in earlier official studies ofCEPEA (for example, economic and technicalcooperation; trade and investment facilita-tion).38 The other elements were newly pro-posed by ASEAN in 2011.

On the other hand, the ‘periodic review’ thatASEAN proposed has not been accepted byits FTA partners so far. The RCEP GuidingPrinciples newly stated that the existingASEAN + 1 FTAs will continue to exist. Moredetailed substances were developed for tradein goods, trade in services and investment. Fur-thermore, ‘other areas related to trade andinvestment’ are specified via ASEAN’s discus-sion with its FTA partners (that is, intellectualproperty, competition policy and disputesettlement). However, none of ASEAN’s pro-posals in 2011 was explicitly declined by itspartners in the 2012 RCEP Guiding Principles.

This simple comparison of the two docu-ments presents a fact that ASEAN is trying tolead the substantive discussions in the RCEPprocess and is also successful to a great extent.There are a lot more concrete substances to benegotiated before the new pact is signed. Butnow, ASEAN should consider how it canfurther influence the RCEP negotiationsubstantively.

5. AEC as Reference for the FutureRCEP Negotiation

It is not easy for ASEAN to drive the sub-stances in the RCEP negotiation becauseASEAN consists of 10 countries with vast dif-ferences in the level of development, whichmakes it difficult to agree on a single andcommon position.39 If ASEAN delays in reach-ing a consensus among the 10 members, itsFTA partners will get frustrated and may startdriving the substances.40 On the other hand,ASEAN has a special advantage because of itsrich experiences in its efforts towards AEC2015, which provides a good basis forASEAN’s leadership in RCEP.41 The AECexperiences bring several advantages forASEAN when considering its leadership inRCEP.

Given a limited time to the target of RCEPconclusion (that is, the end of 2015), the mosteffective and probably the only strategy thatASEAN could take to reach a consensusamong the 10 sovereignties is to utilise AEC asa model. All the ASEAN member states arefamiliar with the AEC issues and AECliberalisation and facilitation measures. Whatis more, the AEC Blueprint urges its membersto carry out reform programs that help them tobe ready for liberalisation in a larger geogra-phy (for example, East Asia).42

More importantly, AEC is deeper in com-mitments and broader in issue coverage ascompared to the existing ASEAN + 1 FTAs.43

37. In addition, WTO consistency and transparency arealso found both in the ASEAN Framework and RCEPGuiding Principles, but they are common elements in anyFTA.38. Track Two Study Group on CEPEA (2009), availableat: �https://www.dfat.gov.au/asean/eas/cepea-phase-2-report.pdf�.

39. Fukunaga et al. (forthcoming).40. It is not only the FTA partners, but potentially ASEANmember states who may start taking a distance from theASEAN approach in FTA strategy. It was the biggestreason why Singapore preferred bilateral FTA negotiationin the early years (Lee 2006).41. Damuri (2012) briefly mentioned this possibility. Healso pointed out that the slow progress in AEC measuresmay pose a question for ASEAN’s capacity of centrality.42. RCEP does not necessarily demand ‘deeper’liberalisation when compared with AEC.43. The deepest and broadest economic integration initia-tive in the East Asia region is the Closer Economic Rela-tions Trade Agreement between Australia and NewZealand. See, in general, the website of Australian govern-ment �http://www.dfat.gov.au/fta/anzcerta/�. The twocountries share language, culture and legal traditions withsimilar level of administrative capacities. Thus, it cannot



