The signing ceremony in November 2020 was conducted virtually due to the COVID-19 pandemic. Symbolically, it took place at a moment when global trade volumes had sharply contracted and when many economies were preoccupied with domestic health emergencies. The conclusion of such a large trade agreement under these conditions sent an important political message: Asia-Pacific economies considered trade openness and regional cooperation to be central elements in their long-term recovery and growth strategies. After domestic ratification procedures, RCEP entered into force on 1 January 2022 for ten signatories and subsequently for the remaining members. Implementation is gradual and will continue over roughly two decades as tariff reductions and regulatory changes are phased in.

At the core of RCEP is its chapter on trade in goods. Members commit to eliminate tariffs on at least 90–92 per cent of tariff lines over transition periods that can last up to twenty years, depending on the sensitivity of particular products. The schedule of liberalization is not uniform. For example, some ASEAN economies maintain longer phase-out periods for agricultural products that are politically sensitive, such as rice or sugar, whereas others protect certain manufactured goods for a longer time. Nevertheless, once the agreement is fully implemented, the average tariff level within the bloc will be significantly reduced. This is expected to stimulate intra-regional trade by making it cheaper for firms to source inputs and sell final goods across RCEP markets.

A particularly important innovation is the introduction of a single, region-wide system of rules of origin. Under previous ASEAN+1 agreements, a good that qualified for preferential treatment when exported from Vietnam to Japan could not automatically enjoy the same treatment when exported from Vietnam to Korea or Australia; the underlying rules of origin differed. RCEP creates a unified regime: as long as a product meets RCEP’s rules of origin, it can benefit from preferential tariffs in all fifteen member economies. This greatly simplifies supply-chain management. Firms can design “diagonal cumulation” production strategies, sourcing components from multiple RCEP members, assembling them in another, and exporting the final product throughout the region without losing tariff preferences. For instance, a company might import electronic components from Korea, conduct assembly in Malaysia, add design services in Singapore and export finished goods to Japan and Australia, all under the same preferential rules.

The agreement also covers trade in services and investment. Members make commitments to open selected sectors such as financial services, telecommunications, professional services, logistics and distribution. Some countries use a “positive list” approach, committing liberalization only in explicitly listed sectors, while others adopt a “negative list” approach, under which all sectors are open except those specifically reserved. Over time, several members have agreed to transition from positive to negative lists, thus gradually increasing the level of openness. The investment chapter provides protections for investors from member countries, including national treatment, most-favored-nation treatment and disciplines on expropriation. However, the investor–state dispute settlement mechanism is limited, reflecting concerns among some governments about sovereignty and regulatory autonomy.

RCEP’s intellectual property chapter sets minimum standards for copyrights, trademarks and patents and provides for cooperation on enforcement. It stops short of some of the more stringent provisions seen in other agreements, such as certain pharmaceutical data exclusivity rules found in the original Trans-Pacific Partnership. This relatively moderate approach was necessary to accommodate the differing levels of development and regulatory capacity among members. For developing economies, the flexibility may help preserve policy space for industrial and public-health policies, while still reassuring investors that core intellectual-property rights will be respected.

Another area of growing interest is the chapter on e-commerce and the digital economy. RCEP includes commitments to avoid imposing customs duties on electronic transmissions, to promote paperless trading and electronic authentication of documents, and to protect the personal information of users engaged in online transactions. At the same time, it recognizes the right of members to adopt measures for legitimate public policy objectives, including national security and data privacy. This balance between openness and regulatory discretion mirrors broader global debates about cross-border data flows, digital sovereignty and the regulation of large technology platforms.

Quantitative assessments of RCEP’s economic impact rely on model-based simulations. Although the precise estimates differ across studies, most suggest that the agreement will yield positive gains for members in the medium to long term. For example, one widely cited analysis projects that RCEP could add more than two hundred billion dollars to global income by 2030, with China, Japan and Korea capturing the largest absolute increases. For China, RCEP complements existing trade agreements and helps strengthen the country’s role as a hub in Asian production networks. For Japan and Korea, the agreement delivers the first comprehensive trade deal with China, improving access to the Chinese market for automotive, machinery and chemical products.

