MANILA, Philippines — The Department of Trade and Industry (DTI) is optimistic micro, small and medium enterprises (MSMEs) will benefit from the Regional Comprehensive Economic Partnership (RCEP) through greater participation in global value chains (GVC).
Trade Secretary Ramon Lopez said the RCEP, once implemented, is not just expected to help in the country’s recovery efforts, but also enable MSMEs to cater to international markets and deepen their participation into GVCs.
“One big advantage of the RCEP agreement is the wider cumulation area for raw materials. This means our MSMEs can source inputs from the 15 RCEP parties, process the products here in the country, and export the same to the region at a preferential arrangement. So, a Philippine manufacturer can source raw materials from China and export the finished product to Japan, South Korea, Australia or New Zealand,” he said.
RCEP is considered the largest free trade deal accounting for 29 percent ($25.8 trillion) of global gross domestic product, 30 percent (2.3 billion) of the world’s population, and 25 percent ($12.7 trillion) of global trade in goods and services.
The deal was signed in November last year by members of the Association of Southeast Asian Nations (ASEAN) such as the Philippines, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam, as well as trade partners Australia, China, Japan, South Korea and New Zealand.
Lopez said RCEP’s simplified trade rules would facilitate trade transactions and reduce the administrative cost for exporters.
He added this would lead to more production and manufacturing activities in the country and in turn, create more jobs.
“The RCEP agreement is a testament on the need to further open the markets for trade and investments, and improve rules and disciplines in addressing the evolving business environment such as e-commerce, intellectual property, and competition policies,” Trade assistant secretary Allan Gepty, who serves as the country’s RCEP lead negotiator, said.
At present, the RCEP region already serves as the main GVC hubs of three emerging economies - Japan, South Korea and China - contributing 50 percent of the global manufacturing output.
“If you further strengthen the region with rules and disciplines then you create an environment of trust, and this will encourage more investments and deeper economic integration. In addition, the creation of the RCEP free trade area strengthens economic integration in the region, and balances global power and influence especially with the growing trend in protectionism,” Gepty said.
With the RCEP region accounting for around 50 percent of Philippine exports and 68 percent of Philippine import sources, Lopez said the country cannot afford not to join.
RCEP is targeted to be implemented by January next year.
It can only take effect 60 days after being ratified by at least six ASEAN countries and three non-ASEAN members.
Those that have deposited their instruments for the ratification of the RCEP to the ASEAN Secretariat are Singapore, China and Japan.
Gepty said earlier the Philippines aims to ratify the RCEP within the year.