PH Participation in RCEP Gets Renewed Push, Other Stakeholders Show Concern

The Department of Trade and Industry (DTI), along with other key stakeholders, renewed the plea for the ratification of the Regional Economic Cooperation Partnership (RCEP), which is seen to be an essential driver in boosting the country’s economic recovery. The RCEP is a free trade deal including Australia, China, Japan, South Korea, New Zealand, and the member-states of the Association of Southeast Asian Nations (ASEAN).

Under the free trade agreement, 90 percent of tariffs are aimed to be lifted between signatories within 10 years of taking effect. However, lawmakers in the country have shelved their decision on the matter putting the participation of the Philippines in the RCEP up in the air. This puts the responsibility upon the coming set of legislators — after the May elections — who will still have to be briefed on the RCEP.

“The RCEP region represents 50 percent of the global manufacturing output, 50 percent of global automotive output, 70 percent of electronic products, 26 percent of GVC (global value chain) trade volume, 35 percent contribution to global export of electronics and machineries, 60 percent of GVC for electrical, machinery, petroleum, chemicals, textile, apparel, metal and transport equipment, and most interestingly, the main GVC hubs of Japan, China, and Korea,” explained Trade Assistant Secretary Allan Gepty, who affirmed the significance of the Philippines’ participation to ramp up trade and investments post-pandemic.

The membership of the Philippines is crucial as over 60% of the country’s foreign direct investments (FDI) are derived from countries that are included in the free trade deal. “And again that tells us that we cannot afford not to be part of this RCEP region, because the bulk of our FDIs are coming from these trading partners,” added Gepty. The Philippines has, likewise, climbed higher as a destination for foreign direct investments (FDI) in the Southeast Asian region, and participation in RCEP could maintain the country’s ranking.

“This is what businessmen are longing for,” elaborated President of the Federation of Filipino Chinese Chambers of Commerce and Industry Inc. Henry Lim Bon Liong, who noted that the ratification of the RCEP could enable the country to reach its 7.5 percent growth target for the year.

On the other hand, certain groups have expressed concern that the country’s participation could have an adverse effect on the economy, particularly within the agricultural sector. The free trade deal would allow the entry of agricultural products without tariffs which, in turn, will compete with local products. This is what prompted India to opt out of the RCEP in 2019 after it flagged textiles, dairy, and agriculture as vulnerable industries.

It has also been forwarded that China serves to benefit the most from the free trade deal, according to Amity Foundation senior research consultant Theresa Chong Cariño. “What’s important is that with RCEP, ASEAN as a whole will uphold rules-based architecture and work for cooperation, peace, stability, and prosperity. You know no matter what kind of FTAs will be implemented, the environment of peace and stability is essential to their success,” explained Cariño.

Source: ABS CBN