DEPARTMENT of Trade and Industry (DTI) Secretary Ramon M. Lopez on Monday warned delays in the Senate’s concurrence of the Regional Comprehensive Economic Partnership (RCEP) will have a negative impact on the economy.
“It is not just a simple trade agreement that provides enhanced market access and stable business environment. It is a strategic tool to sustain the region’s economic advantage. RCEP is expected to promote economic efficiency of member states, linking their strengths in manufacturing, technology, agriculture, and natural resources, and it will reinforce the global value chain network, which the Philippines is very much a part of,” Mr. Lopez said in a statement.
The RCEP was ratified by President Rodrigo R. Duterte on Sept. 2, 2021, and is now pending in the Senate for its concurrence. Since Jan. 1, the RCEP is now in force in 11 countries: Brunei, Cambodia, Lao People’s Democratic Republic (PDR), Singapore, Thailand, Vietnam, Australia, China, Japan, South Korea, and New Zealand.
The Senate only has until Feb. 4 to tackle the RCEP, before lawmakers go on a break for the election campaign.
Mr. Lopez said the delay in Senate’s action would hurt economic activity and job creation as trade and investments would be diverted to other countries in the region.
“As other countries in the region enjoy the preferential treatment arising from enhanced market access, wider sourcing of raw materials and strengthened and transparent trading systems, the existing linkages of the Philippines to the global value chain may deteriorate as investors and businesses look to other countries for better economic environment and opportunities. Even our exports could become less competitive, including electronics, which account for 62% of our exports, and even agricultural product exports,” the Trade chief said.
Meanwhile, the Asian Development Bank (ADB) said the Philippines is one of several countries seen to offer greater market access for services trade under the RCEP.
The multilateral bank said the trade deal’s chapter on trade in services, for the most part, replicates those in recent ASEAN + 1 free trade deals. But RCEP covers a greater share of overall trade in services among all parties, it added.
New market access opportunities have been identified in a variety of sectors, including educational, health, computer-related, and other business services, in such countries as the People’s Republic of China, Indonesia, the Philippines, and Thailand.
But it also said that a “deep comparative analysis” will be needed for more transparency.
Trade in services in the RCEP covers financial services, telecommunications, and professional services.
Compared with ASEAN + 1 free trade agreements, there are higher foreign equity caps under RCEP. It also covers additional financial services.
When it comes to telecommunications, RCEP covers mobile services, including number portability, or the ability of a mobile customer to retain the same number even when they switch providers. RCEP also rolls out new market opportunities in this sector from commitments made by Indonesia, Lao PDR, Malaysia and Thailand.
Meanwhile, the Philippines is one of several countries that made greater market access commitments in professional services, along with Cambodia, China, Indonesia, South Korea, Lao PDR, and Malaysia.
“These commitments would benefit firms supplying legal, architectural, planning, engineering, veterinary, accounting, auditing, and bookkeeping services,” the ADB said.
Meanwhile, a farmers’ group said the country will not lose its export markets if the Senate fails to ratify the trade deal because it already participates in several ASEAN + 1 trade pacts that continue to provide similar tariff concessions to RCEP.
The Federation of Free Farmers in a statement on Monday said safeguards need to be put in place for vulnerable sectors before finalizing the deal.
“Joining RCEP now is ill-advised since many sectors, particularly in agriculture, are unprepared for open competition,” the group said. — J.P.Ibañez