The ball is now in the hands of the business sector to take advantage of opportunities, said Trade and Industry Secretary Alfredo E. Pascual a day after the Senate concurred the ratification of the mega trade deal.
The challenge was readily accepted by the private sector, which composed of local business organizations and foreign groups, as they expressed readiness to take on the benefits and advantages under RCEP. The private sector also lauded the Senate for their concurrence with RCEP ratification.
The country’s participation in RCEP will be effective 60 days after the Philippines has deposited the RCEP ratification of Secretary General of ASEAN. In the meantime, an Executive Order on the country’s tariff commitments will be prepared for signature by President Ferdinand R. Marcos, Jr. This will be the basis for the Bureau of Customs to issue a memorandum circular on the new tariffs on products traded within the RCEP region.
Philippines chief trade negotiator to RCEP explained that once implemented, the immediate impact is a wide sourcing of raw materials and markets from 14 countries where Philippine manufacturers can export at preferential tariff rate.
But Pascual emphasized that the impact of the RCEP will largely depend on the private sector.
“Depends how fast our business people will react,” he stressed citing changes in tariffs and computation of the rules of origin on the country’s exports and imports. One study showed that the RCEP impact is a 1.93 percent increase on real gross domestic product by 2031 yet.
“The real experience is on how well our own business people will take advantage of the benefits and changes that will come about from RCEP,” said Pascual.
He explained that RCEP provides an enabling environment for businesses and the public in general to take advantage of. The role of the government is to ensure that all businesses can avail of the new tariff and regulatory regimes under RCEP.
Pascual also expressed confidence on the readiness of local businesses to avail of the advantages.
With the RCEP ratification, he said, investors who have long been eyeing the Philippines will now be implementing their intentions in setting up their manufacturing operations in the country.
“We are not the only ones that are ready but the investors are also ready, a number of them are ready,” he said adding that investors are expected to formalize their entry into the country as they have been waiting for the Philippines to be part of RCEP.
In addition, Pascual cited the need to curb and prevent smuggling of agricultural products. He said that the Bureau of Customs Commissioner Bienvenido Y. Rubio attended the final Senate RCEP session and has manifested the agency’s readiness and awareness on the need to put a stop to smuggling.
“The way to protect our agri sector is to put a stop to smuggling of our agri products,” said Pascual noting that anti-smuggling has been included in the Senate Resolution to give assurance that actions taken to help farmers will be funded and implemented.
On the part of the business sector, the Philippine Chamber of Commerce and Industry (PCCI) said they have been ready for a long time. “We are just waiting for the guidelines,” said PCCI President George T. Barcelon.
But Barcelon stressed that the real test in the effectiveness of RCEP is if it can draw in foreign investments. He explained that RCEP is not more on tariffs because the Philippines has been trading at preferential rate with 10 of the 15 RCEP countries already and long before RCEP came about.
“So, our focus is on investments because with RCEP we become more attractive,” he said stressing that those wanting to leave China can relocate into the Philippines. “This is like open season for us.”
“I understand we need to protect our farmers, but we should look at the bigger picture. RCEP is the bigger picture, it is like the EU-GSP Plus that without it we will lose our advantage to export to Europe,” he pointed out.
The exporters group also expressed their readiness to take on RCEP.
“Of course, we are ready,” said Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc., noting that the amendments in the guidelines approved by the Senate in the creation of the Special oversight committee have somehow eased the worry of farmers.
He urged for the strict implementation of the guidelines to safeguard local agricultural produce. “If smuggling is not curbed, it will remain a problem to our farmers,” he said.
Ortiz-Luis, however, noted that the issue of water supply for farmers was never discussed in any of the debates in RCEP or in any related fora.
“Why didn’t they include water irrigation as one of the safety nets, it was not even discussed,” he noted. By having efficient water supply, he said, farmers can plant three times a year, instead of two crops.
The Management Association of the Philippines (MAP) said that RCEP will certainly provide the country’s producers of various exportable products easier access to the markets of other RCEP countries.
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 of inputs, and reduce costs of doing business through improved trade facilitation, especially customs and trade clearance procedures.
“The ratification will enable the Philippines to compete on equal footing with our ASEAN and Asian partners already in RCEP in attracting foreign investments as they capitalize on the shift by a number of multinational corporations to seek alternative locations for their manufacturing sites,” said MAP President Benedicta Du-Baladad.
In a separate statement, the Makati Business Club expressed confidence that RCEP will help accelerate inclusive growth and economic recovery, and most importantly, job creation.
“We’ll support government policies that ensure Philippine businesses, especially manufacturing, are up to the challenge and opportunity. On top of the recent Philippine Service Act, Retail Trade Liberalization Act, and Foreign Investments Act legislation, this is a clear signal that we are re-open for business and jobs,” said the MBC statement.
Foreign business groups in the country also lauded the Senate concurrence with the RCEP ratification.
The Joint Foreign Chambers, which is composed of seven foreign business chambers – US, Australia-New Zealand, Japan, Korea, European, and multinational companies regional headquarters -- said the ratification reinforces the “decision of many of our members to invest in the Philippines and will attract more investment from our home countries.”
The Philippines participation in RCEP likewise builds on significant reforms that benefit the national economy such as TRAIN 1, CREATE, Electric Vehicles Industry Development Act, Philippines Creative Industries Development Act, and the amendments to the Public Services, Retail Trade Liberalization, and Foreign Investments Acts.
“We look forward to working with the Philippine government to improve the countries' investment climate and attract more foreign investments in light of the new opportunities that RCEP provides,” the statement concluded.