'TOL VIEWS
A decade in the making, the Regional Comprehensive Economic Partnership (RCEP) is the world’s largest free-trade agreement that took effect for most member countries on Jan. 1, 2022. The RCEP promotes a free and open market that would provide greater simplicity in trade relations compared to a series of bilateral free trade agreements, serving to provide uniform terms and conditions among the RCEP countries.
The 15 RCEP countries can be divided into two: (1) the Association of Southeast Asian Nations (ASEAN) members, comprising of Cambodia, Indonesia, Laos, Myanmar, Thailand, Brunei, Vietnam, Malaysia, Singapore, and the Philippines; and (2) the existing ASEAN partners, Japan, Australia, China, South Korea, and New Zealand.
World Bank Data provides that together, these RCEP countries are responsible for US$25.8 trillion of economic output, accounting for 29 percent of global gross domestic product (GDP), US$12.7 trillion or 25 percent of global trade in goods and services, and has a market of 2.3 billion people or 30 percent of the world’s population.
According to the Asian Development Bank, the signing of the RCEP would benefit regional supply chains with the elimination of tariffs on goods traded and can improve economic relations between member states.
In the Philippines, our President ratified the RCEP on Sept. 2, 2021. The treaty is pending concurrence by two-thirds of the members of the Senate. Stakeholders signified their support of the RCEP, on one side, and rejection, on the other.
RCEP supporters expressed the view that a delay in the Senate’s concurrence would lessen the country’s competitiveness instead of reducing overall costs of imported materials and exported market goods. In support of the call for concurrence, the president of the Philippine Chamber of Commerce and Industry, George T. Barcelon, stated that, “Domestically, we have been working on economic reforms, such as our Foreign Investment Act, Retail Trade Liberalization Act, and the Public Service Act, and yet some sectors do not want us to be part of this largest free trade deal. These are inconsistent positions. If we want to open our market for trade and investment, then we must be willing to commit to it.” The Department of Trade and Industry, including several industry leaders, also stated that the RCEP would foster faster economic recovery in the midst of the pandemic.
On the opposite end of the spectrum, the agriculture sector, among other sectors, protested the RCEP, citing that it may be disadvantageous to the growth of their industry. The Industry Development and Trade Policy Group Trade Assistant Secretary, Allan B. Gepty, noted that many other of our products are in surplus. Issues on and the effects of existing international trades on the Philippines were raised by industry leaders, rejecting claims of gains in trade, increased production output, and notable employment opportunities that a new trade agreement promises to provide.
In my view, the RCEP, admirably ambitious in its aim to provide a comprehensive and mutually beneficial economic partnership among nations, may produce varying results depending on underlying factors existing in the member states. There are structural agreements that would have to be in place in order for the Philippines to be on equal footing with other RCEP members and thus, remain competitive within the free-trade region.
For instance, the Philippines is not a party to other treaties which other RCEP members are part of. This includes treaties like the Hague Choice of Court Convention, the United Nations Convention on Contracts for the International Sale of Goods, and the Convention on the Use of Electronic Communications in International Contracts.
The Hague Choice of Court Convention ensures the effectiveness of choice of court agreements made between parties to international commercial contracts. Notably, the Philippines is neither a signatory nor a party to this Convention.
The United Nations Convention on Contracts for the International Sale of Goods (CISG) provides for a modern, uniform, and fair regime for contracts for the international sale of goods, contributing significantly to the certainty in commercial exchanges and decreasing transaction costs. The CISG is considered as one of the core international trade law conventions since sale contracts are a foundation of international trade. This was ratified by 94 states, including the RCEP countries – Australia, China, New Zealand, Japan, South Korea, Vietnam, Singapore, and Laos. The Philippines is also not a signatory nor party to this Convention.
The Convention on the Use of Electronic Communications in International Contracts, which has yet to be concurred in by the Senate, facilitates the use of electronic communications in international trade by assuring that contracts concluded and other communications exchanged electronically are as valid and enforceable as their paper-based equivalents.
The circumstances surrounding these three treaties, involving dealings in an international commercial market, are also applicable to the circumstances surrounding the implementation of the RCEP in its promotion of a free and open market.
I put forward the view that, perhaps, in order to maximize the benefits that the RCEP promises, we should first ensure the ratification of these relevant and foundational treaties to solidify our position as a member of the RCEP, like the other ASEAN countries and partners who are state parties to the foregoing.
(Senator Francis “Tol” N. Tolentino is a member of the 18th Congress and obtained his Masters of Law (LL.M.) from the University of London, specializing in Public International Law, and from the Michigan Law School, specializing in Constitutional Law.)