FROM THE MARGINS
Finally, the Senate has ratified the Regional Comprehensive Economic Partnership (RCEP), ensuring the country’s participation in the world’s biggest free trade pact. Covering the Association of Southeast Asian Nations (ASEAN) and East Asia’s growth engines (China, South Korea, Japan, Australia, and New Zealand), the RCEP is important because these countries account for almost a third of the world population and the global gross domestic product (GDP).
Signed in November 2020, there has been much debate about the RCEP. The Philippines is the last signatory, as elections delayed its ratification and it was opposed by agricultural groups over fears that the RCEP will open the country to a wave of imported produce that could undermine local producers. Still, government agencies, like National Economic and Development Authority (NEDA), Department of Finance (DOF), Department of Trade and Industry (DTI), and Department of Budget and Management (DBM) pushed for its ratification.
Why is the RCEP important to our economy? How will it impact the poor and MSMEs? As early as now, the government should find ways to maximize our benefits from the RCEP while adopting safeguards to address its perceived disadvantage to the agriculture sector.
Trade and investment opportunities
RCEP provides a framework for economic and trade cooperation in the Asia-Pacific region. It consolidates trade rules in a wide range of fields, including goods, services, investment, intellectual property rights, e-commerce and competition policy, promoting the integrated development of the industrial chain, supply chain, and value chain in the region.
Finance Secretary Benjamin Diokno considers the RCEP as key to a more open, transparent and predictable trade and investment environment. He said: “Deeper economic integration among the RCEP member-states will expand the country’s market access for goods and services, attract more investments, and create more and better jobs.”
Confirming DTI Secretary Alfredo Pascual’s statement that businesses have been anticipating the country’s participation in RCEP, the Management Association of the Philippines (MAP), Makati Business Club (MBC), Joint Foreign Chambers (JFC), and Confederation of Wearable Exporters of the Philippines (CONWEP) lauded RCEP’s ratification, welcoming new opportunities offered by the trade pact.
Among the benefits of RCEP are lower trade barriers, improved market access, more streamlined custom-related procedures, and tariff concessions from trading partners. NEDA Director-General Arsenio Balisacan also assuaged fears over RCEP’s impact on agriculture, citing stakeholder consultations and studies showing that the trade agreement will not lead to a surge in agricultural imports.
I support the RCEP because it will encourage investments, open new markets and bring healthy competition for our industries. It would facilitate access to overseas markets for domestic goods and services, especially for micro-small-and-medium-enterprises (MSMEs). This is important since MSMEs create jobs and ensure poor people’s participation in the economy. MSMEs also promote financial inclusion.
Maximizing gains
We could benefit from increased trade openness via the RCEP. As the success of any trade agreement depends on utilization, local businesses should immediately internalize the RCEP to reduce trade costs. Government must support private sector innovation to improve the variation of Philippine exports and take advantage of RCEP provisions that make cross-border trade simpler and more efficient.
To ensure the growth and competitiveness of our MSMEs and agri-sector, the government should also consider:
1. Improving Food and Drug Administration (FDA) processes. Though there had been improvements, securing an FDA permit still takes months. FDA should decentralize and partner with SUCs and the private sector to speed-up the processing of permits and licenses.
2. Investing in digital infrastructure. We need to enable farmers and MSMEs to access crucial information like prices of farm inputs, products and markets, as well as digital technologies that predict typhoons, floods, pest and insect outbreak, fertilizer and irrigation requirements, etc. Digital infrastructure will help farmers and MSMEs be more competitive.
3. Ensuring access to credit, guarantee fund and insurance. Farmers and MSMEs need capital for production and related expenses, so they need access to credit. The speed of claims payments is crucial to guarantee fund and insurance; hence, providers should be able to pay claims within the day or a maximum of three days, with simplified requirements.
4. Promoting access to markets. This can be done through private sector partnerships, like: Japan food companies’ contract growing arrangements with local farmers; farmers’ and MFIs’ partnerships with corporations (e.g., the onion-growing venture among farmers, ASKI and Jollibee, and the trucking arrangement between 7-11 and CARD-MLNI to bring Baguio farmers’ vegetables to local vendors in Laguna).
With safeguards in place, we could take advantage of trade and investment opportunities from the RCEP. It is a modern, comprehensive and high-quality economic partnership agreement. In the words of Senate President Juan Miguel “Migz” Zubiri: “[RCEP] is modern because it updates the coverage of existing ASEAN free trade agreements and takes into account emerging trade issues such as electronic commerce, competition, intellectual property and government procurement. It is comprehensive because it covers trade areas not previously covered, such as small and medium enterprises; high quality because levels of commitment provide more stability and predictability to business and investors.”
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually-Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically-disadvantaged Filipinos and insure more than 27 million nationwide.)