Navigating Sustainability: RCEP's Initiative for Sustainable Development across Asia

By Dr. Sonia Kumari Selvarajan.

The Regional Comprehensive Economic Partnership (RCEP), encompassing fifteen economies across Asia and the Pacific, has established the world's largest free trade area.

It wields significant economic influence, covering nearly one-third of the global population and accounting for approximately 30 percent of the world’s gross domestic product.

Originating from Asean's core, the RCEP's signatories include the 10 ASEAN member states, Australia, China, Japan, South Korea, and New Zealand.

The initial aim was to unify all regional partners under a single framework.

However, while celebrated for its inclusivity and regional integration, the RCEP has faced scrutiny for its perceived deficiency in sustainable development commitments.

Nonetheless, the RCEP has recently embraced a significant transition towards comprehensive sustainable development.

Embracing the interconnectedness of economic, social, and environmental dimensions, the RCEP signals a paradigm shift towards collaborative growth and prosperity in the Asia-Pacific region.

Central to the RCEP’s significance is its redefinition of the investment landscape within the region.

By fostering deeper economic ties among member nations, the RCEP has sparked a surge in cross-border investments, amplifying prospects for development initiatives with long-term viability.

Crucially, the RCEP's framework offers ample room for embedding principles of sustainability.

From promoting environmentally conscious investments to fostering inclusive growth, specific provisions within the agreement lay the groundwork for a future characterised by resilience and prosperity.

By harnessing the synergies between economic partnerships and the pursuit of Sustainable Development Goals, the RCEP charts a course towards a more equitable and environmentally responsible future.

As the Asia-Pacific region embraces this landmark agreement, the path to a resilient, inclusive, and environmentally sustainable future signals the transformative potential of the RCEP.

Amid efforts to accelerate the implementation of the RCEP, the topic of sustainability has been relatively muted.

However, sustainable development is not entirely absent from the RCEP.

The regional trade agreement acknowledges that the three pillars of sustainable development are interdependent and mutually reinforcing, and that economic partnership can play a crucial role in promoting sustainable development.

Article 18.6 of the RCEP, which deals with the Subsidiary Bodies of the RCEP Joint Committee, specifies the creation of a Committee on Sustainable Growth.

This suggests that sustainable development is recognised as an important issue, albeit one for future action.

The committee is intended to address work on small and medium enterprises, economic and technical cooperation, and emerging sustainability-related issues.

China, as the largest economy in East Asia, plays a crucial role in sustaining regional dynamism.

Since the RCEP was initiated by Asean and strongly supported by China, its implementation has significant effects on maintaining East Asian economic dynamism.

With the adoption of the 'dual circulation' development strategy, China aims to mobilise domestic market potential and enhance domestic technological innovations.

This strategy combines green development with a focus on creating a positive interaction between domestic economic circulation and high-level external circulation.

As part of this approach, the focus is on three priority areas: public health, digital transformation, and green development.

Through participation in the RCEP, China would be able to enhance its role in regional production networks and supply chains, including green supply chains.

This participation will lead to increased imports and investments in an open regional market, further integrating China into the regional economy.

Indeed, the Asean member states should collaborate with China and other RCEP members on climate-aligned financing and green technology sharing.

For instance, there is an urgent need for the RCEP member states, including Malaysia, to transition to renewable energy sources.

Although Malaysia is a major solar equipment manufacturer, it has not fully tapped into its potential for solar energy consumption due to barriers in financing and a lack of green technology.

China, a global leader in energy transition, has the resources to assist Malaysia in its green transition.

Through the RCEP partnership and a strengthened commitment to reducing carbon emissions, member states like Malaysia can benefit significantly from this collaboration.

Since the RCEP was first proposed in 2011, the call for integrating sustainable development issues into trade agreements has grown stronger at both regional and multilateral levels.

The Covid-19 pandemic, climate change crises, and backlash against globalisation over recent years have underscored the need for trade policy to account for its impact more directly on society and the environment.

The RCEP members have a clear opportunity to address these issues well before the 2030 Agenda for Sustainable Development, by leveraging the general review of the agreement, scheduled for completion of discussions by 2027.

Prioritising the pillars of sustainable development (environmental, social, and economic) and including a dedicated chapter on sustainable development would be a significant first step towards integrating sustainability into the RCEP.

Dr Sonia Kumari Selvarajan is a Senior Lecturer at the Department of Political Science, Public Administration, and Development Studies, Faculty of Business and Economics, Universiti Malaya.

The views expressed here are entirely the writer’s own.

The SEARCH Scholar Series is a social responsibility programme jointly organised by the Southeast Asia Research Centre for Humanities (SEARCH) and Tunku Abdul Rahman University of Management and Technology (TAR UMT), in conjunction with the 10-year anniversary of the Belt and Road Initiative.