By Revin Mikhael D. Ochave, Reporter
THE PHILIPPINES is hoping to attract more foreign investments and boost its exports once the Regional Comprehensive Economic Partnership (RCEP) trade deal takes effect as early as May, according to Trade department officials.
At the same time, top business groups cheered the Senate’s approval of the Philippines’ participation in the world’s largest trade deal which includes Australia, China, Japan, South Korea, New Zealand and members of the Association of Southeast Asian Nations (ASEAN).
“Next step is that we will have to deposit the instrument of ratification to the Secretary General of ASEAN. Sixty days after receipt of the instrument of ratification, the RCEP agreement will take effect in the Philippines,” Trade Assistant Secretary and RCEP Lead Negotiator Allan B. Gepty said at a virtual briefing on Wednesday.
Mr. Gepty said an executive order (EO) containing the schedule of the Philippines’ tariff commitments will be drafted, and submitted to President Ferdinand R. Marcos, Jr. for his signature. This EO will be used by the Bureau of Customs as the basis to implement the tariffs under the trade deal.
“We have to make sure that all of those are finished so that after the 60 days from receipt of the instrument of ratification, we are ready to fully implement the RCEP agreement,” he added.
On Tuesday evening, the Senate voted to concur with the ratification of the mega-trade deal, over two years since it was signed in November 2020.
The RCEP was ratified by then-President Rodrigo R. Duterte in September 2021, but the previous Senate did not act on it due to concerns over the deal’s adverse impact on the agriculture sector.
“With the country’s participation in RCEP, the Philippines has now further strengthened its position as an ideal investment hub in the region as we expand market access, facilitate trade, and align our rules and procedures with participating economies,” National Economic and Development Authority Secretary Arsenio M. Balisacan said in a statement.
Trade Secretary Alfredo E. Pascual told reporters that he expects Philippine-based companies to be ready to avail of the export opportunities brought by RCEP.
“But more than that, investors that are eyeing the Philippines as a production hub will now be really implementing their intentions and their plans to set up manufacturing hubs in the Philippines and making their investments in our country,” Mr. Pascual said.
One immediate impact of the RCEP, Mr. Gepty said, is that local manufacturers will now be able to secure their raw materials and intermediate goods used for production from other participating countries at a more favorable tariff rate.
“Then in their manufacturing activities here in the country, they can now export that at a preferential rate or treatment in these RCEP parties,” Mr. Gepty added.
Former Trade Secretary Ramon M. Lopez, who was part of the RCEP’s negotiations during the Duterte administration, told BusinessWorld that the free trade agreement (FTA) will help the country become “more globally competitive.”
“It is unimaginable to think if we are not part of RCEP or if we delay further its ratification as it will give undue advantage to RCEP participating countries which have ratified earlier as they gain better market access to their exports than those coming from the Philippines, and this will even erode the market shares of our exportables in the RCEP countries,” Mr. Lopez said.
GOOD FOR CONSUMERS
Ebb Hinchliffe, American Chamber of Commerce of the Philippines, Inc. executive director, said that the Philippines’ participation in RCEP will increase competition, which will benefit consumers through higher quality products and better prices.
“This is another positive move for the Philippines. While this doesn’t directly involve the US, it will benefit US companies exporting from the Philippines to Asia,” he told BusinessWorld via Viber message.
In a separate statement, the Joint Foreign Chambers said RCEP would expand the market access of Philippine exports.
“It (RCEP) reinforces the decision of many of our members to invest in the Philippines and will attract more investment from our home countries,” it said.
The European Chamber of Commerce of the Philippines said in a separate statement that the RCEP’s ratification “sends a positive message that the Philippines upholds and values a rules-based trading system.”
“When implemented, it will enhance competition policy, intellectual property rights, investment, technical cooperation, public procurement, among others,” the ECCP said.
Chris Nelson, British Chamber of Commerce Philippines executive director, said via mobile phone that he expects to see an increase in trade and investment after the RCEP takes effect in the country.
“We want to bring companies to the Philippines, not just because the country is an important market in its own right, but as a gateway to Southeast Asia. The ratification of RCEP is a further support to that and I strongly believe that it would be a great help to the economy,” Mr. Nelson said.
Benedicta Du-Baladad, Management Association of the Philippines president, said in a separate statement that the FTA will also help the country’s micro, small, and medium enterprises (MSMEs) to expand their market access and secure cheaper sources of raw materials.
“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 (MNCs) to seek alternative locations for their manufacturing sites,” she said.
George T. Barcelon, Philippine Chamber of Commerce and Industry president, said RCEP will translate to more exports and create more jobs.
“This is an opportunity for us, for some of these countries, to invest in us for their manufacturing facilities… This will encourage more people to look at the Philippines and set up their manufacturing here. It would be a win-win for us,” Mr. Barcelon said in a Viber interview.
MORE TRADE DEALS?
Meanwhile, Trade Justice Pilipinas said the Philippines’ participation in the mega-trade deal may push the Marcos government to pursue more liberal economic partnerships that could further weaken the local agriculture sector and other domestic industries.
“We fear that RCEP will pave the way for a more aggressive push by the Marcos government for more ambitious and comprehensive trade and investment deals,” the coalition said in a statement on Wednesday.
The coalition noted that Manila is already pushing for an FTA with the United States, and European Union as well as the Indo Pacific Economic Framework (IPEF).
“For the agriculture sector, liberalization has not delivered the benefits and instead has caused more harm than good… The government’s solution has so far been business-as-usual, including further liberalization by entering into trade agreements such as RCEP,” Trade Justice Pilipinas said.
The Pambansang Lakas ng Kilusang Mamalakaya ng Pilipinas (PAMALAKAYA) also warned the Philippines’ participation in RCEP may lead to a flood of cheap agricultural imports that will hurt farmers and fisherfolk.
“This will threaten our local industry that has been neglected of significant government support, and which will be outcompeted by imports,” PAMALAKAYA National Chairperson Fernando L. Hicap said in a statement.
Mr. Hicap also warned that Chinese investors may intensify conversion projects in fishing grounds and coastal areas as a result of RCEP.
The Federation of Free Farmers (FFF) expressed disappointment with the Senate’s approval of the RCEP, despite warnings that many sectors, including agriculture, are not prepared for the challenges brought by the mega-trade deal.
“But if (RCEP) does not (work out), we will hold the Senators accountable for their decision. They cannot just pass on the blame to the Executive Department, which they themselves acknowledged has had a long track record of broken pledges and poorly implemented programs,” Raul Q. Montemayor, chairman of the Federation of Free Farmers, said in a statement.
The Meat Importers and Trade Association (MITA), on the other hand, welcomed the Philippines’ participation in RCEP.
“The Philippines should quickly move towards integration with our regional economies,” said MITA President Jesus C. Cham to BusinessWorld in a Viber message.
Department of Agriculture (DA) Assistant Secretary for Consumer Affairs and Spokesperson Kristine Y. Evangelista said the government will strengthen its programs to boost the capacity of farmers and fisherfolks. — with inputs from K.A.T.Atienza and S.Talavera