Right time

Analysts and industry leaders also said the RCEP came at an opportune time, as it is expected to help Asia-Pacific economies recover from the COVID-19 pandemic and sustain long-term growth.

Francis Chua, founding chairman of the International Chamber of Commerce in the Philippines, welcomed the RCEP, saying it will not only spur post-pandemic economic recovery, but will also demonstrate the "success and benefits of multilateralism over narrow, nationalistic approaches to world trade" and promote an "inclusive and balanced sharing of (global) prosperity".

Bart Edes, Distinguished Fellow at the Asia Pacific Foundation of Canada, said it is too soon to assess the RCEP's impact, as the agreement was only enforced in January and the planned tariff reductions will be phased in over 20 years. But he said the partnership will help member economies recover from the pandemic during the rest of this decade.

The Asian Development Bank, or ADB, estimates that the trade agreement will increase its members' incomes by 0.6 percent, adding $245 billion annually to regional income and creating nearly 3 million jobs by 2030.

Adachi said the RCEP's benefits can only be fully used if the global supply chain is operational. In the short term, the risk of the pandemic disrupting or slowing supply chain operations will remain, but for the long term, she said the RCEP can reconsolidate regional production networks and boost regional trade.

Edes said the RCEP will also "reinforce and build on the deepening regional integration we have witnessed among Asian economies over the past two decades".

Even before the partnership emerged, trading among future RCEP member countries was worth about $2.3 trillion in 2019, according to the United Nations Conference on Trade and Development, or UNCTAD, which estimates that the partnership's tariff concessions will further boost regional exports by nearly 2 percent, amounting to about $42 billion.

UNCTAD said the increased exports will be the result of two forces. The first is trade creation, with lower tariffs stimulating trade by nearly $17 billion. Then there is trade diversion, with the lower tariffs within the RCEP redirecting trade from nonmembers to members. This trade diversion is equivalent to nearly $25 billion.

Edes said trade creation and trade diversion away from non-RCEP members are expected to boost exports in many sectors, with agriculture likely to see the biggest gains. Other sectors that could see high-percentage increases in export growth are nonmetallic minerals, garments and textiles, and metal.

The ADB said every RCEP member will gain from the free trade agreement, but the largest percentage increases will be realized by the "most trade-oriented" economies such as Malaysia and Vietnam. Other major gains will be seen in nations that can effectively take part in regional supply chains, including China, Cambodia, Laos and Thailand.

The RCEP will also create new cross-border links. In particular, Edes said it is the first free trade agreement among China, Japan and the Republic of Korea, three of the four biggest economies in Asia.

The ADB said the partnership is especially beneficial for the East Asian subregion. For instance, it will boost China's exports by 4.7 percent, while exports in Japan and the Republic of Korea are seen rising by 11.2 percent and 6 percent respectively.

The RCEP will also expand the regional manufacturing supply chain, which is important for China, Japan and the Republic of Korea, as they can put their specialized production advantages to work.

According to the ADB, which is based in Manila, East Asian economies can also help in sustaining efforts needed to reduce non-tariff barriers to trade. It said the RCEP agreement created regular ministerial meetings and the five joint committees－a mechanism critical to the trade pact's success and which will likely depend on the leadership provided by China, Japan and the Republic of Korea.

"Their (East Asian countries') internal reforms and policies will set expectations for implementation throughout the region," the ADB said.

DBS Bank, based in Singapore, also expects the RCEP to further promote investments from China, Japan and the Republic of Korea in the ASEAN subregion. The three countries have long been the top investors in ASEAN.

"The investment chapter under the RCEP is an upgrade and enhancement of the existing provisions under the ASEAN Plus One FTAs. Therefore, it would help further facilitate the FDI(foreign direct investment) flows between ASEAN and North Asian countries in coming years," DBS said.

In Thailand, Pavida Pananond, professor of international business at Thammasat University, said the RCEP's overall benefit to ASEAN is that it provides a mechanism to strengthen regional value chains in manufacturing and service industries.