Advancing RCEP Integration: Forging a More Resilient and Inclusive Economic Future

The Regional Comprehensive Economic Partnership (RCEP) represents ASEAN’s most consequential achievement in shaping the regional economic architecture over the past decade. Signed in November 2020 and entering into force in January 2022, RCEP covers 30 per cent of global GDP, half of the world’s population, and a quarter of world exports. RCEP is a powerful signal of its members’ commitment to a rules-based trade and multilateral cooperation, as its framework is consistent with WTO principles.

Increasing geo-economic tensions are pressing for a rethink on RCEP’s significance and relevance. The upcoming 5th RCEP Leaders’ Meeting, scheduled for 27 October 2025, is a timely opportunity to review RCEP and advance integration within the bloc.

RCEP’s achievements so far have been limited rather than substantial. The ASEAN Secretariat cites rising intra-ASEAN trade in 2024 and inflows of US$66.3 billion in foreign direct investments (FDI) from RCEP partners, or 28.9 per cent of ASEAN’s total 2023 FDI inflows, as evidence of the agreement’s success. However, these outcomes are unlikely to have been driven by tariff cuts as RCEP’s preference margins remain modest even after full implementation. In fact, only China, Japan, and Korea meaningfully benefit from tariff reductions since RCEP is Japan’s first trade deal with both. Consequently, substantial tariff cuts apply mainly to Japan’s exports to China and Korea, where no prior concessions existed beyond most favoured nation (MFN) rates.

Importantly, there is still a significant gap between awareness and utilisation. While business awareness of RCEP now exceeds 60 per cent in key economies, actual usage of its preferential terms remains below 20 per cent, especially by micro, small, and medium-sized enterprises (MSMEs). MSMEs have lower awareness and utilisation of free trade agreements (FTAs), including RCEP. This gap reveals that the agreement’s potential is far from being fully realised. The urgency to bridge this gap is heightened by the ongoing uncertainties in the global trading environment, marked by rising protectionism and supply chain reconfigurations. Advancing RCEP integration is no longer a matter of future ambition; it is a present-day necessity to bolster regional economic resilience.

Advancing RCEP integration is a multi-faceted endeavour, focusing on enhancing implementation, deepening the agreement’s existing provisions, and broadening its reach.

In today’s fast-evolving geo-economic landscape, the bloc cannot afford another long wait to achieve deeper integration and expansion; speed is of the essence.

A central pillar of advancing integration is fostering inclusivity, particularly for MSMEs. MSMEs form the backbone of ASEAN economies, constituting 97 per cent of all enterprises, providing 85 per cent of employment, and contributing 45 per cent to regional GDP. Yet, they account for only 19.2 per cent of the total export value in 2020. These enterprises often face high trade costs, complex paperwork, limited access to finance, and a lack of technical expertise. Although there is a dedicated chapter, chapter 14, for SMEs in RCEP, the focus is on information sharing and cooperation. This is inadequate because it lacks concrete and binding mechanisms. There is no actionable support, like funding or capacity-building programmes, with specific targets. The chapter is not designed to solve the fundamental issues faced by most SMEs, such as limited access to finance, technology, or skilled labour. A review of commitments in this chapter must move from rhetorical acknowledgement to active intervention.

Chapter 15 on Economic and Technical Cooperation (ECOTECH) under RCEP, which can be used to facilitate SMEs’ use of RCEP, sets out non-binding obligations (such as cooperation, capacity-building and technical assistance) rather than strictly enforceable commitments. Enhancing this chapter to better address the specific needs of SMEs, as identified in the ASEAN SME Policy Index 2024 (e.g., access to markets, digitalisation, sustainability), would strengthen SMEs’ ability to utilise the agreement.

Deepening integration is crucial. The agreement’s foundational elements, such as its unified rules of origin and long-term tariff reduction schedules, are designed to create more integrated and efficient regional supply chains. To accelerate this outcome, members should consider committing to shortened transition periods for zero tariffs and a more aggressive approach to dismantling non-tariff barriers, such as complex technical regulations and cumbersome customs procedures. Furthermore, deepening services liberalisation and exploring commitments beyond electronic commerce to emerging areas like the digital economy are essential to future-proof the agreement and facilitate the expansion of sophisticated regional value chains.

Expansion of the bloc goes beyond market size. It is about shaping the rules of regional economic governance. The recent finalisation of the Procedures for Accession and the establishment of the RCEP Support Unit (RSU) in 2024 have eased the administrative process for admitting new members. The expressed interest from economies like Hong Kong, Sri Lanka, Chile, and Bangladesh, alongside the potential reconsideration by India, which exited negotiations nearly five years ago, adds significant momentum.

The path to a more integrated and expanded RCEP is not without obstacles. The primary challenge lies in maintaining political momentum and accelerating the pace of integration. The negotiation of RCEP itself, from its start in 2013 to its entry into force in 2022, was almost a decade-long process. In today’s fast-evolving geo-economic landscape, the bloc cannot afford another long wait to achieve deeper integration and expansion; speed is of the essence.

The 5th RCEP Leaders’ Meeting in Kuala Lumpur is therefore a critical opportunity to inject this necessary momentum. Leaders must transition from celebrating the agreement’s inception to proactively addressing its implementation gaps. The potential of the agreement can only be unlocked when businesses, especially MSMEs, can navigate and utilise its provisions with ease. Enhancing usage is not an ancillary activity but the core objective as it directly facilitates exports, strengthens supply chains, and builds genuine regional economic resilience, which is urgently needed under the ongoing geo-economic tensions. Deepening and widening the reach of RCEP will further bolster the bloc’s support of a rules-based trade order.

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