THE economic managers, including the current and incoming secretary of trade, are making a final push for ratification this week of the Regional Comprehensive Economic Partnership (RCEP), but its fate at the Senate remains uncertain.
Sen. Panfilo Lacson noted that “the two-thirds vote” required for treaty ratification “may be a tall order under the present composition of the Senate,” as he pointed to a general sense of “reluctance” given uncertainties of whether the Philippines was competitive enough to engage the other members of the trade bloc.
He, however, hastened to clarify that “at least, that is my own opinion which may not affect that of at least 15 others.”
The reluctance on the basis of competitiveness questions was expected to be bolstered by remarks from President-elect Ferdinand “Bongbong” Marcos Jr. last week that he would rather hold off on the RCEP until he finishes reviewing it and is satisfied that the Philippine agriculture sector can hold its own against bloc members.
However, Socioeconomic Planning Secretary Karl Kendrick Chua urged senators to vote in favor of ratification, stressing such will benefit the agriculture sector and the entire country.
To further improve the agricultural sector, the National Economic Development Authority (Neda) said the country must join RCEP and pursue parallel efforts in fixing structural issues of the sector.
In a dialogue with members of the Samahang Industriya ng Agrikultura (SINAG), Chua explained the bigger benefits that the agriculture sector and the country can if reap if the Philippines joins RCEP. Chua was joined in the dialogue by Department of Trade and Industry (DTI) Secretary Ramon Lopez and officials from Neda, DTI, and the Department of Agriculture.
While the Neda chief acknowledged the sector’s concerns on importation, he explained that importation is a temporary measure that the government needs to undertake to improve agricultural productivity.
‘Time is of the essence’
“The economic team has pushed for the passage of three liberalization laws that will bring in a lot of foreign direct investments. But if we limit our intervention by not joining RCEP, then we will not reap the full benefits of all the reforms that we have pushed and are pushing for. By not joining RCEP, we lose out on so many other opportunities. Today, countries are looking for the next best source of agricultural and non-agricultural products because of the Russia-Ukraine conflict. Time is of the essence, and we do not have time to waste,” Chua said.
He added: “We hope the Senate will urgently ratify the RCEP this week, given its urgency and large benefits to the country.”
The RCEP is a free-trade agreement among the 10 members of the Association of Southeast Asian Nations (Asean), along with China, Japan, South Korea, Australia, and New Zealand. This covers roughly 50.4 percent of the Philippines’ export markets and 67.3 percent of the country’s import sources.
President Duterte already ratified the RCEP agreement on September 2, 2021. However, it still requires the approval of Senate Resolution No. 963, pursuant to the constitutional requirement that this needs the concurrence of the Senate.
Joining RCEP will preserve 98.1 percent of tariff lines, which corresponds to 228 commodities or USD 16.9 billion of imports. Only 15 agricultural commodities representing 33 tariff lines will see lower tariff rates. They account for only 1.9 percent of total tariff lines and only 132 million dollars or 0.8 percent of total agricultural imports. These commodities will be affected since RCEP rates for these items are generally lower than the most favored nation rate and lower than the ASEAN+1 rate.
The Philippine Institute for Development Studies (PIDS), in December 2021, estimated that participating in the RCEP could provide a 10.47-percent increase in the country’s exports and a 2.02-percent increase in real gross domestic product (GDP). Factors that enable this include the lower transaction costs as a result of wider sourcing of raw materials for sectors in manufacturing and inputs for agricultural production, said PIDS.
Root causes of problems
While conceding that there are other problems in the agriculture sector that require urgent solutions, Chua said the solution is not to stop RCEP but to address the root causes of the sector’s inefficiency.
The issue with the agriculture sector is not about funding but also how best to allocate resources to improve productivity, he explained.
“Even if we have funds for the sector, if we misuse it or don’t allocate it properly, or if we put it in production inputs only and not support services or mechanization or high-yielding seeds, we can spend the same amount and achieve little results. Our support to agriculture will have to change from providing subsidies, which is what we have done for decades, to providing public goods and support services. That is really how I think we can improve productivity,” said Chua.
Pascual’s take
Management Association of the Philippines (MAP) President Alfredo Pascual said he agrees with Trade Secretary Ramon Lopez that RCEP ratification must not be stopped as the trade deal is safe for agriculture
In a televised interview on Friday night, Trade Secretary-designate Alfredo E. Pascual said the regional economic deal is safe mainly because no new sensitive products were included in the regional trade deal.
“Yes that’s one argument why we can go ahead with the ratification by the Senate of RCEP because the impact on the agricultural sector is not as being imagined,” said Pascual.
In fact, Pascual stressed, “MAP which I now head and I will head up to the end of June has taken a position in favor of RCEP.”
Senate running out of time
The Senate is still poised to firm up a consensus to ratify or not the RCEP in its remaining plenary agenda before Congress adjourns from June 4 to July 24, after which the 19th Congress takes its place on July 25.
At the outset, Senator Aquilino Pimentel III pointed out, however, that “action on the RCEP depends on the sentiment of the majority in the Senate,” despite Marcos Jr’s remarks about holding off.
Asked if the Senate should still put RCEP in its plenary agenda, Lacson said,
“It is not much of a question of whether or not the incoming leadership wants the RCEP passed or not.”
Rather, Lacson said, “it is more of the indication that a good number of senators have reservations about having the measure ratified in plenary primarily because of our country’s apparent lack of competitiveness to be a co-signatory of RCEP.” He admitted that “I, for one, share that reluctance.”
As earlier endorsed by Malacanang for Senate ratification, the objective of launching RCEP negotiations was to “achieve a modern, comprehensive, high-quality, and mutually beneficial” economic partnership agreement among the Asean members and their foreign partners, Lacson said.
The incoming trade chief also stressed that reviews have already been made on the regional economic deal and it’s only “a matter of getting all the stakeholders together and agreeing on what is real impediment and what’s just misunderstood at this point.”
The DTI aims to submit its full statement on this matter when the Senate resumes deliberation on RCEP this week.
Further, Lopez said that they will provide a paper on the regional economic deal as part of their briefing papers to the incoming administration along with Trade Secretary-designate Pascual.