By Bernadette D. Nicolas & Jovee Marie N. dela Cruz
TRADE tensions between the United States and China have provided the impetus for the Beijing-led Regional Comprehensive Economic Partnership (RCEP), Speaker Gloria Macapagal-Arroyo told an international forum, but analysts doubt the continually changing timeline for concluding the multilateral agreement can finally be met.
The proposed mega free-trade agreement involves member-states of the Association of Southeast Asian Nations (Asean), including the Philippines, and six Asia-Pacific states, including China.
“The trade tension with the United States provides an impetus for RCEP. With China’s participation, the proposed RCEP will be the world’s largest trading bloc,” Arroyo, an economist and former Philippine president, said in her keynote speech at the recent Boao Forum for Asia Youth Summit 2018 at the Hong Kong Convention and Exhibition Centre.
Arroyo said that days after the United States took steps toward a trade war, Chinese President Xi Jinping stressed the need for greater cooperation and commitment to building an open economy.
She added that with RCEP combined with the “Belt and Road” initiative, China is gearing into the next stage of its development to become a fully modern and globally relevant economy as it strives for partnership in growth and development with its neighbors and the world.
By 2019?
Analysts, however, doubt that the RCEP will finally be forged by 16 negotiating countries next year.
According to a draft statement obtained by Nikkei, member-
countries are now eyeing to conclude the RCEP in 2019. Earlier this year, negotiators vowed to conclude RCEP by year-end.
But the Nikkei report said a joint statement will be released on
November 14 after the RCEP summit in Singapore. The draft statement is also reported to warn of rising protectionism.
Former Tariff Commissioner George N. Manzano expressed doubt that the new deadline next year will be met considering the delays in closing the RCEP, which is said to be potentially the world’s largest free-trade deal.
“Well the deadline has been broken several times in the past. I would treat the announcement as aspirational only,” Manzano told BusinessMirror in a message.
The RCEP is a multilateral trade agreement involving the 10 Asean members and six of its Asia-Pacific trading partners. Besides China, they are Australia, India, Japan, New Zealand and South Korea.
In 2016 RCEP negotiating
countries comprised almost half of the world’s population and about 30 percent of global GDP and over 25 percent of world exports.
Although the negotiations started way back in 2013, only five of 18 chapters were so far agreed upon. These include chapters on customs procedures and trade facilitation, as well as government procurement and also chapters on small and medium enterprises and technical cooperation.
UP-based economist Ramon L. Clarete, who specializes in international economics and multilateral trade policy, also does not believe that the countries involved can beat the deadline next year.
“On my own I doubt they can,” Clarete told the BusinessMirror via SMS when asked on his
prospects on the new commitment of countries to conclude RCEP next year. “China and Japan, India and China, and India and Japan are big economies that do not have yet a bilateral free-trade agreement with each other. They have respectively large constituencies to please,”
he said.
Meanwhile, Action for Economic Reform coordinator Filomeno S. Sta. Ana III is more optimistic that global developments will prompt the early conclusion of the deal.
“There is impetus for RCEP in light of [US President Donald J.] Trump’s protectionism,” Sta.
Ana said in a message sent to the BusinessMirror.
Missed opportunities
Asked what could be the repercussions if the deal gets delayed further, Sta. Ana said: “Missed opportunities, particularly the preference to return to international rules to govern globalization.”
He said the most important
signal of closing the deal is that countries are still capable of crafting
global rules that likewise serve national interests in the wake of retreat from globalization. He warned, though, that the negotiating countries should “avoid rigidity to give space to national sovereignty concerns.”
Sta. Ana stressed that RCEP by itself will not solve the current binding constraints in the country, such as infrastructure bottleneck, underspending and the rule of law.
“We have other bigger problems. This is not to belittle the significance of RCEP but a question of where our focus should be,” he said. “Nothing wrong with a trade deficit resulting from importation of capital goods. Export is underperforming not because of restrictive market but because of our internal problems.”
The country’s trade gap grew 124.1 percent to $3.927 billion in September 2018, from $1.752 billion in September last year. This was also higher than the $3.494 billion in August 2018.
Brick-and-mortar
Meanwhile, in her speech at the Boaoa Forum, Arroyo said, “My view of the “Belt and Road” initiative can best be expressed in terms now popular in the computer age. Trade and investments relationships, such as those governed by regional agreements like the RCEP, are like the software that provide a framework for world trade and investments to thrive.”
She continued: “But we also need the hardware, and this is where the Belt and Road initiative comes in to provide the brick-and-mortar infrastructures, without which international trade and investments cannot flourish.”
Earlier, Foreign Affairs Assistant Secretary Junever M. Mahilum-West said leaders gathering at the final leg of this year’s Asean summit in Singapore will call for the “expeditious” conclusion of RCEP. President Duterte will attend the Asean summit from November 13 to 15 at the Suntec Singapore International Convention and Exhibition Center.
Visit
Meanwhile, in the same speech, Arroyo said the Manila visit of Chinese President Xi this month will boost relations, especially trade, between the Philippines and China.
Keeping good ties with China is important to the Philippines because of, among others, its geographical location, trading partnership and proven capability in infrastructure development, Arroyo said.
Arroyo also cited vibrant Filipino-Chinese community in the country: “Domestically, the Philippines has a very vibrant Filipino-Chinese community for whom increased business dealings with China is very natural.”
According to Arroyo, China “will soon become the largest economy in the world, so of course, it is good to be friends with China.”
The Speaker cited China’s track record in infrastructure, adding: “Infrastructure will be very important for the Philippines in the coming years, and there is no country in the world that matches China’s recent track record and capability in this area.”