THE National Economic and Development Authority (Neda) and local economists from the Foundation for Economic Freedom (FEF) expressed their staunch support for the ratification of the Regional Comprehensive Economic Partnership Agreement (RCEP).
The Neda believes the RCEP could fast-track the country’s economic recovery from the pandemic and increase its access to non-traditional markets that would not only grow the country’s export revenues but also attract new investments.
FEF, for its part, believes delaying the ratification of the trade part will prevent the Philippines from maximizing opportunities to recover from the pandemic and generate more jobs. The FEF said out of the 15 signatory states, the Philippines is the only country that has yet to ratify RCEP.
“We, in Neda, consider RCEP to be a vehicle that would drive our economy’s sustained growth through regional and global trade as well as through greater investment in strategic sectors. Being part of RCEP will further enhance our market access, placing us at par with other RCEP-participating countries and the world’s largest economies such as China, Japan, and Korea, among others,” Neda Secretary Arsenio M. Balisacan said.
“Several consultations with concerned stakeholders and studies on the subject affirm that joining RCEP would unlikely lead to a surge in agricultural imports. In any case, with or without RCEP, the government strives for a competitive and resilient agriculture sector,” Balisacan said.
Based on the 2021 trade data from the International Trade Center, Neda said under the RCEP, only 15 agricultural commodity groups corresponding to 33 tariff lines will have lower tariff rates compared to some ASEAN+1 FTAs.
This is equivalent to only 1.9 percent of the total 1,718 agricultural lines and only 0.8 percent of the total agricultural imports. Of these 33 tariff lines, 17 are raw materials, 8 are intermediate products, while only 8 are final goods.
The remaining agricultural tariff lines will have equal or higher rates compared to other ASEAN+1 FTAs, or are excluded from import tariff concessions under the RCEP.
“Joining RCEP will enhance our market access for key agri-based exports, as partner countries agreed to lower tariff rates on Philippine exports. Non-participation or delayed RCEP ratification may result in foregone opportunities. We aim to promote greater openness, create a business-friendly environment, and provide a more stable and predictable system of trade,” Balisacan said.
The Philippines currently exports a number of products for which concessions were secured (e.g., preserved pineapples, pineapple juice, chocolate) and securing better market access for these products through RCEP opens the possibility to further widen the market base in these countries.
GDP, poverty reduction
Meanwhile, FEF reiterated that the RCEP can contribute 1.93 percent to real GDP and reduce poverty by 3.62 percent in 2030. It will also improve the country’s trade balance by $128.2 million.
“We urge the government to build on the country’s momentum to increase trade and investment opportunities in support of our country’s post-pandemic recovery and development by ratifying the RCEP,” the FEF said.
“Further delaying our participation in the free trade bloc means missing out on opportunities to increase trade and investments, which in turn can create opportunities that will benefit many Filipino businesses and generate jobs,” it added.
The economists also said the main opposition to the RCEP’s ratification are “misplaced fears” that the agriculture sector would become less competitive than today.
FEF said the RCEP will only open up the Philippine market for 33 agricultural tariff lines equivalent to only 15 products that will “pose little to no threat to local produce.”
“The agriculture sector’s noncompetitiveness today lies more on the protectionist and heavy-handed approach of the government in regulating agriculture over the years, and turning the situation around requires the reintroduction of free market principles, starting with freeing up the land market to allow greater consolidation and achievement of scaled economies in our agricultural production systems,” FEF said.
Other benefits from the RCEP, the local economists said, is access to a market of 2.3 billion people. This market already represents one-third of the world’s population.
RCEP, FEF said, will also provide predictable and uniform rules for trade and investments. Ratifying the agreement, they said, would lead to the country’s participation in “seamless production networks” to boost jobs and investments.
The trade deal also promises to improve commitments from participating countries to create job opportunities in professional and management services, accounting and legal services, auditing, architecture, game development, telecommunications, and transport.
FEF also said the single rule-of-origin framework to be implemented under RCEP will help enhance and accelerate participating countries’ activities in global value chains to facilitate foreign direct investments.
“RCEP also creates a conducive environment for liberalizing services and digital transformation in areas such as e-commerce and telecommunications,” the FEF said.