Looking at the RCEP: What will the implications be for world trade?

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What benefits will the newly-signed RCEP bring to its participating nations, and how will it affect future trade in the region?

Earlier this month, 15 Asia-Pacific nations signed off on what is set to become the world's biggest trade deal, the Regional Comprehensive Economic Partnership (RCEP). Nearly a decade in the making, the new agreement covers almost a third of the world's population and 29 per cent of global trade, making it larger than either the US-Mexico-Canada trade deal or the EU single market.

So what will the member nations get out of the deal, and what will the implications be for global trade? Here are some of the key points.

Who is involved in the RCEP?

The participants in the RCEP include the ten members of the Association of Southeast Asian Nations (ASEAN) - Brunei, Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Indonesia and the Philippines - along with Australia, New Zealand, Japan, South Korea and China.

While an initiative of ASEAN, it is the inclusion of China in the deal that is particularly significant. The RCEP is the first multilateral trade deal the country has signed up to. It also marks the first trade agreement between China, Japan and South Korea - three traditional rivals in the region who have long had testy political and economic relationships.

Many commentators therefore see the RCEP as a way for China to extend its economic power in the region, and counter the influence of the US and other deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. 

China isn't the only beneficiary, however. ASEAN nations are also set to enjoy increased access to global supply chains, which should make them more attractive to overseas investors. 

Meanwhile, the likes of Australia and New Zealand will gain easier access to major markets for their key sectors, while Deborah Elms of the Singapore-based Asian Trade Centre told Reuters: "Japan may find significant benefits, as it now has preferential access to South Korea and China, which it did not have [previously]."

What does it offer to its signatories?

The RCEP is not a complete free trade agreement (FTA). While it will lead to the removal of tariffs on a wide range of products, many of these are already covered by existing deals, and certain loopholes will remain. But it will mean companies should be better able to build more seamless supply chains through the Asia-Pacific region, and will simplify what is at present a complex set of bilateral FTAs in the region.

Another significant factor is the adoption of a common set of rules of origin, which should make it much easier to move goods between the 15 member nations. According to one analysis by Euler Hermes, this factor alone could boost regional trade by as much as $90 billion per year.

Under the RCEP, components from any member nation will be treated equally, which may give companies within the bloc an incentive to look within the trade region for suppliers - possibly at the expense of those outside the agreement.

What does the future hold for RCEP?

The agreement still needs to be ratified by at least six ASEAN members and three non-ASEAN nations before it comes into effect. Nick Marro from the Economist Intelligence Unit told the BBC this should not be viewed as a formality, noting: "Ratification will likely be tricky in national parliaments, owing to both anti-trade and anti-China sentiment." 

Less-developed nations will also be given more time to implement the legislative changes required. For example, Cambodia and Laos are to be given three to five years to upgrade their customs procedures to meet the RCEP's standards.

One notable omission from the RCEP agreement is India. The south Asian nation had previously been involved in discussions to join the group, but pulled out over concerns it would open its markets to a flood of cheap Chinese imports. 

However, the signatories have made clear the door is open for India to join if its situation changes, and adding India's 1.2 billion consumers to the deal would certainly make the RCEP an even more powerful agreement.

Even under its present makeup, it is still a significant achievement to bring together so many nations that have been historically in competition with each other. Ms Elms noted: "For an agreement signed with countries that did not volunteer to participate and with such incredibly diverse membership, the quality of RCEP actually exceeds expectations.

"It will deliver significant economic benefits to many firms."