Although it is far from the best outcome in trade liberalisation, the finalisation of the 15-member Regional Comprehensive Economic Partnership (RCEP) among economies of Northeast Asia and Southeast Asia, along with Australia and New Zealand, has highlighted and even salvaged Asean's adverse pandemic year.
This year, the RCEP was under Vietnam's chairmanship.
Just as the Asean Outlook on the Indo-Pacific was the main takeaway from Thailand's rotational leadership last year, Vietnam this year will perhaps be remembered for the RCEP free-trade deal which remarkably brings together 30% of the global population, accounting for the same proportion of world GDP.
The RCEP should now be seen as an opportunity to shore up what's left of the multilateral trading system and to reboot value chain integration in East Asia after the Covid-19 pandemic is overcome and long gone.
As Asean's chair, Vietnam may be feeling short-changed as it passes the baton alphabetically to Brunei for 2021 and Cambodia in 2022.
This year was supposed to be Vietnam's chance to shine on the global stage, yet the pandemic changed all that.
Not only did it lead Asean, but Hanoi also took up a non-permanent seat at the United Nations Security Council.
Vietnam prepared early and put up its best talent for both Asean and United Nations roles.
That the Asean-related summits in 2020 had to be done online robbed Vietnam of opportunities to drive and shape key contentious issues, particularly the Code of Conduct for the South China Sea, because Asean's informal and consensual ways and means for communication undoubtedly work best through in-person diplomacy and face-to-face meetings.
Nevertheless, Hanoi did as much as it could under the theme of Asean's cohesiveness and responsiveness and in light of 2020's circumstances.
Vietnam also managed to upgrade the Mekong region, where China's upstream dams have adversely affected downstream riparian countries, to become an Asean priority concerning all key stakeholders.
Maritime Asean members will now pay more attention to Mekong concerns as much as mainland Asean countries have always had to lend support to the organisation on the South China Sea.
But the RCEP clearly stole the show, partly due to the absence of multilateral trade liberalisation.
Yet its arduous eight long years of negotiations before completion were spoiled in the end by India's withdrawal.
Without India's huge consumer market that is second only to China's, the other economies outside Asean may later feel dwarfed and disadvantaged when it comes to dealings with Beijing.
And unlike its peer free-trade platform in the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the RCEP is not as comprehensive and substantial.
Furthermore, it is much weaker on agriculture, dispute settlements, competition, services, and investment.
Yet the RCEP also offers plenty of upsides.
Larger in market size and share of global GDP than either the European Union or the North American Free Trade Agreement, the RCEP boosts the spirit of multilateralism.
It also promotes deeper regional value chain integration among its member economies.
The RCEP can act as a regional hub for growing demand without the region, underpinned by rising middle classes around the bloc.
And while the RCEP is not as comprehensive as CPTPP, it does consolidate and streamline bilateral free-trade agreements (FTAs) among members.
Take rules of origin, for example. With a myriad of 27 existing FTAs and 44 bilateral investment treaties among its members, unifying and standardising rules of origin would be a boon for trade and investment facilitation, a major prerequisite for the development of regional value chains.
Beyond trade, the RCEP comes at a crucial juncture when multinational companies around the world are rethinking their investment strategies owing to the effects of the pandemic.
In addition, the RCEP is just what domestic reformers in member economies need as justification for opening up in the face of protectionist vested interests.
Meanwhile, the call for reshoring — bringing back investment activities to home countries -- has become louder, uprooting the entire supply chain and is furthermore not that simple.
While Southeast Asia is likely to benefit from companies looking for "China plus one (or two)" strategy towards regional diversification, investment in China remains important for multinational companies because of the enormous market size of the Chinese market, its developed infrastructure, and the availability and depth of the supply chains China can offer.
Trade and investment among the RCEP members are already enmeshed, with China, Japan, and South Korea serving as major markets and higher-tech nodes, while Asean as a group plays an affiliated role as a lower-cost production hub.
According to the United Nations Conference on Trade and Development (UNCTAD), intra-RCEP trade volume grew at an impressive rate of 50% between 2010 and 2018, whereas the volume with non-RCEP countries expanded at 34% during the same period.
The RCEP's integration and regionalisation proffer an attractive option for multinationals to the benefit of Asean's central role in the broader region.
Notwithstanding its immense potential for post-pandemic regional economic recovery, the RCEP will still need to be ratified by the legislatures of most of its country members.
On the other hand, the implementation of the RCEP's 20 chapters of trade liberalisation will be much harder to do than to ink, especially for smaller economies that are less open.
Although the RCEP can be an overall framework that enables Asean to propel regional value chain integration, differences in member economies' levels of economic integration and competition for similar inputs and investment will likely prove contentious.
The RCEP members will need to build a lot of mutual trust for collective trade benefits.
Apart from trade and investment, the RCEP as a geo-economic grouping can also act as a confidence- and trust-building platform for spillover benefits in the geopolitical arena.
If given a chance, greater economic interdependence can lead to more regional peace and stability.
Much will depend on China's role in both geo-economic and geopolitical realms and also on countries with which Beijing has had territorial issues, particularly Japan, the Philippines and Vietnam.
Without the United States' inclusion in regional trade liberalisation, both in the RCEP and CPTPP, China will have to tread carefully to engender trust and mutual understanding, not coming across as overbearing.
As a second-best outcome after multilateral free trade, RCEP also crucially serves as a timely window to look for geopolitical ways forward for China and some of its neighbours.
Pavida Pananond, PhD, is an Associate Professor of International Business at Thammasat Business School, Thammasat University, and Thitinan Pongsudhirak, PhD, teaches at the Faculty of Political Science and directs the Institute of Security and International Studies at Chulalongkorn University.