More groups press Senate to ratify RCEP

MANILA, Philippines — Five business organizations yesterday made an urgent call to the Senate to approve the Philippines’ participation in the Regional Comprehensive Economic Partnership (RCEP) mega-trade deal, citing economic opportunities it would open for the country.

“We urge the Senate to ratify Philippine membership in the RCEP, the largest economic bloc in the world’s history,” the Financial Executives Institute of the Philippines, Makati Business Club, Management Association of the Philippines and Philippine Council for Foreign Relations said in a joint statement yesterday.

RCEP, which will account for 30 percent of the world’s population and global gross domestic product, entered into force last Jan. 1 for Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam,  Australia, China, Japan and New Zealand.

It will start for South Korea on Feb. 1, while Southeast Asian countries Indonesia, Malaysia and Myanmar are reportedly poised to ratify the agreement soon.

The groups said the RCEP is expected to provide a huge market for Filipino businesses.

“Like any free trade agreement, RCEP provides wide economic opportunities for our country, along with certain threats to uncompetitive industries, and individual producers and their workers. And like in the other free trade agreements the country has joined (of which our country has the least, compared to Indonesia, Malaysia, Thailand and Vietnam), the overall economic gains in terms of net  job creation, economic growth and price stabilization will well outweigh the costs,” the groups said.

RCEP would help expand market access of micro, small and medium enterprises through more liberal rules of origin on trade, as well as provide alternative sources for inputs,  and lower the costs of doing business through improved trade facilitation.

The groups warned the country’s non-participation would be costly both to the economy and the people, citing its impact on exports and investments.

In particular, the Philippines’ exports to RCEP countries, which now account for nearly two-thirds of total exports, are expected to decline as trade with the country will be diverted to fellow members.

“It would also make us even more unattractive to job-creating investments than we already are, as these would best locate in RCEP member countries to take advantage of free access to its vast market,” the groups said.

For those with concerns on the RCEP, the groups said they may find comfort to know that little would immediately change in the Philippines’ trade relations since the deal only reaffirms existing trade concessions the country has with all RCEP members through the Association of Southeast Asian Nations (ASEAN) Trade in Goods Agreement and the ASEAN Plus free trade agreements.

“Tariff elimination will take up to 20 years, giving ample time for us to shape up and achieve the competitiveness that will allow our producers to take full advantage of the vast market opportunities RCEP offers,”  the groups said.

The groups said the government has the responsibility to assist those to be affected, and enable them to become competitive or adjust to alternative products or livelihood.

RCEP also excludes sensitive farm products including swine and poultry meat, potatoes, onions, garlic, cabbages, sugar, carrots and rice, along with manufactured products like cement and certain steel products from tariff liberalization.

With the country’s membership in RCEP seen as an important challenge to the government to step up efforts to support Filipino producers, especially those in agriculture, the groups also pushed for a higher budget for the sector.

“We, therefore, urge the government to provide a substantial increase in the agriculture budget commensurate to that provided in our comparable ASEAN neighbors, as we urge our Senators to ratify the RCEP Agreement without delay,” the groups said.

In a separate statement, the Australian-New Zealand Chamber of Commerce Philippines (ANZCham) also strongly urged the Senate to concur with the ratification of RCEP as such would support recovery from the pandemic.

“As an organization representing businesses with strong ties to countries that have already ratified the RCEP (Australia and New Zealand), we understand that the Philippines, especially its export industry severely hit by the pandemic, stands to miss out if this groundbreaking free trade agreement is not ratified. We urge the Senate to prioritize concurrence before the adjournment of the session in February,” ANZCham president Daniel Alexander said.