Amid the noise over the controversial mega trade deal Regional Comprehensive Economic Cooperation (RCEP), farmers have asked the Senate to let the incoming administration the trade treaties ratification.
“Let the incoming administration handle RCEP,” said the Federation of Free Farmers in a letter on June 1 to the Senate, which is currently on its last day today, Wednesday, June 1, deliberating whether or not it will concur Malacanang’s RCEP ratification.
Given the major implications of RCEP membership on the country’s agricultural sector, FFF National Manager Raul Q. Montemayor urged the current Senate to “give the incoming administration of President-elect Ferdinand Marcos, Jr. the opportunity to properly study the treaty and devise strategies that will allow us to maximize the benefits of the treaty, and minimize its adverse effects on vulnerable sectors.”
“Concurring with the agreement now, even as questions on trade remedies and the preparedness of our agriculture sector have yet to be fully answered, will unnecessarily tie the hands of the incoming administration and pre-empt whatever measures it might have to take to prepare the country for accession.”
The farmers’ group even pointed out that while the country’s RCEP negotiators shielded most of the country’s sensitive products from any tariff reduction under RCEP with relatively high tariff walls, these products remain vulnerable to imports.
For example, FFF pointed out the country still experienced surge in rice imports after enacting the Rice Tariffication Law, and became the world’s top importer, even though our tariff remained at 35 percent.
Similarly, imports of chicken and pork continue to flood the markets despite the fact that these commodities are protected with high tariffs.
“We cannot tell ourselves not to worry about RCEP just because we have retained protection for our sensitive products. Unless we address our high costs of production and marketing, trade agreements like RCEP could just make matters worse, especially if trade remedies like safeguard duties are rendered inutile by RCEP rules,” FFF told the Senators.
FFF also tried to debunk claims by the Department of Trade and Industry that the RCEP Transitional Safeguards DTI address harmful import surges. The farmers’ group pointed out that the RCEP transitional safeguards are inferior to the World Trade Organization (WTO) safeguards because RCEP safeguard duties have a cap or limit. They cannot exceed the difference between the prevailing RCEP tariff and the applied WTO tariff when the country join RCEP.
Under WTO rules, the Philippines can start imposing safeguard duties if it can prove that the surge has caused harm to the domestic sector. “We can impose as much safeguard duties as necessary. We can even impose a temporary ban on imports, if the safeguard duty proves to be ineffective. However, under RCEP rules, we cannot impose safeguard duties on maize imports from RCEP countries if there is no surge in imports from within RCEP, even if there is already a surge globally or overall,” FFF said.
This means that if the Philippines imports corn imports from China, and this importation exacerbates the overall surge, it still cannot impose safeguard duties on Chinese corn if its imports from China and other RCEP countries have not yet exceeded historical levels.
“Obviously, RCEP transitional safeguards give no added benefit to us, or to any other RCEP country hit by import surges. No affected country will invoke these RCEP rules, if it could freely choose WTO trade remedies instead,” the FFF said.
Meantime, three major business groups in the country have reiterated their call for the Senate to ratify the Philippine membership in the Regional Comprehensive Economic Partnership (RCEP), the largest economic bloc in the world’s history, but also equally stressed that the government has the responsibility to assist those adversely affected meaningfully and effectively.
In a statement, the Financial Executives Institute of the Philippines (FINEX), the Makati Business Club (MBC), and the Management Association of the Philippines (MAP) said that RCEP’s 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.
As such, the groups said, RCEP is a huge market that Filipino producers would gain preferential access to via membership in RCEP. 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.
“The overall economic gains in terms of net job creation, economic growth and price stabilization will well outweigh the costs,” the groups said.
As they urged for the RCEP ratification, the groups also stressed that the 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.
“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,” they added.
With that, they urged the government to provide a substantial increase in the agriculture budget commensurate to that provided in comparable ASEAN neighbors.
“We see our membership in RCEP as an important challenge to our government to step up genuine and meaningful support for Filipino producers, especially in the agriculture sector, which is the backbone of the Philippine economy,” the statement added.
Nonetheless, the groups also 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,” the pointed out.
“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 we 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,” they added.
Tariff elimination will take up to 20 years, giving ample time for us to shape up and achieve the competitiveness that will allow our producers to take full advantage of the vast market opportunities RCEP offers.
They further explained that 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.
For the same reason, FINEX, MAP and MBC are confident that their members could attract more foreign investments into the country from firms wishing to produce and sell to the large RCEP market.