https://www.dfat.gov.au/asean/eas/cepea-phase-2-report.pdf


http://www.dfat.gov.au/fta/anzcerta/

Corbett and Umezaki (2009, p. 54) pointed outthat ‘[e]conomic development in generalentails structural adjustment, and economicintegration is expected to accelerate theprocess’. The AEC is in line with this consid-eration and should be understood as a con-certed effort for structural reform rather thanconventional trade negotiation. ASEAN setsclear and ambitious targets of economic inte-gration and establishes a process to reach thetargets. To take an example, ASEAN Trade inGoods Agreement (ATIGA) demands almostcomplete tariff elimination.44 It also set cleartimeline with relatively long transition periodwith different nuance in accordance with levelof economic development.45 At the same time,the process put a flexibility measure so thateach member state can select its own sensitiveproducts during the transition period.46 Longtransition period and flexibility measure aremechanisms that give member states some dis-cretion for its reform initiatives in terms ofpace and priority, and thus facilitate the pro-gressive economic integration without com-promising the level of ambition. ASEANadopts a lot of facilitation and cooperation ini-tiatives to encourage efforts for capacity build-ing. Trade facilitation is a good example. Thenational single window (NSW) developmenthas pushed member states to simplify dupli-cate documentation requirement. Streamlinedprocedures for trading contribute to the exportcompetitiveness of the country that takes thereform initiative and thus is quite differentfrom the trade negotiation mindset. There areother interesting initiatives such as the regionalguidelines for competition policy, whichpotentially contribute to the convergence ofnational competition regulations in a long run.

In addition to the AEC efforts, ASEAN’sexperiences in ASEAN + 1 FTAs will alsohelp ASEAN in leading the substantive discus-sion of RCEP. Despite the many commona-lities among the ASEAN + 1 FTAs, thereremain significant differences between them aswell. It is only the ASEAN countries whoknow the advantages and disadvantages of dif-ferent approaches of the ASEAN + 1 FTAs.47

Therefore, ASEAN is in the best position tolead the discussion in shaping the new regionalarchitecture.

Indeed, ASEAN’s experiences have startedinfluencing the ASEAN + 1 FTAs as discussedin the previous section. Yet some more recentAEC experiences are not reflected in theASEAN + 1 FTAs because these pacts weresigned before 2010 while AEC efforts arespeeding up at the moment. AEC has morethan what were already adopted in theASEAN + 1 FTAs. ASEAN should reflect itsown experiences, both success and failure, andpropose the best measures in the RCEP.

The next section illustrates some possibleagendas where AEC experiences can be par-ticularly useful: (i) services liberalisation, (ii)trade facilitation and (iii) NTBs.

6. Three Possible Areas of ASEAN Model

6.1 Services Liberalisation

An economic simulation of RCEP showsthat large benefits come from servicesliberalisation (Itakura 2013). ASEAN’s ser-vices liberalisation agreement (ASEANFramework Agreement on Services (AFAS))has achieved higher liberalisation in servicessectors than any other ASEAN + 1 FTAs(Ishido & Fukunaga 2012). When applying theHoekman Index, AFAS marks the highestscores (that is, most liberal commitments) ascompared with ASEAN–Australia–New

provide a model for RCEP whose membership varieswidely.44. ATIGA Art. 19.1. In addition to tariffs, a similarapproach is taken for services as discussed in Section 5 ofthis article.45. ATIGA Art. 19.2.46. For example, while ATIGA Art. 19.2 (a)(iv) stipulatethat the CLMV countries can choose up to 7 per cent tarifflines to be eliminated by 2018 while they need to eliminatetariff for the rest by 2015. The 7 per cent tariff lines can beselected by each country.

47. ASEAN’s FTA partners have signed many FTAs aswell, which also bring insights to the RCEP negotiation.These FTAs are mostly bilateral, however, and different innature from regional FTAs.



Zealand FTA, ACFTA and AKFTA.48 Thus, inorder to gain more market access from servicesliberalisation, ASEAN should propose to useAFAS as the basis of the RCEP serviceschapter so that the ASEAN + 1 FTA servicescommitment will ratchet up to the AFAS levelor higher via the RCEP process.

The most important difference betweenAFAS and ASEAN + 1 FTAs is the negotiationmodality. All the ASEAN + 1 FTAs take theclassic ‘request and offer’ approach in servicesnegotiation.49 ASEAN used to apply the samenegotiation format at the initial stage (that is,in its first and second packages), followed by amodified approach tested during the third tosixth packages (Hiong 2011). After these expe-riences and experiments, with the endorsementof the AEC Blueprint, AFAS is now taking a‘formula approach’, which is one of the mostimportant innovations in AFAS (Sauvé 2013,p. 31). In the formula approach, each AMSshould meet the set target such as sectoral cov-erage and a maximum cap of foreign equitylimitation (for each package as well as in 2015as the final goal) but does not need to play the‘request and offer’ negotiation game anylonger. AFAS practically functions as a mecha-nism to push for concerted efforts of domesticregulatory reform at the regional level whiletaking the conventional ‘trade liberalisation’form. Services reform brings large benefits tothe country that reformed rather than foreigncountry seeking for improved market accessbecause the productivity of the services sectorscontributes to the manufacturing sectors’ com-petitiveness as well as to the overall economicefficiency of the country (Dee 2012). Thus, theconcerted effort of services liberalisation is areasonable method of reform.

