RCEP to strengthen economic integration in the region

The Department of Trade and Industry (DTI) emphasized the key role that the Regional Comprehensive Economic Partnership (RCEP) agreement will play in furthering cooperation and trade within the region at a forum hosted by the Association for Philippines-China Understanding (APCU) last 21 April 2022.

The forum was attended by APCU members composed of Filipino businessmen, academics, journalists, various local and international organizations, and diplomats.

DTI Assistant Secretary Allan B. Gepty emphasized that RCEP is not just about trade in goods, but has notable value-added provisions in services, investments, e-commerce, competition, and intellectual property, among others.

Gepty also elaborated some key features of the RCEP agreement, such as streamlined customs procedures and a single set of rules of origin for the export products of all RCEP countries, as opposed to the multiple sets of rules that govern trade within the region. These features will help lower the prices for goods and materials within the region, as administrative costs will be reduced by these measures.

He underscored that a mega trade deal like RCEP had substantial advantages over the existing ASEAN FTAs since it enhances market access and provides a stable regulatory framework for the entire region.

Addressing a question about RCEP’s effects on agricultural products, Asec. Gepty noted that tariff liberalization under the Agreement would be comparatively limited considering existing FTAs with the other RCEP parties. He stressed that in RCEP only 33 agricultural tariff lines will be further liberalized under RCEP which is only equivalent to 1.9% of the total agricultural tariff lines.

In response to concerns over the possible deferral of Philippine accession to the RCEP agreement, he stressed that such a move may result in the erosion of the country’s comparative advantage in existing export products and the country’s positioning as a manufacturing hub in the region as investors and businesses will opt to invest in and trade with countries within the RCEP region instead.

He concluded that not ratifying the RCEP agreement would run counter to the momentum generated by the recent passage of economic reforms and send conflicting signals to investors and other stakeholders.

“We have amended the Foreign Investments Act, the Retail Trade Liberalization Act and the Public Service Act. So basically, we are telling the whole world that we are opening our market for trade and investment, and yet here you are, the Philippines, trying to restrict its participation in the globalized economy,” he said.

Other speakers at the event included Dr. Theresa Chong Cariño, Senior Research Consultant at The Amity Foundation, and Dr. Henry Lim Bon Liong, President of the Federation of Filipino Chinese Chambers of Commerce & Industry (FFCCII).

Dr. Cariño tackled the geopolitical implications of the Agreement and emphasized RCEP’s role in promoting peace and stability in the region. She described RCEP as a triumph of ASEAN’s middle power diplomacy since ASEAN member states were able to exercise their collective bargaining power in setting the terms of interregional and global trade.

“I think if RCEP can strengthen regional economic integration, this will strengthen the role of ASEAN as a whole. What’s important is that with RCEP, ASEAN as a whole will uphold rules-based regional architecture and work for cooperation, peace, stability, and prosperity,” she said.

Dr. Lim Bon Liong highlighted the resilience of the Philippine economy and the lucrative export opportunities that the RCEP agreement could make available to businesses, particularly for micro, small, and medium enterprises. He remarked that competition would always be present in business, and touted innovation as a way for local enterprises to adapt to the market.

“I hope that we can try to adapt and try to attract foreign investment, but then the local business families should try also to do on our own, by trying to adopt innovations and investing in our own capabilities. As I said, at the end of the day, competition will always be there and we should be ready for that,” he said.