Following the ratification of the Regional Comprehensive Economic Partnership (RCEP) Agreement, the government is optimistic that the country will reap the benefits and advantages of the mega-trade deal, the National Economic and Development Authority (NEDA) said.
“With the country’s participation to RCEP, the Philippines has now further strengthened its position as an ideal investment hub in the region as we expand market access, facilitate trade, and align our rules and procedures with participating economies, ” NEDA Secretary Arsenio M. Balisacan said.
RCEP consolidates existing ASEAN regional free trade agreements among members and covers trade in goods, services, investments, economic and technical cooperation, as well as dispute settlement, among others.
As underscored by the Marcos administration’s economic managers, the Philippines has an advantage as it can serve as a gateway to the dynamic ASEAN region, and boasts of a young, growing workforce, and stable legal regime, particularly on intellectual property and competition policy. This makes the country an ideal manufacturing and research and development hub, even for non-RCEP countries. Manufactured products can then be exported to RCEP-participating countries with preferential tariffs.
In line with the overall goals of the Philippine Development Plan 2023-2028, robust business expansion and investment are seen to lead to more, higher quality, and more resilient jobs that will be key to rapid and sustained poverty reduction.
“With the strong support of Congress, yesterday’s concurrence to the RCEP Agreement is a testament to the government’s commitment to creating an environment conducive for trade and investments that are catalysts for job creation, skills development, and technology transfer as we seek to transform the Philippine economy in the next six years,” Balisacan added.
Complementary to RCEP’s ratification is the recent implementation of key economic liberalization laws such as the amendments to the Retail Trade Liberalization Act, Foreign Investments Act, Public Service Act, and the Build-Operate-Transfer Law, which will facilitate a more open and business-friendly investment climate.
Finance Secretary Benjamin Diokno welcomed the approval of the Senate resolution concurring in the ratification of the Regional Comprehensive Economic Partnership (RCEP) agreement on February 21, 2023.
“The ratification of the RCEP is key to a more open, transparent, and predictable trade and investment environment. Deeper economic integration among the RCEP member states will expand the country’s market access for goods and services, attract more investments, and create more and better jobs,” Secretary Diokno said.
Senate Resolution No. 485 was approved on third and final reading, with 20 affirmative votes, one negative vote, and one abstention.
RCEP is the largest regional free trade agreement (FTA) in the world, accounting for 30 percent of the world’s population, 29 percent of gross domestic product (GDP), 29 percent of trade, and 33 percent of global inward investments in 2020.
FTAs such as the RCEP support the growth and development of businesses, which make these frameworks strong drivers for post-pandemic economic recovery efforts.
The RCEP was signed on November 15, 2020 by ten ASEAN member states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam), the ASEAN+3 countries (China, Japan, and South Korea), and ASEAN+6 members (Australia and New Zealand).
Since its date of effectivity on January 1, 2022, all RCEP participating countries have ratified the agreement, except for the Philippines.
The Department of Finance (DOF) has been advocating the benefits of the RCEP, which takes into account emerging trade issues affecting small and medium enterprises (SMEs), e-commerce, competition, intellectual property, and government procurement that were not covered in existing FTAs.
KEY BENEFITS OF RCEP
The RCEP provides enhanced trade facilitation provisions that make cross-border trade simpler and more efficient.
This will result in a stable and predictable business environment to attract more investments in the Philippines and safeguard the country’s investments abroad. The agreement will also support MSME development and drive participation in the global value chain.
Moreover, the Philippines will benefit from economic and technical cooperation support in order to strengthen its competitiveness.
Zero or lower import tariffs for Philippine exports such as agricultural products, automotive parts, and garments would give the country more access to bigger markets for its products.
Philippine manufacturers would also benefit from wider sources of raw materials due to zero or lower import duties on their inputs as well as more flexibility in the rules of the FTA on product manufacturing.
Skilled Filipino professionals and business persons in legal, construction, engineering, and banking services will be given preferential treatment to practice their professions in participating nations.
Finally, Philippine intellectual property rights will be upheld and given stronger protection to ensure the interests of Filipinos.
