Delayed RCEP participation to divert investments

MANILA, Philippines — The country’s delayed participation in the Regional Comprehensive Economic Partnership (RCEP) will lead to the diversion of investments to other participating countries, Trade Secretary Alfredo Pascual said.

“Considering that a number of trading partners and competitors are also participating in this agreement, delays in the Philippine participation will result in the diversion of trade and investments towards  our neighboring countries, which are already within the regional bloc, at the expense of our local industry and people,” Pascual said in a Senate hearing yesterday.

“As other countries in the region enjoy preferential treatment arising from enhanced market access, wider sourcing of raw materials and a strengthened and transparent trading system, the existing linkages of the Philippines to the global value chain may deteriorate as investors and businesses look to other countries for better economic environment and opportunities,” he said.

Pascual said the country’s exports, including electronic and agricultural products, could become less competitive if the country does not join the RCEP as intermediate goods used as inputs for further production and manufacturing become more expensive in comparison to our competitors.

The RCEP is a multilateral trade agreement between and among ASEAN countries, including the Philippines, and China, Japan, South Korea, Australia and New Zealand. It provides for an open, inclusive and rules-based trading system to promote deeper economic integration in the region.

The trade deal is expected to boost Philippine exports through enhanced market access in the region. It would provide cheaper goods for production and manufacturing, as well as ensure transparent rules and clear mechanisms for resolving trade issues and concerns, and also allow micro, small and medium enterprises to participate in the global value chain.

Pascual has repeatedly said that foreign investors, as well as economic ministers, are always asking how soon the country will ratify the trade agreement.

“As demonstrated by the high anticipation among foreign investors for the Philippines to be part of this agreement, and alongside the recent economic reforms undertaken by the country such as amendments to the Public Service Act, Foreign Investments Act and the Retail Trade Liberalization Act, we are  sending a signal of our readiness and seriousness to accelerate the country’s economic recovery and growth in the overall standing in the global trading environment,”Pascual said at the hearing yesterday.

“Thus, while we recognize the concerns raised by some sectors, it is important to understand the bigger picture and view RCEP in terms of the opportunities it can bring us, overall. We are situated in a dynamic region of the world and we cannot afford to remain out of its further economic integration,” he said.

Trade Assistant Secretary for Industry Development and Trade Policy Allan Gepty said earlier that the country’s delayed participation in the RCEP could have a negative impact on the country’s image to investors.

“Investors and stakeholders are waiting for the Philippines’ participation in this RCEP agreement. We don’t want the country to have a negative image because of our delayed participation, especially that we have already introduced major economic reforms in the country,” Gepty said in a mix of English and Filipino.

“In terms of signal, there is some degree of inconsistency. Internally, you have passed all these major economic reforms, amendment of public service act, amendment of foreign investments Act, the Retail Trade Liberalization Act amendment. Basically you are telling the whole world that the country is open for trade and investment. And then here you are when it comes to the participation in this very important agreement, there is delay. Of course we want to be really consistent,”he added.

Pascual emphasized earlier that the full implementation RCEP would complement the economic recovery efforts of the government, which will ensure the continuity of the upward economic growth trajectory.

“The full implementation and utilization of the agreement will fuel the recovery and sustained growth of the region,”Pascual said.

He said it would also complement the economic recovery efforts implemented by the Philippine government, thereby ensuring the continuity of the upward economic growth trajectory.