THE Regional Comprehensive Economic Partnership (RCEP) may still see low utilisation rates among businesses, but policymakers and trade experts argue that writing off the world’s largest free trade agreement (FTA) at this stage would be premature.
Instead, they believe the FTA is only beginning to reveal its strategic importance as global supply chains become increasingly fragmented amid geopolitical tensions, rising protectionism, and a weakening multilateral trading system.
The contrast with the more commercially active Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has become increasingly apparent.
CPTPP, which came into force in 2018, has 12 members currently and has generally seen stronger traction among exporters due to its broader tariff liberalisation and clearer commercial incentives.
The agreement aims to reduce or eliminate tariffs and set high-standard trade rules for goods, services, and digital trade in the Asia-Pacific region.
Meanwhile, RCEP officially came into effect for all 15 member countries in November 2020.
It binds the 10 Asean countries with China, Japan, South Korea, Australia, and New Zealand, covering about 30% of global gross domestic product and population.
However, economists and trade officials say RCEP’s value lies beyond immediate tariff savings.
“The RCEP is an agreement that goes beyond market access and goods,” says Institute of Strategic and International Studies Malaysia senior fellow Arividya Arimuthu.
“Discussions on utilisation rates of RCEP are usually very focused on goods and the rules of origin. It’s important also to remember that the RCEP is an agreement that goes beyond market access and goods,” she emphasises.
Current estimates suggest utilisation rates among Malaysian businesses remain relatively low, at below 1%.
Part of the challenge stems from the fact that many RCEP members already enjoy overlapping bilateral or Asean+1 trade agreements with better tariff concessions.
“So when you compare that with RCEP, where you still have a lot of products that attract tariffs, it is not so attractive for businesses.
“If they have to choose between, let’s say, RCEP and CPTPP, probably they’ll choose CPTPP,” she shares.
That said, experts argue that such comparisons overlook RCEP’s longer-term purpose.
Unlike CPTPP, which primarily focuses on high-standard market liberalisation, RCEP was designed to consolidate and harmonise the existing Asean+1 FTAs involving China, Japan, South Korea, Australia and New Zealand.
“That objective is still very valid today,” Arividya adds.
“Increasingly, when supply chains become more regional in nature, RCEP will become even more important.”
That strategic argument is gaining traction as countries seek to reduce dependence on single production centres and diversify manufacturing networks across Asia.
Unny Sankar Ravi Sankar, Economic Affairs Minister at the Embassy of Malaysia in China, says the current global environment – which is experiencing supply chain disruptions, geopolitical tensions and intensifying trade competition – has created urgent demand for stronger regional integration.
“The RCEP cooperation now requires hubs to deliver more than traditional tariff reductions,” he says.
“These hubs must serve as integrated platforms for rules of origin accumulation, supply chain diversification, digital and sustainable growth.”
Rather than merely facilitating low-cost exports, Unny Sankar, who was a panelist at the “Thematic Dialogue: Building a Strategic Hub for RCEP Regional Economic and Trade Cooperation” dialogue said RCEP should now focus on raising the sophistication of regional manufacturing and services ecosystems.
The dialogue was held in conjunction with the 2026 RCEP Media and Think Tank Forum in Hainan, organised by China Daily and the China Institute for Reform and Development to promote regional economic integration and high-level development in the RCEP amid global economic uncertainties.
“We need to increase the product complexities of our goods and services,” Unny says.
He adds that the next phase of regional integration would require stronger digitalisation, logistics connectivity, talent mobility and investment cooperation.
“High-standard quality aligns with RCEP commitments, extending to services, investments, eCommerce, and emerging areas like supply chain connectivity,” he emphasises.
Malaysia-China trade has already reached US$191.67bil, largely driven by electrical and electronics products, palm oil and energy.
Unny Sankar says Malaysia’s industrial policies, including the New Industrial Master Plan 2030 and the National Semiconductor Strategy, are intended to deepen small and medium enterprises’ participation in regional supply chains.
“So this is how Malaysian, Asean SMEs can really upgrade the value of our goods and export to the Chinese market, even the RCEP market,” he adds.
Meanwhile, experts say low utilisation should not necessarily be interpreted as failure, particularly for a mega trade agreement still in its infancy.
“The RCEP is in the fourth year of implementation,” Arividya notes.
“If we compare some of the plus-one FTAs in the past, the kind of utilisation rates they had in the third year or the fourth year wasn’t as high as the kind of utilisation rates you would see in the 10th year,” she explains.
She also cautions that current measurements may understate actual usage because existing calculations focus too heavily on certificates of origin and merchandise trade.
Services, tourism, investment flows, eCommerce and movement of talent are rarely included in official utilisation metrics.
In fact, one of the biggest criticisms of RCEP today may ultimately become its future advantage, which is its sheer scale and complexity.
While businesses currently find the agreement cumbersome, the ability to accumulate value across 15 economies could become a powerful competitive edge once supply chains become more integrated.
“There is value to RCEP in that sense, because sometimes I feel the discussions are so focused on tariffs, on rules, on goods, that we forget that RCEP is so much more than that,” Arividya stresses.
The agreement’s upcoming general review next year is expected to be closely watched.
Arividya says member countries should use the review process to establish clearer timelines for improving market access commitments and provide more structured accession guidelines for prospective members.
That could eventually strengthen RCEP’s attractiveness and accelerate its maturation into a more commercially meaningful trade bloc.
For now, CPTPP may still be winning the utilisation race. But RCEP’s supporters believe the agreement was never meant to be judged purely by short-term tariff usage.
Its real test may come later – when resilience, regionalisation and supply-chain integration become more valuable than tariff cuts alone.
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