The leaders and representatives of the Regional Comprehensive Economic Partnership (RCEP) member states convened in Kuala Lumpur on 27 October 2025. This meeting constituted a pivotal agenda item within the series of the 47th ASEAN Summit. On this occasion, the nations comprising the RCEP discussed the strategic direction of the partnership’s implementation amidst the dynamics of the global economy. Furthermore, the meeting served to reiterate their commitment through a Leaders’ Statement. The document is replete with soothing diplomatic vocabulary: the strengthening of the multilateral trading system, the upholding of World Trade Organization (WTO) principles, and pledges to maintain an open, free, and rules-based market. Amidst the rising tide of global protectionism and increasingly sharp geopolitical fragmentation, this statement of stance certainly serves as a breath of fresh air celebrated by many parties.
In the context of statistical data, RCEP is an indisputable behemoth. It encompasses nearly 30% of the global Gross Domestic Product (GDP) and one-third of the world’s population, integrating diverse economic powers ranging from technological giants such as Japan and China to the developing nations of Southeast Asia. Indeed, currently, four nations have submitted accession applications to become new RCEP members: Hong Kong, Chile, Sri Lanka, and Bangladesh. However, an economic agreement cannot be judged solely on its aggregate potential on paper. The true value of a trade pact must lie in its implementation on the ground. This applies whether at ports, in factories, or within the real balance of trade.
Here, the author observes a disquieting paradox that warrants objective critique. There exists a wide chasm (gap) between the high-level political rhetoric agreed upon in the boardroom and the operational reality of business on the ground. This raises a significant question: is the immense potential of RCEP truly being utilized? Or does it merely risk becoming an empty narrative adorning media headlines? RCEP is currently at risk of falling into the phenomenon of institutional overhang—a scenario where a magnificent institutional framework stands, yet the economic actors within are reluctant or unable to utilize it optimally due to structural barriers that escape ceremonial scrutiny.
The Noodle Bowl Trap and Institutional Inertia
The Asia-Pacific region has long been ensnared in what economist Jagdish Bhagwati termed the Spaghetti Bowl Effect, or, as it is often referred to in Asia, the Noodle Bowl Effect. This is a condition characterized by an excess of overlapping trade agreements with differing rules of origin. Before RCEP was established, ASEAN already possessed Free Trade Agreements (FTA) with China (ACFTA), Japan (AJCEP), and Korea (AKFTA), as well as Australia and New Zealand (AANZFTA).
Recent empirical studies from IDE-JETRO provide crucial technical insight: for many key export commodities, the tariff preference margins offered by RCEP are often no more attractive than existing bilateral FTAs. If an Indonesian textile exporter already enjoys a 0% tariff to China through the ACFTA scheme—a procedure they have understood for a decade—what incentive is there to switch to the RCEP scheme, which also offers 0% but entails new administrative procedures?
This institutional inertia is exacerbated by compliance costs. For multinational corporations (MNCs), adapting to new rules may be straightforward. However, for Micro, Small, and Medium Enterprises (MSMEs), which form the backbone of the ASEAN economy, the complexity of learning new RCEP rules represents a distinct cost burden. Consequently, RCEP has not yet succeeded in becoming the simplifier of the regional trading system as aspired. Instead, it has merely added another layer of complexity to the Asian noodle bowl of trade.
Geopolitics Behind the Figures: Integration or Diversification?
Viewing RCEP would be incomplete without dissecting the surrounding geopolitical context. Caution is required when interpreting data regarding intra-RCEP trade growth. While we cannot deny that trade volume between members has increased, is this rise purely the result of RCEP integration? Trade data from 2024–2025 indicates a significant surge in the flow of goods from China to Vietnam and other ASEAN nations, subsequently followed by exports from these countries to the United States and European markets.
This phenomenon indicates that the primary driver of economic activity in the region currently is not market efficiency created by RCEP, but rather the China Plus One strategy and de-risking efforts resulting from US-China trade tensions. Many companies are relocating parts of their supply chains to Southeast Asia or engaging in transshipment simply to avoid high tariffs imposed by Western nations on Chinese products.
In this context, RCEP functions more as a safety net or facilitator for the geopolitical strategies of major powers than as an autonomous driver of economic integration. This leads us to the question of ASEAN Centrality asserted at the Summit. Geographically and diplomatically, ASEAN is the driver of RCEP. However, economically, the region’s gravity leans heavily towards East Asia (China, Japan, and Korea). If ASEAN functions merely as a transit zone or final assembly point in a global value chain controlled by East Asian technology and capital, then that centrality is fragile. ASEAN risks becoming merely a diplomatic venue, whilst the real economic structure is dictated by the competition of great powers to the north.
Unaddressed Development Gaps
Economic disparity among members is a crucial aspect that is rarely emphasized. RCEP unites nations with very high per capita incomes, such as Australia and Singapore, with developing nations like Cambodia, Laos, and Myanmar, within a mechanism that is not yet strong enough to bridge capacity gaps. Developed nations within RCEP tend to be more aggressive in pushing high-standard issues such as Intellectual Property Rights (IPR) and e-commerce, which benefit technology owners. Meanwhile, the fundamental needs of developing nations—such as technology transfer, industrial infrastructure development, and protection of the agricultural sector—are often left behind in implementation priorities.
Therefore, if RCEP in this context fails to deliver tangible benefits to its poorest members, the agreement will lose its moral legitimacy as an instrument of development. Instead of creating shared prosperity, it has the potential to widen regional inequality. This can be observed in value-added activities being concentrated only in advanced industrial nations, while developing nations remain trapped merely as providers of raw materials and consumer markets.
Towards a Functional RCEP
The critique and analysis above are not intended to negate the relevance of RCEP. On the contrary, RCEP remains a vital instrument for the region to maintain economic stability amidst global uncertainty. However, to transform potential into reality, business as usual is no longer adequate.
Firstly, the establishment of the RCEP Secretariat, which has been agreed upon, must be operationalized immediately with a strong mandate. This Secretariat must not merely be a meeting administrator but must function as a watchdog monitoring the implementation of commitments, particularly regarding the removal of unfair non-tariff barriers. Furthermore, transparency is a key aspect. Member states must be required to report any new technical regulations that have the potential to hinder trade.
Secondly, there needs to be a stronger push for the harmonization of rules of origin. One of the theoretical advantages of RCEP is the concept of regional cumulation, where raw materials from one member state are considered local materials in another member state. This feature must be massively socialized and its procedures simplified so that Micro, Small, and Medium Enterprises (MSME) can truly enter the regional Global Value Chain.
Thirdly, ASEAN must strengthen its bargaining position. ASEAN Centrality can no longer be requested; it must be fought for through internal solidity. ASEAN nations must possess a common stand on strategic issues within RCEP, such as digital standards and energy transition, so as not to be easily dictated by the interests of the East Asian economic giants.
The agreement reached on 27 October in Kuala Lumpur is an important diplomatic step, a political signal that Asia retains faith in multilateralism while other parts of the world are closing themselves off. However, political signals alone are insufficient to move containers at ports or create new jobs. RCEP currently stands at a crossroads. It can choose to remain a sleeping giant—a beautiful, thick document with minimal real impact—or wake up and evolve into a substantive integration platform.
That choice is not determined by the statements of leaders at the podium, but by the hard work of technocrats and policymakers to dismantle the structural barriers that still persist. As long as scheme utilization remains low and capacity gaps remain wide, the potential of RCEP will remain a deferred promise. It is time to shift from the rhetoric of integration to the reform of the quality of integration itself.
