RCEP deal could mean more certainty for ASEAN members amid trade tensions, says analyst

Key Concepts

• ASEAN (Association of Southeast Asian Nations): A regional intergovernmental organization comprising ten countries in Southeast Asia.
• Trade Deals: Agreements between countries to facilitate and regulate the exchange of goods and services.
• US Tariffs: Taxes imposed by the United States on imported goods.
• Intra-ASEAN Trade: Trade conducted between member countries of ASEAN.
• Dialogue Partners: Countries or organizations that engage in formal discussions with ASEAN.
• Rare Earth Minerals: A group of 17 chemical elements with unique properties crucial for modern technologies.
• Ceasefire Agreement: An agreement to stop fighting, often a precursor to a peace treaty.
• Joint Declaration: A formal statement issued by two or more parties, outlining their agreement on certain issues.
• RCEP (Regional Comprehensive Economic Partnership): A proposed free trade agreement between ASEAN member states and its six free trade agreement partners.
• Protectionism: Economic policy of restraining trade between countries through tariffs, quotas, and other restrictions.

US Trade Deals with ASEAN Members

President Trump has signed several trade deals with ASEAN members. While the specifics of these deals are not yet clear, Malaysia, Cambodia, Vietnam, and Thailand are identified as potential beneficiaries. However, existing US tariffs remain in place, raising questions about the immediate clarity and stability these deals provide for businesses in export-dependent ASEAN countries. The analyst suggests that the clarity businesses seek will not be immediately evident, and the situation will continue to evolve throughout President Trump's presidency.

US Commitment to Southeast Asia and Shifting Priorities

President Trump has pledged a "100% commitment" to Southeast Asia, aiming to be a strong partner for generations. However, concerns exist regarding the sustainability of this commitment, given past instances where enthusiasm faded after initial agreements. The analyst emphasizes the importance of continued working-level diplomacy and back-channeling, especially as President Trump shifts his focus to East Asia and pursues his domestic agenda. Southeast Asia might consequently drop in priority over the next two years, placing a significant workload on officials to maintain engagement.

Strategic Value of ASEAN Members and Rare Earth Minerals

The US is engaged in a critical race for minerals to support its industries, a key component of President Trump's "Make America Great Again" agenda. Countries possessing rare earth deposits, or those conducting geological studies, are likely to be prioritized. This suggests that the trade deals signed with Cambodia, Vietnam, and Thailand, three of which have rare earth deposits, are not coincidental. Other countries with different strategic values, such as the Philippines and Singapore, will need to work harder to demonstrate their contributions. The analyst notes that countries like Brunei or Timor-Leste might be left behind given President Trump's preference for bilateral deals.

Thailand-Cambodia Ceasefire Agreement

A significant development was the signing of an expanded ceasefire between Thailand and Cambodia, presided over by President Trump and brokered with the help of Malaysian Prime Minister Anoa Ibrahim. While termed a "pathway to peace" rather than a full peace deal, the agreement details practical steps such as moving machinery from the border and demining. However, the structural root cause, the demarcation of sovereign lines, remains unaddressed. The sustainability of this pathway depends on both sides committing to simultaneous steps to diffuse tensions.

US-China Trade Relations and ASEAN's Role

The upcoming meeting between President Trump and Chinese President Xi Jinping is a key focus. Beijing views ASEAN as a partner and aims to be a strong and reliable one. Bilateral meetings between President Trump and Southeast Asian leaders during the ASEAN summit likely surfaced concerns that President Trump is expected to carry into his meeting with President Xi. The ongoing negotiation of a trade framework aims to close loopholes that allow trade diversion through Southeast Asia. The analyst suggests that a joint effort by the US and China to address Southeast Asia's concerns would be a significant win for the region.

RCEP Reforms and Relevance

The Regional Comprehensive Economic Partnership (RCEP) summit is scheduled to discuss ways to make the agreement more relevant and current, with potential for new members. As a relatively new framework, the RCEP meeting is seen as significant for generating political momentum. The grouping needs to carefully consider which potential new members would bring the most value. Expansion of RCEP would increase its coverage of global trade, creating a trading bloc that offers benefits to its members amidst trade tensions and tariffs. Crucially, making RCEP known to businesses and clarifying its benefits, along with providing capacity building, is essential for businesses to effectively tap into its advantages.