ASEAN may not be comfortable in givingthe same level of preferential treatment to non-

ASEAN countries, yet it can still proposeadopting the formula approach with lowerambition than AFAS10 but higher than theexisting ASEAN + 1 FTAs.

6.2 Trade Facilitation

The RCEP Guiding Principles state that RCEPwill include ‘provisions to facilitate trade andinvestment and to enhance transparency intrade and investment relations’. Economicgains from RCEP will also be larger whentariff and services liberalisation is combinedwith trade facilitation (Itakura 2013). ASEANhas adopted a number of tangible trade facili-tation initiatives. Some are already highly suc-cessful while others are still moving forward.For example, the ASEAN Single Window(ASW) initiative is running the test run projectby linking the seven NSWs. ASEAN has suc-cessfully established its own harmonised tariffnomenclature based on but going deeper thanthe global harmonised system of tariff nomen-clature.50 ASEAN is currently creating anASEAN Trade Repository by linking theNational Trade Repositories. Another ongoinginitiative of self-certification in ATIGA willalso facilitate trade especially for small andmedium enterprises. While ASEAN + 1 FTAsalso cover trade facilitation aspects, the pro-grams are not comprehensive in some FTAs(Pellan and Wong 2013). ASEAN’s experi-ences can provide many ideas as well as tech-nical designs of regional trade facilitationinitiatives. Indeed, the CEPEA Phase II StudyReport51 explicitly mentioned in 2009 that‘facilitation measures under CEPEA shouldbuild on existing ASEAN initiatives’. TheReport specifically mentioned the ASW as apotential measure to be adopted in RCEP.Trade facilitation will therefore be an impor-tant area that AEC experiences can givelessons for the RCEP members.

48. The other two ASEAN + 1 FTAs (that is, AIFTA andAJCEP) are close to finalising their services packages, butthe details are not publicly available as of the time ofwriting.49. ACFTA and AKFTA have not adopted the formulaapproach while taking the package structure in servicesliberalisation, which can be a main reason for the slowprogress in ACFTA and AKFTA. See Fukunaga and Ishido(2013).

50. An idea of common tariff nomenclature across theRCEP region was discussed during the ASEAN PlusWorking Group on Tariff Nomenclature (during 2009 and2011). However, the result is not available to the public.51. The report is available at: �https://www.dfat.gov.au/asean/eas/cepea-phase-2-report.pdf�.





6.3 NTBs and Non-tariff Measures (NTMs)

NTBs and NTMs are a key element of RCEP.52

If new NTBs/NTMs are introduced, the poten-tial gain from tariff elimination can be easilymitigated or nullified. It is natural for AMSs,therefore, to seek elimination of NTBs as wellas minimisation of NTMs so that ASEANfirms can fully enjoy the improved marketaccess in goods.

ASEAN has made significant efforts inreducing NTBs/NTMs: some have been suc-cessful while others are still ongoing (ERIA2012, pp. III-19-23). First of all, the AEC Blue-print mandates the elimination of NTBs by2010 forASEAN-5, by 2012 for the Philippinesand by 2015 for CLMV countries (withflexibilities to 2018).53 In accordance with thismandate,ATIGAprovides all the NTBs shall beeliminated.54 However, the records have notbeen very successful mainly because of the lackof a clear definition of NTBs.55 Transparencymeasure requires notification to the Secretariatbefore a new measure is introduced.56 However,such a rule is not fully respected. As a result,there are a number of ‘core NTMs’ (NTMs thatare likely to have barrier effects) that exist, bothin terms of frequency and prevalence, accord-ing to ERIA’s scoring study (ERIA 2012, pp.III-21-24). In other words, ASEAN faces chal-lenges in eliminating NTBs (including settingclear definition) and minimising NTMs. NTBs/NTMs are growing concerns in ASEAN eco-nomic integration. The 45th AEM endorsedregional-level and national-level work pro-grams on NTMs, which was the primaryoutcome from the AEM.57

