India is on the way back towards its growth potential, upwards of 8 per cent over the next decade in which the young will be pouring into its labour markets.

The potential for achieving faster than global average growth in Asia’s two giants, and Indonesia, is real. But realising Asia’s growth potential depends on mobilising the will in Asian polities to undertake the next round of reforms that are essential to lifting productivity and accelerating the structural change that will deliver it.

The ambitions for reform in China, with enunciation of the leadership’s supply-side and financial market reform agenda, and in India, under Modi’s ‘make-in-India-in-open-competition-in-the-world’ strategy are bold and well-targeted. Delivery, however, seems less certain.

There is hesitation with pushing reform because of the global economic outlook, with continuing bearishness about growth prospects in the developed world. That elevates the difficulty of executing financial reforms in international markets that are skittish. And trade reform is a harder call with trade volumes down.

The dynamics and continuing momentum of trade and industrial transformation in Asia offer a more conducive environment for mutually reinforcing trade and economic reform. But can Asian leaders seize the momentous opportunities that beckon?

In Perth this week, a round of negotiations is taking place on the Regional Comprehensive Economic Partnership (RCEP). RCEP, initiated by ASEAN in response to the US-led Trans-Pacific Partnership (TPP) enterprise is in part designed to leverage more value out of the existing five ASEAN free trade agreements (FTAs) with other RCEP countries and the plethora of bilateral FTAs negotiated over the past 15 years among the RCEP countries. Yet trans-regional FTAs, like the proposed TPP, are only a small step, along the way to realising the potential of Asian economic integration. RCEP has the potential to be much more than simply another mega-regional free trade agreement.

The Asian economies are already highly integrated. Their interdependence grew under the global trading regime, not through bilateral or regional trading arrangements. ASEAN, Japan, China, South Korea, India, Australia and New Zealand which comprise the RCEP group, already collectively had a share in global GDP bigger than that of the TPP in 2007 in purchasing power parity terms. It has the potential to be twice the size of the TPP economies 15 years hence. The RCEP grouping is where the global economic dynamism is.

In this next stage of lifting the frontier of Asian growth through closer regional integration, RCEP governments will need to go beyond negotiating a single-undertaking trade deal along TPP lines. A comprehensive RCEP can aspire to be a model for a global set of principles-based rules for managing trade and other forms of international commerce in the 21st century.

RCEP provides an historic opportunity for East Asia to secure its future as the dynamic centre of higher than average global growth through deepening its integration and cooperative commitment to the reforms. Policy leaders in East Asia can move boldly — and expeditiously — to form an agreement that substantially deepens the openness of their economies which has historically underpinned economic growth in the region.

China, India, Indonesia and other developing countries in Asia will have trouble joining the TPP in the foreseeable future. An ambitious and high quality RCEP can offset trade and investment diversion from TPP and work to integrate the entire Asia Pacific region.

An agreement among RCEP members can be signed when, and only when, there is commitment to comprehensive freeing of trade in goods, services and investments and an agreed path for its implementation together with a framework for economic cooperation. Concluding an agreement this year that entrenches such ambitious commitments will give RCEP momentum and credibility.

Market access commitments at the end-point of the implementation of this agreement will need to include elimination of at least 95 per cent of tariffs, negative list approaches for foreign investment and services liberalisation commitments — or at least provide a pathway to such approaches — through removing unnecessary barriers to doing business and committing to national treatment and non-discriminatory treatment for investment. This will need to be complemented by disciplines to constrain non-tariff measures which restrict trade. Market access commitments need to be supported by trade facilitation measures, including simple and easy co-equal rules of origin.

One feature that distinguishes RCEP and makes it different from other agreements such as TPP is that it covers a broader range of countries (including Cambodia, Laos and Myanmar).

RCEP can have the region’s developing countries commit to high standards in reasonable timeframes, not exclude them for not having developed country standards to start with.

Its economic cooperation agenda sets up RCEP as an important vehicle for building economic and political confidence in effecting the next big structural transformation in Asia, between China, India and Southeast Asia. Creating the right environment in the region for these countries to be able to take bold reforms at home is critical.

An agreement framed around these principles will establish RCEP and its ASEAN plus 6 members as the core of growth through open trade and investment integration in East Asia and its centrality in achieving the region’s common goals.

Peter Drysdale is Emeritus Professor and Co-Editor of East Asian Forum and Head of the East Asian Bureau of Economic Research in the Crawford School of Public Policy at The Australian National University.