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ASEAN’s Productive Year

By Huong Le Thu

Against all odds, Vietnam has concluded its chairmanship of ASEAN with the signing of the world’s largest trade agreement. The Regional Comprehensive Economic Partnership (RCEP) of all ten ASEAN members states and China, Japan, South Korea, Australia and New Zealand combines a third of world’s population and GDP. The signing of RCEP, on the final day of the 37th ASEAN Summit, capped a productive year for ASEAN, despite the coronavirus pandemic and the resort to virtual meetings. The summit concluded some 80 agreements among its members and dialogue partners – the highest number in over 50 years of ASEAN history.

A great deal of ASEAN’s success this year can be attributed to Vietnam’s ability to keep the focus on critical bread and butter issues. Defying initial expectations that traditional security and maritime issues would dominate Hanoi’s chairmanship, its largest contribution was to the economic domain, including trade, COVID-19 recovery plans, and innovation for a post-pandemic world.

The finalisation of the RCEP is a big deliverable and reasserted ASEAN’s centrality in the economic architecture of East Asia, even as India opted out after years of negotiation. It is a symbolic accomplishment and contributes to the goal of connecting the Indo-Pacific via a dense network of trade – the so-called ‘noodle bowl’ of bilateral and multilateral trade agreements that serve to entwine the economies of Southeast Asia and Northeast Asia.

Many of the RCEP members already have free trade agreements (FTAs) with each other. For example, Australia has ratified agreements with eight Asian countries and now is party to a third regional agreement. The RCEP, however, is the first trade agreement outside the World Trade Organisation, that comprehensively brings together the two sub regions of southeast and northeast Asia.

Vietnam has been among the strongest supporters of FTA networks, expanding the number of its own bilateral agreements, but also promoting connections to two of its top investors – the Republic of Korea and Japan. Of course, the RCEP mega-trade pact, as with all multilateral trade agreements, will not benefit all members equally and details of implementation will vary according to economic sectors and an individual state’s ability or willingness to conform. Indonesia, for example, has already declared it will exclude sensitive sectors rice and alcohol, meaning no relief there for Australian winegrowers facing punitive tariffs in the China market. But collectively, RCEP does present ASEAN’s unequivocal support for multilateralism, a rules-based regional agenda, and a rebuttal of the Trump Administration's tariff war.

On the wider strategic agenda, Vietnam is one of the strongest critics within ASEAN of China’s growing assertiveness in the South China Sea. Hanoi’s approach has been consistent in the face of growing pressure from Beijing over conflicting maritime territorial claims. While Vietnam has been candid about internal discord within ASEAN in responding to the US-China rivalry, it knows that it is unrealistic to expect all ASEAN members to be on the same page in their geopolitical calculations. Hanoi tried to bridge issues that threaten the group’s unity by focusing on collective initiatives for a post-COVID recovery, in line with its chairmanship theme of a ‘Cohesive and Responsive’ ASEAN Community. As such, while the South China Sea issues featured, neither they nor the economic and environmental challenges of Mekong River use dominated this year’s discussions.

Vietnam’s successful battle with COVID-19 within its borders has been critical for its leadership of ASEAN this year. Hanoi needed to perform at its best – it marked the 25th anniversary of its membership of the regional grouping. Joining ASEAN was particularly important for Vietnam. It broke the diplomatic isolation it fell into after the end of the Cold War. Since then, Vietnam has earned a reputation as a strong contributor to ASEAN – a high benchmark it needed to uphold. Both external and internal factors compelled Hanoi to perform well. Other important anniversaries in 2020 – the 10th anniversary of the ASEAN Defence Ministers Meetings Plus, an initiative that Hanoi proposed ten years ago when it last chaired ASEAN, and the 15th anniversary of the East Asia Summit – also required Hanoi to go the extra mile.

Apart from the need to assert strong leadership in a challenging geopolitical environment, Hanoi’s performance needed to be spotless also for the sake of its own legitimacy as the Congress of the ruling Communist Party approaches next year. Strong international performance, and even leadership, is among the conditions for domestic political support.

While Vietnam’s chairmanship has been instrumental in steering ASEAN through challenging times for the region’s economic and health security, it is the developmental agenda that can truly unite this diverse group. Among other summits, Hanoi hosted the ASEAN-United Nations dialogue, which acquired special prominence given the setbacks COVID has caused to efforts to meet the UN Sustainable Development Goals. The Asian Development Bank estimated some 15 million people in Southeast Asia could fall back under the poverty line. With most economies in the region expected to contract (Indonesia and Philippines have already officially fallen into recession), any conversation about a post-COVID recovery needs to be a collective one. In that regard, ASEAN’s continuous efforts to sustain the cooperation framework in spite of the geopolitical climate, are both pragmatic and useful.

By that token, Australia’s pledged contribution to ASEAN’s recovery was well-received. The regional grouping’s oldest dialogue partner has already pledged to support equitable access to vaccines under the Gabi initiatives to the Pacific and Southeast Asia. This is on top of offering Indonesia a special loan of $1.2 billion. At the East Asia Summit, Prime Minister Scott Morrison unveiled another development and aid package of $550 million to ASEAN. Notwithstanding the continuing decline in real terms of Australia’s overseas development aid, the Morrison government’s latest initiatives signal its willingness to support the region at a critical time.

Vietnam can draw satisfaction from all this ASEAN-centred activity. Despite ASEAN’s worries of becoming beholden to great power competition, Vietnam, while well-aware of the gravity of geopolitics, has managed to steer ASEAN back to the zone of cooperation. As the November summits showed – there are no shortage of issues that require collective commitment.

Vietnam’s chairmanship allowed ASEAN to surmount some of the challenges created by COVID and set the region on the right path towards recovery. But the ASEAN process is a continuous one. The next two chairs in succession, Brunei Darussalam and Cambodia, face challenges of post-pandemic recovery for the region, and most likely an even more complex external environment, as the great power competition is not going away.

Originally published by: ASIALink on 30 Nov 2020