RCEP hearing tackles safety nets vis-à-vis gains for PHL ahead of concurrence proceedings

The Senate Committee on Foreign Relations (CFR) held the 2nd Public Hearing on RCEP last 5 November 2021. The hearing was presided by Sen. Koko Pimentel, Chairperson of the CFR and attended by representatives from the government, academe, private sectors, and civil society organizations. DTI was represented by DTI Assistant Secretary Allan Gepty, RCEP Lead Negotiator.

DTI explained the preferential trading arrangements and safety nets ensured for the Philippines in the RCEP Agreement. This is following the questions posed by trade and health advocacy groups on the merits of the country acceding to the Agreement.

DTI highlighted that RCEP provides a more advantageous arrangement by bringing together the established ASEAN+1 FTAs into a single framework with one set of simplified rules.

According to Asec. Gepty: “The RCEP is the first regional trade Agreement that includes ASEAN, China, Japan, Korea, Australia, and New Zealand. Having a single set of rules for Filipinos to do business among these countries is considered a significant gain in facilitating trade. In the area of market access, this is a huge leap as businesses, including MSMEs, need only look into one Agreement for its trade requirements.”

“Integrating various FTAs into one simplify trade rules and lessen administrative costs.  By having a consolidated FTA with one set of simplified rules, more efficiency is expected,” added the PH RCEP Lead Negotiator.

The DTI, together with other lead government agencies such as the Department of Agriculture, also responded to the concerns raised by trade and health advocacy groups of the RCEP severely constraining policy space and the lack of consultations to effectively address labor issues, as well as ongoing health and economic crisis.

“While the RCEP Agreement does not have provisions on labor standards and practices, the Philippines and many of the RCEP parties remain signatories to the International Labour Organization (ILO) Conventions that set out basic principles and rights at work. Parties will continue to have recourse under these relevant agreements. Also, emerging issues in trade such as labor can be discussed by the Committee on Sustainable Growth once the RCEP agreement is implemented,” assured by Asec. Gepty.

He also added: “The preambular statement of the RCEP Agreement recognizes the right of each Party to regulate in pursuit of legitimate public welfare objectives. In line with this, the policy space of each RCEP Party to adopt and implement measures to protect public health is maintained. In fact, Article XX of GATT 1994 has been incorporated in the RCEP Agreement.”

Aside from the discussion on labor and health, Asec. Noel Padre of the Department of Agriculture also shared that the Philippines was able to secure flexibility for agricultural products and improved market access for select products from RCEP partners such as Japan and Korea.

According to Asec. Padre: “The Philippines’ additional tariff lines committed is only marginal compared to what was already made under existing ASEAN Plus One FTAs. Nonetheless, the concessions we gained show higher market access improvements from trading partners such as Korea and Japan.”

Working together with stakeholders 

The Philippine RCEP Lead Negotiator also shared that the negotiating team has always been mindful of the sensitivities of the agriculture sector.

In response to the conduct of consultations with stakeholders Asec. Gepty said: “The DTI conducted at least 19 consultations domestically and 14 regional engagements with RCEP countries. This is in addition to the public hearings conducted by the Tariff Commission since 2015.”

“We undertook consultations on RCEP as early as when negotiations started in 2013,” added Asec. Padre.

“This is the reason behind agricultural products being listed under the country’s exclusion list for all FTA Partners in RCEP for products such as rice, corn, sugar, pork, chicken, sugar, highland vegetables, coffee bean not decaffeinated, and other processed meat, among others,” Asec. Gepty elaborated. “We heeded the concerns raised by our stakeholders on the need to retain the tariffs on these products”.

Support from private sector, academe

The private sector and academe also joined the DTI in expressing support for the timely concurrence of RCEP by Senate. They also clarified the findings of studies undertaken and noted their participation in the consultation process undertaken by DTI prior to concluding the negotiation.

Atty. Anthony A. Abad, Chief Executive Officer of TradeAdvisor, recalled the long consultation process undertaken by DTI to ensure benefits for the country and supported the immediate concurrence of the Agreement.

Further to his presentation during the first public hearing on 29 October 2021, Dr. Francis Quimba shared that the findings of the study undertaken by the Philippine Institute for Development Studies (PIDS) on RCEP looked into the costs of both participation and non-participation in order to establish a balanced perspective in analyzing the gains of RCEP for the country.

“The PIDS undertook an ex-ante analysis for RCEP to look at possible scenarios and cost should the country decide to join or not join the RCEP. We looked at both cases, including possibilities and threats to provide a balanced perspective,” he said.

Dr. Caesar Cororaton also added his findings on the expected benefits of RCEP in terms of generating a positive net trade balance and inducing poverty reduction. “Post-RCEP Philippine exports will increase faster than the increase in imports. The expanded market in RCEP will generate a positive net trade balance of 128.2 billion USD by 2031.”

“It is also expected that RCEP will reduce poverty in the country. In a 10-year simulation period, the Philippines’ poverty incidence would decline by 0.3% in the first year followed by further reduction of 1.73% and 5.0% in 2025 and in 2030 respectively, relative to the baseline.”  he added.

Status of ratification of other Signatory States 

To-date, six ASEAN Member States: Brunei Darussalam, Cambodia, Lao PDR, Singapore, Thailand and Viet Nam, and four FTA Partners, namely: Australia, China, Japan and New Zealand, have deposited their respective Instruments of Ratification/Acceptance. They will be implementing the RCEP Agreement on 1 January 2022.