A further dimension that deserves attention concerns RCEP’s potential role in shaping the future configuration of regional and global value chains, especially in the context of rapid technological change and post-pandemic restructuring. The pandemic revealed structural vulnerabilities in existing supply networks, from shortages of medical equipment to disruptions in semiconductor manufacturing capacity. As firms reassessed risks related to geographic concentration and inventory management, a shift toward multi-location sourcing and greater production redundancy became visible across a number of industries. RCEP can influence these adjustments in several ways. First, the harmonized rules of origin reduce the transaction costs associated with diversifying production across multiple economies. A manufacturer that previously hesitated to establish additional facilities in Southeast Asia due to inconsistent regulatory regimes may be more inclined to do so when uniform origin criteria and clearer customs procedures apply across the region. Second, RCEP’s provisions on trade facilitation—such as commitments to streamlined customs documentation, transparency in border procedures and increased use of electronic certification—lower the operational barriers that often impede cross-border production planning. These improvements are likely to be particularly relevant for time-sensitive sectors such as electronics, automotive components and precision machinery, where delays at a single border can disrupt entire assembly lines.

In addition, the agreement may accelerate the diffusion of digitalization and supply-chain technologies, including real-time tracking systems, interoperable data platforms and digital trade documentation. Several RCEP members are already experimenting with electronic bills of lading, blockchain-based trade finance tools and automated customs clearance. These initiatives are not formally mandated by the agreement, but RCEP acts as a coordinating framework that encourages convergence in technical standards and regulatory expectations. As firms adopt these digital trade infrastructures, transaction costs may fall regardless of the physical distance between production sites. This dynamic could strengthen Southeast Asia’s attractiveness as a hub for intermediate manufacturing stages that rely on rapid information exchange and strict quality control. Economies such as Vietnam, Malaysia and Thailand may therefore see increased investment in mid-stream processing activities, while Singapore is well-positioned to function as a regional center for logistics, digital trade finance and supply-chain orchestration services. Over time, this technologically enabled reconfiguration of value chains may generate new competitive pressures within the bloc. Firms operating in economies that lag in digital infrastructure or regulatory alignment could find it increasingly difficult to integrate into regional production networks.

The geopolitical context further amplifies the strategic importance of these developments. Heightened rivalry among major powers has accelerated efforts to secure supply chains for critical goods such as semiconductors, industrial batteries, rare earth elements and pharmaceutical inputs. Although RCEP does not contain explicit provisions on critical-mineral governance or technological security, the agreement’s reduction of intra-regional trade barriers offers member economies a wider range of sourcing options. For example, manufacturers in Japan or Korea seeking to reduce dependence on any single supplier can expand procurement networks to multiple ASEAN states without sacrificing preferential access. Conversely, ASEAN producers may find expanded opportunities to supply intermediate goods to advanced East Asian manufacturers seeking diversification. The ability to reconfigure supply chains in response to strategic uncertainty may gradually increase the resilience of production systems across the region. RCEP therefore functions not only as a liberalization instrument but also as a structural stabilizer that provides firms with a flexible operating environment amidst global volatility.

ASEAN members also stand to benefit. Countries such as Vietnam, Thailand and Malaysia are already heavily involved in regional value chains in electronics, machinery and textiles. Lower tariffs and simplified rules of origin can enhance their attractiveness as production bases. Vietnam, in particular, has seen strong inflows of foreign direct investment in recent years as multinational firms adopt “China+1” strategies, diversifying manufacturing locations while maintaining links to Chinese suppliers and markets. RCEP may reinforce this trend by creating a more predictable framework for investment and cross-border sourcing.

At the same time, the benefits are unlikely to be evenly distributed. Some sectors may face intense competitive pressure. Agricultural producers in certain countries could struggle if cheaper imports from more efficient producers enter local markets. Small and medium-sized enterprises, which often lack resources to understand and use complex trade rules, may find it challenging to take advantage of the agreement without support. Policy measures at the domestic level – such as trade-facilitation reforms, business advisory services, skills training programs and social safety nets – will therefore shape how the gains and adjustment costs are shared across societies.

RCEP’s relationship with other regional agreements deserves particular attention. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) includes several of the same members, such as Japan, Australia, New Zealand, Singapore, Malaysia and Vietnam. CPTPP is more ambitious on issues like labor standards, environmental protection, disciplines on state-owned enterprises and digital trade rules. By contrast, RCEP focuses more on tariff reduction and practical trade facilitation and is more accommodating of state-led development models. For countries that belong to both agreements, this dual membership offers strategic flexibility. They can use CPTPP as a platform to push higher standards globally while relying on RCEP to strengthen broader Asian regionalism and integrate neighboring economies that may not yet be ready for stringent rules.

