THE Financial Executives Institute of the Philippines (FINEX), Makati Business Club (MBC), Management Association of the Philippines (MAP) and the Philippine Council for Foreign Relations (PCFR) urged the Senate to ratify the country’s membership in the Regional Comprehensive Economic Partnership (RCEP) in a joint statement on Friday.
“Like any free trade agreement, RCEP provides wide economic opportunities for our country, along with certain threats to uncompetitive industries, and individual producers and their workers. And like in the other free trade agreements the country has joined (of which our country has the least, compared to Indonesia, Malaysia, Thailand and Vietnam), the overall economic gains in terms of net job creation, economic growth and price stabilization will well outweigh the costs,” the industry groups said.
The RCEP currently has 15 members, consisting of ten ASEAN member economies along with Australia, New Zealand, China, Japan and South Korea. It is considered to be the largest trade bloc in the world, representing 30% of global gross domestic product.
The trade agreement took effect on Jan. 1, although the Senate was unable to ratify the RCEP before 2021 ended.
“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,” they said in the joint statement.
They said exclusion from the RCEP would be “immensely costly to our economy and our people.
“We can anticipate a significant decline in our exports to RCEP countries, which now account for nearly two-thirds (64%) 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.
“For the same reason, our membership could attract more foreign investments into the country from firms wishing to produce and sell to the large RCEP market,” they said.
The groups noted tariff elimination will take up to 20 years, giving enough time to enhance production and improve competitiveness.
“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. — L.M.J.C. Jocson