Pandemic to delay trade deal talks

MANILA, Philippines — The COVID-19 pandemic may delay trade deal talks, including the Regional Comprehensive Economic Partnership which the Philippines is part of, Moody’s Investors Service said.

“As countries focus on battling the coronavirus, the trade negotiations will become even more challenging,” Moody’s said in its Global Trade Monitor research report.

Moody’s said among the trade negotiations likely to be delayed is the RCEP.

“RCEP aims to create the world’s largest free trade bloc, but the coronavirus shock, in addition to diverging interests, highlights the difficulties in completing the agreement by the end of 2020,” it said.

Parties to the RCEP are the Association of Southeast Asian Nations members Philippines, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam, as well as trade partners Australia, China, Japan, Korea and New Zealand.

India, which was initially part of the negotiations for RCEP, stepped out of the planned trade deal amid concerns the entry of goods from other countries may hurt its local industries.

Moody’s said India’s absence during the RCEP Inter-Sessional Ministerial Meeting held in June has stalled discussions as Japan has reiterated it would not sign the deal without India.

RCEP participating countries are aiming to sign the trade deal in November this year.

Apart from the RCEP, the Philippines is negotiating trade deals with South Korea and the EU.

Moody’s said other trade negotiations which may move slowly given the COVID-19 crisis include Phase 2 of the US-China agreement, as well as deals between the US and EU, UK and EU following UK’s exit from the trade bloc, US and India, and the African Continental Free Trade Area.

Apart from affecting trade talks, the COVID-19 outbreak is also seen to accelerate the countries’ move to have more localized supply chains.

“Government initiatives will support shifts toward domestic production of critical goods such as pharmaceuticals and food. The pandemic could steer production closer to end consumers, making it more resilient to sudden shocks in global supply chains,” Moody’s said.

In the Philippines, the Department of Trade and Industry (DTI) has requested manufacturing firms to repurpose a part of their facilities to produce COVID-19 critical products such as medical grade face masks and coveralls.

Moody’s said governments are also likely to focus on digital tax initiatives as the pandemic drives an increase in data flows and trade in digital services.