DTI expects lower manufacturing cost from RCEP
Published Jun 2, 2023 10:06 am
Trade and Industry Secretary Alfredo E. Pascual said manufacturers, whose raw materials are sourced from members of the Regional Comprehensive Economic Partnership (RCEP) countries, are expected to experience reduced cost, but he also hastened to add that the impact on consumer prices will largely depend on how businesses respond in utilizing the benefits the new free trade deal brings.
At a press conference marking the effectivity today, June 2, of RCEP in the Philippines, Pascual emphasized that for products negotiated for lower tariffs on their raw materials there will be reduction in cost of manufacturing, but for imported materials for products excluded from the trade deal there will be neutral effects. Pascual, however, reiterated that “RCEP is not a magic pill” adding “there are still lots of work that need to be done to reduce cost” that will redound to lower consumer goods prices and eventually on the country’s balance of trade. “Even if we bring tariffs down to zero, if the product is not done at competitive cost, it will not be competitive in the market,” he said. While the high cost of power is also a handicap to manufacturing operations, the trade chief noted that not all industries are power intensive. He noted that some studies have made estimates on the impact of RCEP on the country’s balance of trade based on certain assumptions, there is still “no certainty.” “But if business responds to the potential gains in RCEP, we will definitely benefit from RCEP,” said Pascual citing reports of significant gains in exports of member countries that have joined the mega trade deal ahead of the Philippines. Thus, DTI put emphasis on stakeholders’ understanding on how to trade and do business in the RCEP region, seize opportunities in services, and know how to invest in the RCEP region and protect their investments. With that, the DTI will conduct awareness strategy and campaigns, including annual international trade forum, trade education, and put in place international trade assistance centers and free trade clinics to increase awareness and utilization of Philippine preferential trade agreements, regional trade agreements and FTAs. RCEP reduces or eliminates 92 percent of tariffs over a period of 20 years. Eliminated tariffs cover 65 percent of goods traded within the 15 member countries. For instance, Pascual pointed out that the agriculture sector will only be affected positively by RCEP because most of the traditional farm produce such as rice and corn are excluded from tariff cuts indefinitely, but other segments in the agriculture sector are subject to tariff reduction for over 20 years. “Agriculture can only be affected by RCEP positively,” he said emphasizing that a big segment in food processing such as cacao and coffee can benefit from RCEP through innovations with the help of the Department of Science and Technology to local food processors. The Philippines was able to improve its tariff concessions from China, Japan, and Korea on key agri products such as preserved pineapple, coconut juices, fish fillet, coffee, canned salmon, dried/salted tilapia, papaya, durian, soya bean, chocolate, fruit juices, leather gloves, footwear, printed paper, sound signaling equipment, ignition wiring sets, bicycles, cement, fuel, fertilizers, plywood, among others. In particular, RCEP grants zero duty on garments and zero tariff in 15 years for alcoholic beverages such as beer, gin, and rum. Enhanced market access on services for Filipinos await in Australia, China, Japan, Korea, and New Zealand. RCEP also provides stability in the telecommunications region and further enhances transparency and interconnection in the region. There is also an expected inflow of foreign investments that will benefit the construction industry, thus positively affecting the transportation and manufacturing sectors.
MARKING THE ENFORCEMENT OF REGIONAL COMPREHENSIVE ECONOMIC
PARTNERSHIP (RCEP) IN THE PHILIPPINES – The Department of Trade and Industry
(DTI) marks the effectivity of RCEP in the Philippines on June 2, 2023. Shown
in photo [L-R:] DTI Bureau of International Trade Relations Assistant Director
Marie Sherylyn Aquia; Trade Promotions Group Assistant Secretary Glenn
Peñaranda; Industry Development and Trade Policy Group Undersecretary Ceferino
Rodolfo; DTI Secretary Fred Pascual; Industry Development and Trade Policy
Group Assistant Secretary Allan Gepty; and Export Marketing Bureau Assistant
Director Bianca Sykimte.
At a press conference marking the effectivity today, June 2, of RCEP in the Philippines, Pascual emphasized that for products negotiated for lower tariffs on their raw materials there will be reduction in cost of manufacturing, but for imported materials for products excluded from the trade deal there will be neutral effects. Pascual, however, reiterated that “RCEP is not a magic pill” adding “there are still lots of work that need to be done to reduce cost” that will redound to lower consumer goods prices and eventually on the country’s balance of trade. “Even if we bring tariffs down to zero, if the product is not done at competitive cost, it will not be competitive in the market,” he said. While the high cost of power is also a handicap to manufacturing operations, the trade chief noted that not all industries are power intensive. He noted that some studies have made estimates on the impact of RCEP on the country’s balance of trade based on certain assumptions, there is still “no certainty.” “But if business responds to the potential gains in RCEP, we will definitely benefit from RCEP,” said Pascual citing reports of significant gains in exports of member countries that have joined the mega trade deal ahead of the Philippines. Thus, DTI put emphasis on stakeholders’ understanding on how to trade and do business in the RCEP region, seize opportunities in services, and know how to invest in the RCEP region and protect their investments. With that, the DTI will conduct awareness strategy and campaigns, including annual international trade forum, trade education, and put in place international trade assistance centers and free trade clinics to increase awareness and utilization of Philippine preferential trade agreements, regional trade agreements and FTAs. RCEP reduces or eliminates 92 percent of tariffs over a period of 20 years. Eliminated tariffs cover 65 percent of goods traded within the 15 member countries. For instance, Pascual pointed out that the agriculture sector will only be affected positively by RCEP because most of the traditional farm produce such as rice and corn are excluded from tariff cuts indefinitely, but other segments in the agriculture sector are subject to tariff reduction for over 20 years. “Agriculture can only be affected by RCEP positively,” he said emphasizing that a big segment in food processing such as cacao and coffee can benefit from RCEP through innovations with the help of the Department of Science and Technology to local food processors. The Philippines was able to improve its tariff concessions from China, Japan, and Korea on key agri products such as preserved pineapple, coconut juices, fish fillet, coffee, canned salmon, dried/salted tilapia, papaya, durian, soya bean, chocolate, fruit juices, leather gloves, footwear, printed paper, sound signaling equipment, ignition wiring sets, bicycles, cement, fuel, fertilizers, plywood, among others. In particular, RCEP grants zero duty on garments and zero tariff in 15 years for alcoholic beverages such as beer, gin, and rum. Enhanced market access on services for Filipinos await in Australia, China, Japan, Korea, and New Zealand. RCEP also provides stability in the telecommunications region and further enhances transparency and interconnection in the region. There is also an expected inflow of foreign investments that will benefit the construction industry, thus positively affecting the transportation and manufacturing sectors.