Delay in RCEP participation costly to PH, DTI chief warns

• Delay in RCEP participation costly to PH, DTI chief warns

• Delay in Philippine participation to the Regional Comprehensive Economic Partnership pact may cast doubts about the openness of the economy, Trade Secretary Ramon Lopez says

• The country can’t afford to delay or stay away from the RCEP when its ASEAN neighbors are already reaping the fruit of their participation

The Philippines may miss the boat when it comes to trade and investments if it delays participation in the Regional Comprehensive Economic Partnership (RCEP) pact, the Department of Trade and Industry (DTI) reiterated.

“We cannot afford to delay or not participate in this FTA [free trade agreement] deal when our ASEAN [Association of Southeast Asian Nations] neighbors are already reaping the advantages of the agreement with partners. And they are already benefitting from it,” Trade Secretary Ramon Lopez said.

Lopez was speaking at the recent “International Trade Forum: The Importance of Philippine Participation in the RCEP” hosted by DTI.

Lopez said Singapore’s trade minister announced recently that local businesses are already exploring opportunities brought about by RCEP, through additional preferential market access they gained from China and Japan for products such as mineral fuels, plastics, chemical products, food preparations and beverages, among others.

“Delayed participation in RCEP may send concerns to the business sector of the openness of the Philippine economy, and may divert to other economies the trade, investment, and other economic opportunities that the RCEP may bring,” Lopez reiterated.

Signed in November 2020, RCEP aims to “further liberalize trade in goods and services while enhancing competition policy, intellectual property rights, investment, technical cooperation, government procurement, and others.”

The RCEP agreement came into force on January 1, 2022 for Brunei Darussalam, Cambodia, Lao PDR, Singapore, Thailand, Vietnam, Australia, China, Japan, and New Zealand; on February 1 for South Korea; and on March 18 for Malaysia.

In the Philippines, the agreement was ratified by President Rodrigo Duterte on September 2, 2021, but it is still under Senate consideration. Several sectors, particularly in agriculture, have voiced opposition to the country’s swift participation in the agreement due to various concerns.

Allan Gepty, DTI assistant secretary and the Philippines’ RCEP chief negotiator, said the Philippines cannot afford to isolate itself from the regional FTA, as it would be inconsistent with the country’s trade policy direction.

This, Gepty said, “as the Philippines has just introduced various economic reforms to open and liberalize our markets, and to put more stability in our investments, such as amendments in Foreign Investments Act, Public Service Act, and Retail Liberalization Act, among others.”

Agriculture Assistant Secretary Noel Padre made a presentation on potential benefits of RCEP to the agriculture sector through improved tariff concessions the Philippines secured from China, Japan, and Korea for some agri-fishery products, such as canned pineapple, papaya, and chocolate.

Padre explained that local manufacturers and exporters of certain products, such as canned tuna, will gain from the liberalized rules of origin under RCEP.

Dr. Cielito Habito, professor of economics at the Ateneo de Manila University and chair of Brain Trust Inc., said the Senate’s hesitancy in ratifying the RCEP agreement sends negative signals to the international community and reinforces the country’s historical reputation for tentative policy setting.

This could only lead more foreign investors to bypass the Philippines on trade and investment in favor of more decisive ASEAN countries. Habito added the delay in ratification based on illusory threats is potentially costly to industries.

DTI Undersecretary Ceferino Rodolfo, meanwhile, cited an article by the Japan External Trade Organization (JETRO) dated March 29, 2022 regarding Thailand’s RCEP utilization leading to about 4 billion yen (about P1.7 billion) of exports in two months after the agreement came into effect.

According to the article, RCEP is being used more and more in Thailand’s exports to Japan and China given the enhanced market access and liberal rules of origin under the agreement.

Rodolfo noted that stakeholders in Thailand benefiting from RCEP are competing with Filipino exporters in the Japanese and Chinese markets. Rodolfo stressed Filipino exporters will be at a disadvantage if the Philippines is not part of RCEP.