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Concerns over RCEP

The Star - 01 July 2021

Concerns over RCEP
By Daniel Khoo

The ongoing US-China tensions can be a potential wildcard to the mass ratification and adoption of the Regional Comprehensive Economic Partnership (RCEP) by its country member signatories.

“Already, these tensions have caused a rethink by the business community and a relocation of some of their operations.

“I believe that in the Asean region, there are some countries which have got serious indications of companies wanting to be relocated, ” former ambassador to the World Trade Organisation Datuk M. Supperamaniam (pic) said at the Malaysia-China Chamber of Commerce-RCEP roundtable series seminar.

“The tensions are there and they are not going to go away soon even with the change in the US presidency. I don’t expect all the issues to be solved, ” he added.

It was highlighted at the seminar that of the 15 member countries of the RCEP, only three – China, Japan and Singapore – have ratified the agreement while the 12 other countries have not yet fully ratified it.

“Will the 12 other countries get cold feet?, ” asked the National University of Malaysia’s Graduate School of Business’ adjunct professor and former chief executive officer of Matrade, Mohd Shahreen Madros, who moderated the session.

“Let me be very frank, as there are already some concerns in Australia and New Zealand on the ratification of the RCEP. One of the possible reasons could be the political developments in Myanmar – human rights and democracy which is very close to the United States (and the West).

“And Australia is usually politically aligned to the United States and the United States could work on Australia to delay this process, ” Supperamaniam said.

He said geopolitical developments can influence the ratification of the RCEP and so there needs to be a counter strategy to this.

“Even if Australia doesn’t ratify, if we have six Asean countries (ratifying it), it should be easy since this is an Asean initiative. With China and Japan – then with just one more country, we can go ahead.

“The bilateral tensions between Australia and China is causing Australia a lot of losses and they have realised it, ” Supperamaniam said.

Supperamaniam also highlighted that Malaysia is very dependent on China for exports, especially for the exports of intermediate products and components that is sent to China before it is eventually used in the manufacturing of finished products there.

“These are then exported to the United States and other countries. The US-China tensions will invariably impact our exports of these items to China.

“Of course, there will be some disruptions from these tensions but there are many other opportunities (from the RCEP). But even the American businesses are not too keen on the US taking such a hard stance on China, ” Supperamaniam said.

“There are a lot of benefits for Asean countries (to ratify) since Asia is the next growth centre and will continue to be for the next decade and this is where the opportunities are, ” he added.

On a related matter, Supperamaniam highlighted that the South China Sea dispute should be settled amicably for East Asia to grow smoothly.

“I believe the governments in Asean have sent a message to China that it doesn’t want the high level of economic engagement in this area to be disrupted as a result of this issue.

“China will be an important driver of East Asian integration through RCEP so much so many seem to think RCEP is a China initiative but it is not although they (do) play an important role since they’re an important market for Asean countries, ” Supperamaniam added.

 source: The Star