With apparent hesitation, three major business groups and a foreign relations firm have called for the ratification of the country’s participation in the Regional Comprehensive Economic Partnership (RCEP) as they equally stressed the need for government to increase substantially the budget for agriculture as safety nets for local producers.
The groups — Financial Executives Institute of the Philippines, Management Association of the Philippines, Makati Business Cub, and Philippine Council for Foreign Relations — believe that the Philippines membership in RCEP is an important challenge for the government to step up genuine and meaningful support for Filipino producers, especially in the agriculture sector.
Despite their call for the Senate to ratify RCEP, the groups also equally stressed the need for government to put in place safety nets for local producers.
“We, therefore, urge the government to provide a substantial increase in the agriculture budget commensurate to that provided in our comparable ASEAN neighbors, as we urge our Senators to ratify the RCEP Agreement without delay,” the groups said in the joint statement.
They acknowledged that like any free trade agreement, RCEP provides wide economic opportunities for the country, along with certain threats to uncompetitive industries, and individual producers and their workers.
And like in the other free trade agreements the country has joined, they noted that the Philippines has the least, compared to Indonesia, Malaysia, Thailand and Vietnam, in the overall economic gains in terms of net job creation, economic growth and price stabilization will well outweigh the costs.
As such, the four groups stressed that “Government has the responsibility to assist those adversely affected meaningfully and effectively, to allow them to achieve competitiveness or adjust to alternative products or livelihoods.”
Nonetheless, the groups believe that RCEP will help MSMEs expand market access, especially with more liberal rules of origin on traded products to qualify for trade concessions. It will also provide broader and cheaper alternative sources for inputs and reduce costs of doing business through improved trade facilitation, especially customs and trade clearance procedures.
“Exclusion from RCEP would be immensely costly to our economy and our people. We can anticipate a significant decline in our exports to RCEP countries, which now account for nearly two-thirds (64 percent) of our total exports, as trade with us will logically be diverted to fellow members. It would also make us even more unattractive to job-creating investments than we already are, as these would best locate in RCEP member countries to take advantage of free access to its vast market. For the same reason, our membership could attract more foreign investments into the country from firms wishing to produce and sell to the large RCEP market,” the group said.
It could be recalled that more than 50 groups from farmers and non-governmental organizations have expressed strong opposition against RCEP, resulting in the delayed action by the Senate and the subsequent delay in the country’s participation in the trade deal that took effect Jan. 1 this year.
The groups also said that RCEP skeptics should find comfort in the fact that little will immediately change in the country’s trade relations, since RCEP only reaffirms existing trade concessions the Philippines already have with all RCEP members via the ASEAN Trade in Goods Agreement (ATIGA) among ASEAN members and the ASEAN-Plus Free Trade Agreements with the rest.
Tariff elimination will take up to 20 years, they said, giving ample time for the country to shape up and achieve the competitiveness that will allow local producers to take full advantage of the vast market opportunities RCEP offers.
Even so, our negotiators had excluded from tariff liberalization “sensitive” farm products including swine and poultry meat, potatoes, onions, garlic, cabbages, sugar, carrots and rice, along with manufactured products like cement and certain steel products.
Meanwhile, in a separate statement, the Australian-New Zealand Chamber of Commerce Philippines (ANZCHAM), strongly urged the Senate to concur with the ratification of the Regional Comprehensive Economic Partnership (RCEP).
ANZCHAM believes that the RCEP will be important to support the recovery of the Philippines from the devastating economic effects of the COVID-19 pandemic. The RCEP is an economic treaty brokered by the Association of the Southeast Asian Nations (ASEAN), of which the Philippines is a member.
“As an organization representing businesses with strong ties to countries that have already ratified the RCEP (Australia and New Zealand), we understand that the Philippines, especially its export industry severely hit by the pandemic, stands to miss out if this groundbreaking free trade agreement is not ratified. We urge the Senate to prioritize concurrence before the adjournment of the session in February,” said Daniel Alexander, President of ANZCHAM.
He said the ratification of the RCEP will be instrumental to instilling foreign-investor confidence in the country, which will be badly needed to revive the economy.
The RCEP has already entered into force on 1 January 2022 for ten countries, namely, Australia, New Zealand, Brunei Darussalam, Cambodia, China, Japan, Laos, Singapore, Thailand and Vietnam, with Australia as an original party. For the Republic of Korea, RCEP will enter into force on 1 February 2022. The Philippines has yet to fully ratify RCEP. President Rodrigo Duterte ratified the agreement last 2 September 2021, but it needs concurrence of the Senate to take full effect.
RCEP comprises of 15 member economies, consisting of the ten ASEAN members plus Australia, New Zealand, China, Japan and South Korea, together account for 30 percent of the world’s population and of global GDP or $26.2 trillion. As such, it is a huge market that Filipino producers would gain preferential access to via membership in RCEP.
RCEP already entered into force on January 1, 2022, having been ratified earlier by 10 signatories, while South Korea comes in as the 11th on February 1, after the prescribed 60 days from its ratification last December 2. The other remaining countries, Indonesia, Malaysia and Myanmar, are reportedly poised to ratify the agreement shortly.