Group of exporters calls for ratification of RCEP
The Philippine Exporters Confederation Inc. (Philexport) calls for immediate ratification of the Regional Comprehensive Economic Partnership (RCEP), noting that participation in the mega trade deal will accelerate the recovery of the country’s economy.
In a position letter to the Senate, Philexport said participation in RCEP had more advantages than disadvantages, although it called for “safety nets” to cushion the negative effects of the deal on disadvantaged sectors. .
Philexport President Sergio Ortiz-Luis Jr. said of the organization’s more than 2,000 active members, nearly 1,000 export to economies that are now part of RCEP.
“Opening and expanding market access for member economies will create positive spillover effects, which can translate into much needed jobs and livelihoods, especially now that we are trying to recover and to thrive again in this pandemic, ”Luis said in the position letter. sent to Senator Aquilino Pimentel 3rd, Chairman of the Senate Committee on Foreign Relations.
RCEP is a free trade agreement between the 10 members of the Association of Southeast Asian Nations (ASEAN), China, Japan, Australia, New Zealand and South Korea .
To date, six ASEAN Member States (AMS) and five ASEAN Free Trade Partners (AFP) have deposited their respective instruments of ratification.
The deal is expected to come into effect in January.
The Senate has yet to approve ratification of the trade deal, a precondition for the country to join the deal.
Luis said the unique and specific provisions of RCEP can strengthen the interests of the Philippines.
On the one hand, the chapter on trade facilitation provides for more definitive and predictable commitments from signatories, while allowing changes in the opening and clearance of goods, he said.
In addition, exporters will find it easier to comply with preferential tariff treatment with the consolidation of rules of origin in ASEAN.
The economic impacts of liberalizing the service sector and improving trade facilitation in RCEP are much greater than the tariff reduction offered in other free trade agreements (FTAs), he said. added.
Luis said several provisions of the RCEP, such as those on e-commerce, government procurement and competition, are not found in other FTAs.
He said, however, that while there are sectoral “winners” there may also be sectoral “losers”, especially during the early stages of RCEP implementation.
Luis, citing a study released by the United Nations Conference on Trade and Development (UNCTAD), said the Philippines was among the countries that could see their exports drop due to RCEP.
The largest commercial block
When it takes effect next year, the RCEP will create the world’s largest trading bloc in terms of economic size and could further increase intraregional exports by $ 42 billion, according to the UN study.
The new FTA, covering a third of the world economy, will eliminate 90% of tariffs between 15 countries in East Asia and the Pacific.
However, countries like the Philippines, Vietnam, Cambodia and Indonesia could see their exports drop due to tariff concessions from RCEP, according to the study. This is due to the negative trade diversion effects, as some exports from these economies are expected to be diverted to other RCEP members due to differences in the magnitude of tariff concessions.
The UN report noted, however, that the overall negative effects for some of the RCEP members do not imply that they would have been better off staying outside the RCEP deal.
“Even without taking into account the other benefits of the RCEP agreement in addition to tariff concessions, the trade creation effects associated with participation in RCEP mitigate the negative effects of trade diversion,” the report said.
Luis said that for sectors seen as disadvantaged and less competitive, “we urge the Senate to consider enacting separate tailored legislation on certain” safety nets “to somehow cushion the negative impact. of the trade agreement on these sectors “.
He also called on the government to facilitate solutions to issues such as the availability of raw materials, climate change, the high cost of logistics, especially transportation, and the high cost and unstable supply of electricity. and Internet connectivity.
“These have been major constraints in maximizing the benefits of RCEP and, in general, of the growth of MSMEs (micro, small and medium enterprises) and exports. If these issues are not resolved, the fear of some sectors on the “level playing field” where we could experience trade deficits with our RCEP member economies, “he said.