On the other hand, some measures arebecoming more promising. One is theASEAN NTM Database compiled by theASEAN Secretariat which provides transpar-ency.58 In addition, the recent practice of‘Matrix of Actual Cases’ (also uploaded onthe ASEAN Secretariat’s website) providesa government-to-government consultationmechanism, which has resulted in concrete,although limited number of, resolution of dis-putes.59 Notably, some NTM complaints inthe Matrix are found to be based on wronginterpretation of laws in the complainantcountries rather than an implementation ofproblematic measures in the respondent coun-tries. This therefore strongly indicates thevalue of transparency measure in trade-relatedregulations.

ASEAN + 1 FTAs also have NTB-relatedprovisions. These are somewhat similar toATIGA provisions, which typically includetransparency mechanism, non-applicationof quantitative measures and consistencywith the World Trade Organization’s rulesfor NTMs. Yet the benefits of theseASEAN + 1 NTB/NTM provisions have notbeen proved.

While ASEAN itself has not been com-pletely successful in addressing the NTB/NTM issues, its rich experiences can giveinsights on how the RCEP may address theseissues.60 The implementation records of thenewly adopted work programs will be theimportant litmus test.

52. The RCEP Guiding Principles provide that ‘[t]heRCEP will aim at progressively eliminating tariff and non-tariff barriers on substantially all trade in goods in order toestablish a free trade area among the parties’.53. AEC Blueprint, para.14.54. ATIGA, Art. 41 for quantitative measures, Art. 42 forall the other NTBs.55. In addition to ERIA (2012), this point is also dis-cussed in Austria (2013, pp. 39, 77, 78).56. ATIGA, Arts 11 and 40.57. Key Outcomes of the 10th AEC Council Meeting,45th ASEAN Economic Ministers’ Meeting and RelatedMeetings, 18–21 August 2013, Bandar Seri Begawan,Brunei Darussalam, para. 3(a).

58. The database is available at: �http://www.asean.org/communities/asean-economic-community/item/non-tariff-measures-database�.59. The matrix is available at: �http://www.asean.org/images/2013/economic/afta/matrix%20of%20actual%20cases%20on%20ntms%20-%20trade%20barriers%20for%20uploading.pdf�.60. For example, Das (2012) emphasises the importance oflearning from experiences in NTBs. She proposes to createand maintain a database on NTBs to trade. Unlike theASEAN NTM database, however, the proposeddatabase should be based on surveys of relevant firms ratherthan governments. She further proposed for RCEP to (i)develop regional standards and subject the NTBs to them,(ii) streamline and regionally harmonise licensing andcustoms procedures, and (iii) develop common approachesto testing methods and conformity assessments.



http://www.asean.org/communities/asean-economic-community/item/non-tariff-measures-database



http://www.asean.org/images/2013/economic/afta/matrix%2520of%2520actual%2520cases%2520on%2520ntms%2520-%2520trade%2520barriers%2520for%2520uploading.pdf




7. Threats to the ASEAN Centrality

There are many threat factors for ASEAN cen-trality. First of all, ASEAN may not be able totake a single position. As the AEC Blueprintprovides, a coherence of member states’ posi-tions is a prerequisite for ASEAN centrality(ASEAN 2008b, para. 65). There are severalfactors for possible division within theASEAN group, including the developmentgaps that bring about the differences in eco-nomic structures among the 10 countries. Inaddition, some scholars point out that TPPmembership may distract the unity.61 Cur-rently, four ASEAN members join the TPPnegotiation and thus may have different pref-erences on the regional economic integrationthan the other ASEAN members. If the TPPgoes than RCEP, for example, these membersmay push for more ambitious outcomes in theRCEP while non-TPP members stick to lowertargets.62 So far, however, there is no evidencefor such division taking place in the RCEPnegotiation process. As both initiatives are stillongoing, it is too early to judge how TPP willaffect the RCEP process. Second, and relatedto the first point, a protectionist momentum insome ASEAN members may impede theRCEP negotiation process. The global finan-cial crisis has triggered a protectionist reactionin the world, including ASEAN.63 In theASEAN context, such reaction is also

strengthened with the implementation ofASEAN + 1 FTAs, especially ACFTA.64 If anASEAN member hesitates to furtherliberalisation in the East Asia region, ASEANherself may delay the RCEP negotiationsprocess. Moreover, if such a protectionistmindset affects the implementation of AEC, itwould affect the credibility of ASEAN intaking a leading role in the RCEP as well.65

