Co-author: Jose Adlai M. Tancangco
The Regional Comprehensive Economic Partnership (RCEP) was established in 2020, with effect in 2022, for the purpose of deepening regional economic integration among members of the Association of Southeast Asian Nations (ASEAN) and the association's free trade agreement partners (ASEAN.org). RCEP comprises 15 Asia-Pacific economies: Brunei (BRN), Cambodia (KHM), Indonesia (IDN), Laos (LAO), Malaysia (MYS), Myanmar (MMR), the Philippines (PHL), Singapore (SGP), Thailand (THA), Vietnam (VNM), Australia (AUS), China (CHN), Japan (JPN), Korea (KOR), and New Zealand (NZL). The world’s largest trading bloc, RCEP accounted for 11.9 percent of goods exports and 5.5 percent of services exports globally in 2021.
All good intentions notwithstanding, agreements to reduce trade barriers and harmonize regulation can go only so far in achieving economic integration as long as disparate monetary and exchange rate policies among members continue to generate uncertainty and impose costs on doing business. Advancing to a higher stage of integration would require binding economies together under a currency union. Short of that, fluctuations in exchange rates and interest rates cause perpetual disturbances to cross-border trade and capital flows with inhibiting effects on engagement.
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