The Department of Trade and Industry (DTI) Secretary Ramon M. Lopez reiterated its call for the immediate Senate concurrence of the Regional Comprehensive Economic Partnership (RCEP) Agreement citing not only its benefits, but the potential negative impact on the economy should the Philippines’ ratification be delayed to the trade pact.
Sec. Lopez highlighted that the agreement would support the Philippines’ inclusion in global value chains and improve economic efficiency.
He explained, “It is not just a simple trade agreement that provides enhanced market access and stable business environment. It is a strategic tool to sustain the region’s economic advantage. RCEP is expected to promote economic efficiency of member states, linking their strengths in manufacturing, technology, agriculture, and natural resources, and it will reinforce the global value chain (GVC) network, which the Philippines is very much a part of.”
The Trade Secretary noted that most economists and trade experts are one in saying that the Philippines stands to gain economically from the agreement, from lower trade costs, higher factory gate prices, increase in exports, increase in real GDP growth rate, reduction of poverty incidence, and enhance competitiveness of industries.
He also expressed his appreciation for the strong support of various industry and business organizations in calling for the immediate Senate concurrence of the RCEP Agreement.
“I would like to extend my heartfelt gratitude to all industry and business organizations who expressed support in moving forward this very important trade deal. This is really for the future of our economy. We have to sustain our growth momentum and show to the international community that the Philippines is indeed an emerging economy open to trade and investment,” the trade chief added.
Sec. Lopez also warned that a delay in ratification would hamper job creation and economic activity, as trade and investments would be diverted away from the country to competitors within RCEP. Furthermore, exclusion from the trade bloc would erode the Philippines’ export competitiveness.
“As other countries in the region enjoy the preferential treatment arising from enhanced market access, wider sourcing of raw materials and strengthened and transparent trading systems, the existing linkages of the Philippines to the global value chain may deteriorate as investors and businesses look to other countries for better economic environment and opportunities. Even our exports could become less competitive, including electronics, which account for 62% of our exports, and even agricultural product exports,” the Trade Secretary said.
Sec. Lopez also stressed that consultative processes with sectoral stakeholders were followed over the course of negotiating the agreement, noting that safety nets and flexibilities were available under RCEP, and that sensitive products were excluded from tariff liberalization.
Amidst the concerns raised by a group of farmers, Secretary Lopez emphasized that the RCEP agreement provides vast opportunities for the agricultural sector, ranging from enhanced market access, trade facilitation measures, time bound consultation in addressing trade issues to more investments in research and development in agricultural sciences and even manufacturing.
He also clarified that highly sensitive agricultural products for the Philippines are excluded from the country’s Schedule of Commitments. “This means that these products are still protected by tariffs”, Sec. Lopez clarified.
Some of these agricultural products include swine meat, poultry meat, potatoes, onions, garlic, cabbages, sugar, carrots, and rice.
Trade Assistant Secretary Allan B. Gepty also explained that “Our farmers and producers should view RCEP as an opportunity for them to have a stable access to cheaper farm inputs and implements such as fertilizers, pesticides and farm machineries. They can also export their products to the RCEP region at a preferential and more trade facilitative arrangement, and in the process RCEP will encourage investments in food processing and even research and development in agricultural sciences and technology. In sum, our agricultural sector will reap these benefits while at the same time enjoying tariff protection on certain agricultural products.”
When asked about safety nets, Assistant Secretary Gepty clarified that the RCEP Agreement provides more than enough trade remedies and flexibilities. In addition, RCEP parties can still avail of the safeguard measures provided for in the WTO agreement. He also added that the RCEP Agreement even provides a mechanism to modify concessions should there be a need to do so.
“In other words, the RCEP Agreement provides ample flexibilities and remedies to our local industries including the agricultural sector,” Asec. Gepty clarified.
Sec. Lopez emphasized that the economic gains the Philippines has accrued under globalization and FTAs, with economic growth averaging 6.6 percent annually before the pandemic. He cautioned that delay in the country’s participation would be detrimental to the economy.
“Not joining RCEP or delaying our participation will cause disruption in this momentum. Investments will shy away from the country not participating, definitely. There will be capital flight and lost investment opportunities. Why? Companies will go to where they have greater ease in trade flows. Thus, jobs will be lost, livelihood destroyed, and poverty will worsen,” the trade chief explained.
A study conducted by Dr. Caesar Cororaton, a Research Fellow at the Virginia Polytechnic Institute and State University (USA) and a Visiting Scholar at the De La Salle University (DLSU), noted that the RCEP is estimated to improve the country’s trade balance by as much as USD 128.2-M, increase overall welfare by USD 541.2-M, contribute to a 1.93% real GDP growth, and lower poverty incidence by 3.62% in 2030. The said study also provides an insightful analysis on the significant gains of the Philippines from RCEP, not only in terms of trade and GDP, but also in the area of poverty reduction and overall welfare.