8. Conclusion

ASEAN centrality was one of the biggestreasons for ASEAN’s proposal of RCEP in2011. In order to gain both politically and eco-nomically from RCEP, ASEAN should playproactive roles in the RCEP negotiation. Suchroles should include the one as the driver ofsubstance in addition to the one as a facilitatorof process. ASEAN has already started exer-cising its influence over the substances ofASEAN + 1 FTAs and RCEP. At the sametime, however, many more concrete substancesshould be negotiated before the conclusion ofthe negotiation. Thus, a challenge beforeASEAN is whether and how ASEAN can leadthe substantive discussions in the next 2 years.This article argues that ASEAN should utilisethe AEC as much as possible as the model forRCEP. AEC has achieved a much higher levelof liberalisation than the existing ASEAN + 1FTAs by setting clear and high-end targetswith long transition period to allow domesticreform. It also provides rich facilitation pro-grams especially in trade in goods. It is easierfor ASEAN to create a single and commonposition because of its familiarity of the AECmeasures. The AEC is inducing the ASEANmember states to implement necessary reformagendas. Its rich experiences, both success andfailure, will bring major insights for the RCEPnegotiation. At the same time, the credibleachievement of AEC 2015 is of vital impor-tance. As the ASEAN leaders declared in 2010,the best way to ensure ASEAN centrality in the

61. This risk of division among ASEAN members israised by Pakpahan (2012) and Damuri (2012). In additionto the treaty substances, the existence of frequent negotia-tions of TPP affects the negotiation resources of TPPmembers and thus may delay the creation of ASEAN’scommon position as well as RCEP negotiation itself.62. The difference between RCEP and TPP in terms ofissue coverage may not be substantive (Intal et al., 2014,pp. 303–305) because RCEP is also aiming to be a com-prehensive FTA. For example, e-commerce is explicitlymentioned in the RCEP Guiding Principles as a possiblecomponent of economic and technical cooperation. On theother hand, some issues are covered in TPP while notlikely in the RCEP, for example, environment, labour andgovernment procurement. While TPP is often perceived ashaving a higher ambition than the RCEP, the actual nego-tiation outcomes, however, are not yet available.63. See World Trade Organization (2014) and its earlierseries for the recent trends of trade restrictive measures inthe G20 countries including Indonesia.

64. For a discussion of Indonesia’s recent changes intrade policy, see Anas (2012).65. Damuri (2012) argues the delays in AEC implemen-tation to be one of the two major risks for ASEAN cen-trality in the RCEP.



evolving regional architecture is to pursue ‘atwo-pronged approach which gives priority tothe acceleration of ASEAN integration whileintensifying ASEAN’s external relations’.66 IfASEAN halts because of domestic opposition,the ASEAN centrality goals will never beachieved.

October 2014.Earlier version of this article was presented at theIndonesia–Australia Symposium on Regional Strat-egies (co-hosted by The Australian National Uni-versity and the Centre for Strategic andInternational Studies), Jakarta, 10 April 2014. Theauthor appreciates the useful inputs and commentsmade at the symposium.

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Yoshifumi Fukunaga is a senior policy coordinatorat the Economic Research Institute for ASEAN andEast Asia. He researches on a variety of issuesregarding the ASEAN Economic Community andASEAN’s FTA with external partners. His recentpublication includes ‘Taking ASEAN + 1 FTAstowards the RCEP: A Mapping Study’ (ERIA Dis-cussion Paper 2013-02) and ASEAN EconomicCommunity Midterm Review: Executive Summary(ERIA). He received his LLM from Harvard LawSchool and MA (international relations) fromthe Fletcher School of Law and Diplomacy, TuftsUniversity.





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