Comparing how ASEAN views the Chinese dominated RCEP vs the US led IPEF and where their interests lie?

RCEP or IPEF: Where do ASEAN states stand?

Launched in May 2022 by the United States, the 

Indo-Pacific Economic Framework for Prosperity

 (IPEF) includes seven of the ten ASEAN members as initial partners. While the IPEF has been compared to the Trans-Pacific Partnership (TPP) which the US opted out of in 2017, it is not a Free Trade Agreement (FTA), but rather an economic arrangement aimed at tackling twenty-first century challenges. The IPEF is seen as a 

counter to Chinese economic influence in the Indo-Pacific

, especially after the Regional Comprehensive Economic Partnership came into effect in January 2022, as well as the US trying to regain economic leadership in the region after its withdrawal from the TPP. China has 

 as an attempt to force ASEAN countries to choose between China and the US. In this context, the question arises about the rationale behind ASEAN countries joining the IPEF and how they perceive its benefits compared to the RCEP.

The RCEP was the brainchild of ASEAN itself. ASEAN’s decision to propose a FTA can be attributed to 

, which is the impact of one government’s policies on the policy choices of other governments. The idea behind it was to protect its economic interests and 

 to the TPP and the China-Japan-South Korea FTA which had already been proposed prior to the RCEP’s conception in 2011. Furthermore, the decision was made easier by the fact that existing trade between ASEAN countries and non-ASEAN members of RCEP was already significant, including existing bilateral FTAs. However, it still took ten years of committed negotiations before the RCEP was finally signed in 2021 by all ten ASEAN members as well as Australia, China, Japan, New Zealand and South Korea. ASEAN’s unanimous commitment to the RCEP comes from two factors. First are the expected 

 to increase regional economic integration in the Asia-Pacific, significantly reduce tariff barriers, provide easy access to markets, and transfer of technology boosting manufacturing. Secondly, the successful establishment of RCEP has helped maintain ‘

Unlike RCEP, the IPEF is a US-led enterprise rather than being an ASEAN-led initiative. Regardless, all ASEAN members excluding Cambodia, Laos and Myanmar have joined the US, India, Japan, Australia, South Korea and Fiji in initial negotiations. As voiced by senior leaders from Thailand, the Philippines, Malaysia, Singapore and Vietnam, the 

IPEF has been received positively by ASEAN

 countries. There are three main reasons for their decision to join the IPEF. Firstly, the agreement is in a nascent stage and therefore being part of the negotiations does not obligate ASEAN states to become signatories in the future. Similarly, the flexible nature of the IPEF allows countries to selectively be part of any or all of the 

: i) trade; ii) supply chains; iii) clean energy, decarbonisation and infrastructure; and iv) tax and anti-corruption. This means the members are not as bound by the framework compared to an FTA. Secondly, even though the US has rejected any possibility of removing tariff barriers under the IPEF, ASEAN states perceive economic benefits in other forms. For example, being part of the group could lead to 

greater foreign direct investment (FDI) and technology transfer

 from the US and other non-ASEAN members. Contrastingly, opting out of the IPEF would make the country less attractive for American FDI and lose competitiveness to other ASEAN members. Lastly, joining the IPEF is consistent with ASEAN's hedging strategy, which includes 

simultaneous cooperation and confrontation with China

Even ASEAN countries which are not currently part of the IPEF have signalled that they 

. While Myanmar’s exclusion is due to the military regime in the country, the USA's 

 possibly stems from their close ties to China. This has received calls from these countries as well as within the US, to include them in the IPEF, a group that the US claims is ‘open.’

It is too early to compare whether the IPEF or the RCEP would benefit ASEAN countries more. However, it is clear that most ASEAN states are committed to both. The RCEP has seen some initial success with China’s trade with ASEAN and other states in the RCEP 

 over the first year. The two initiatives have largely been seen in the context of the US-China rivalry, but that does not necessarily mean that RCEP and IPEF are mutually opposed. In fact, ASEAN members view it as an opportunity to benefit from both simultaneously. While ASEAN is taking a risk-free chance with the IPEF, if it were to fail or demand greater commitment from members, the option of exiting remains open. Whether the RCEP or the IPEF would be better for ASEAN remains to be seen, however the fact that Southeast Asian countries are part of both, highlights their economic importance and helps reinforce ASEAN centrality in the Indo-Pacific.

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