As the Regional Comprehensive Economic Partnership (RCEP) Agreement is pending Senate concurrence, the Subic-Clark Alliance for Development (SCAD), in collaboration with the Department of Trade and Industry (DTI), has highlighted anew its strong call for the agreement’s immediate approval to usher in bigger economic benefits and allow multiple sectors of our economy, including small businesses, to compete “freely and fairly” in the global value chain.
During the webinar hosted by SCAD last 16 March 2022, DTI – Industry Development and Trade Policy Group Assistant Secretary Allan Gepty emphasized the advantages of joining RCEP and pushed for the prioritization of the landmark agreement once the Senate resumes session on May 23.
“RCEP is the first free trade agreement that brings together the economies of Japan, China, and Korea—the big emerging countries right now, and incidentally, the RCEP [participating countries] are also their main Global Value Chain Hub. By its sheer size alone and the extent of economic activities happening here in the [RCEP] region, the Philippines cannot afford not to be part of this very important agreement,” he said.
The RCEP countries accounts to 29 percent ($25.8 trillion) of the world’s economic output, 29 percent of world’s trade ($10.1 trillion), 33 percent of global inward Foreign Direct Investment (FDI), 47 percent of global outward FDI, and 29 percent (2.3 billion) of the world’s population. The agreement also represents 52% of the Philippines’ exports, 63% of the country’s imports, and 58% of FDI source in 2020.
Asec. Gepty underscored the key benefits of RCEP for the Philippines, namely: (1) cheaper costs with 98.1 percent tariff liberalization; (2) convenience for businesses in trading such as with simplified and unified procedures; (3) competitiveness for Philippine industries in market access, e-commerce, intellectual property rights, and completion policies; and (4) complementation of existing government programs such as the international investments promotion campaign of the DTI, “Make it Happen in the Philippines”.
He also noted that RCEP addressed concerns of the local agriculture sector by excluding sensitive agricultural products such as live swine, meat, and rice from tariff liberalization under the agreement. Cement, flat-rolled products of iron or non-alloy steel, among others, are also exempted from zero tariffs upon series of consultations with local industry players.
The RCEP, the world’s largest free trade area involving Australia, China, Japan, South Korea, New Zealand, and 10 members of the Association of Southeast Asian Nations (ASEAN), namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, was signed in November 2020, and has been in force in 11 signatory states since January 1, excluding the Philippines. The agreement is still under Philippine Senate deliberations to secure concurrence.