RCEP tilts the balance

The Regional Comprehensive Economic Partnership (RCEP), which should take effect as early as May this year, is expected to give the last push for interested foreign investors to make that decision to finally make it here in the Philippines.

The country’s participation in RCEP will be effective 60 days after the Philippine government has deposited the RCEP ratification to the Secretary General of ASEAN. In the meantime, an Executive Order on the country’s tariff commitments will be prepared for signature by President Ferdinand R. Marcos, Jr.

This will be the basis for the Bureau of Customs to issue a memorandum circular on the new tariffs on products traded within the RCEP region.

Last week, the Senate gave its concurrence in the ratification of the RCEP agreement, allowing the Philippines to finally join the 14 other countries that have begun to implement the mega trade deal.

The vast RCEP market is composed of the 10 ASEAN countries, plus the five major markets such as China, Japan, South Korea, Australia, and New Zealand, that with unified trading rules certainly presents a formidable vantage position for any global investor.

The immediate impact is wider sources of raw materials and vast markets from 14 countries where Philippine manufacturers can export at preferential tariff rate.

But Trade and Industry Secretary Alfredo E. Pascual stressed that the immediate impact of RCEP will largely lie in the hands of the private sector to take advantage of the enabling environment created under the auspices of RCEP.

“Depends how fast our business people will react. The real experience is on how well our own business people will take advantage of the benefits and changes that will come about from RCEP,” Pascual challenges the private sector. If the business community takes advantage of the benefits the mega trade agreement will provide, incremental growth in the domestic economy over time can be expected. One study showed that the RCEP impact is estimated at 1.93 percent increase in real domestic product by 2031.

With the RCEP ratification, investors who have long been eyeing the Philippines will now be implementing their intentions in setting up their manufacturing operations in the country.

In fact, the Board of Investments has already raised the investments target for the year by 50 percent to P1.5 trillion from only P1 trillion before the RCEP ratification.

In the meantime, there are measures as promised in the ratification that the government must implement to ensure local stakeholders, particularly the agriculture sector, are amply protected.

This is because although agriculture products are not included in the reduced tariff regime in RCEP, it is likely that without the strict implementation of safety nets, the country’s ailing agriculture would end up to be the loser.

First and foremost, there is the need to curb and prevent smuggling of agricultural products and to arm our farmers with the right tools to become competitive.

Without these measures, any free trade deal will just be for naught.