Geopolitically, RCEP carries strong symbolic weight. It demonstrates that Asian and Pacific economies can take the initiative in shaping regional economic governance rather than depending solely on institutions dominated by Western powers. The agreement emerged at a time when the multilateral trading system under the World Trade Organization was facing significant challenges, including the paralysis of its dispute-settlement system. By upgrading and consolidating regional trade rules, RCEP contributes to the resilience of the broader rules-based order.

China’s participation is particularly salient in the geopolitical narrative. Some observers interpret RCEP as evidence of China’s increasing influence in regional economic architecture, especially given the absence of the United States from any comparable trade pact in the region. Others caution that the design of RCEP, with ASEAN at its core and with major roles for Japan and Australia, prevents any single country from dominating. The agreement is best understood as a product of multi-polar bargaining rather than as a unilateral project. Nevertheless, by embedding China more deeply in a network of trade commitments with neighbors, RCEP may contribute to stabilizing economic expectations even when political tensions are high.

For ASEAN, RCEP reinforces the idea of “centrality”. ASEAN acted as the convener and agenda-setter throughout the negotiation process. The final agreement reflects ASEAN’s preference for gradualism, flexibility and consensus-based decision-making. This reinforces ASEAN’s diplomatic relevance and provides the organization with an additional tool to engage major powers on economic issues. It also reduces the risk that the region could fragment into competing blocs formed around rival powers.

Despite its achievements, RCEP faces several challenges in implementation. One practical issue is awareness and utilization among businesses. Empirical evidence from other trade agreements indicates that utilization rates of preferences can be surprisingly low, particularly among smaller firms that lack specialized legal and logistical expertise. Governments therefore need to invest in dissemination of information, training programs, digital tools for calculating origin status and one-stop service centers that guide companies through the documentation requirements. Without such efforts, the legal reduction of tariffs on paper may not translate into tangible gains in trade volumes.

Another challenge stems from the broader environment of global economic uncertainty. The COVID-19 pandemic, the war in Ukraine, supply-chain disruptions in sectors such as semiconductors, and concerns about over-reliance on any single country for critical goods have prompted governments to place greater emphasis on resilience and security. Concepts such as “friend-shoring”, “near-shoring” and “strategic decoupling” have entered policy debates. RCEP needs to coexist with these security-driven policies. While the agreement facilitates trade, member governments may still impose restrictions in sensitive sectors, for instance by screening certain foreign investments or by controlling exports of dual-use technologies. Managing this interaction between open trade commitments and security considerations will require careful calibration.

Furthermore, the absence of binding and enforceable disciplines in areas such as labor rights and environmental protection has been criticized by some civil-society organizations. They argue that without strong social and environmental safeguards, deeper economic integration might place downward pressure on standards or encourage a “race to the bottom” in regulation. Others counter that RCEP’s membership diversity makes such stringent provisions politically unrealistic at this stage, and that the agreement can be a stepping stone toward more comprehensive cooperation in the future. In any case, these debates are likely to continue as environmental sustainability and social justice remain central topics in global governance.

Looking ahead, the evolution of RCEP will depend on several factors. One is the possibility of new members joining. The accession clause in the agreement explicitly provides for future membership by any state or separate customs territory in the region, with the consent of existing members. India has been mentioned as a key potential candidate if domestic political conditions change. Other economies, including some in South Asia and the Pacific, have also expressed interest. Expanding membership would increase the economic weight of RCEP, but could also complicate negotiations over new commitments.

Another factor is whether the agreement will be updated over time. Many trade agreements evolve through additional protocols or side agreements that introduce new disciplines, for example on digital trade, competition policy or sustainable development. If RCEP members decide to negotiate such upgrades, the agreement could gradually move closer to the standard of more ambitious pacts such as CPTPP, while preserving its inclusive character.

In conclusion, RCEP constitutes a major milestone in the economic and diplomatic development of the Asia-Pacific region. It consolidates existing trade relationships, reduces tariffs, simplifies rules of origin and provides a more coherent framework for cross-border trade and investment. Its design balances ambition with pragmatism, taking into account the diversity of its members and the complex realities of regional politics. The implementation of RCEP will shape supply-chain configurations, investment decisions and trade flows for many years. At the same time, the agreement operates within a dynamic global environment marked by strategic rivalry, technological change and shifting societal expectations regarding equity and sustainability. How RCEP adapts to these pressures will determine the extent to which it can fulfil its promise as a cornerstone of regional economic order in the twenty-first century.

By Wentong Li