Our compliance to the intellectual property rights (IPR) indirectly diverts and/or retards our quest for free trade. That preoccupation pushed our economy backward and we spent time examining our products than expanding the horizon for free trade and in promoting multilateralism.
Our preoccupation with securing to protect IPRs, inventions and patents of other countries eat up most of our time and resources like our enactment of the Anti-Money Laundering Act (AMLA) of 2001 to secure the integrity of foreign currency. We attend to IPR than to our objective of securing our economic rights through free trade.
Concentrating on IPR has become a bane to our progress and development. The Philippines is deeply immersed in spending our resources and manpower to protecting IPR, forgetting the more serious business of expanding trade through multilateralism. Many anti-imperialist writers observe there is a pattern to mislead countries to giving preference to IPR with a threat of sanction for the slightest violation of the rule.
Should the government adhere to the demand of the Senate to secure the protection of our agricultural products, it means we are not ready for free trade. At most we can only seek exception for our export, and usually this comes in with reciprocity like giving equal treatment to exports but the primary objective remains – that of reducing the cost of imports through the elimination of tariff.
Our farmers however can seek the “maximum” limit given under RCEP until the Free Trade Agreement (FTA) could finally eliminate all tariffs like what our farmers have perennially been complaining about. We have to find ways to reduce the cost of our exports like providing subsidy, if allowed under the agreement, or plant other crops without violating the FTA.
We have to balance our exports to remain competitive. The Regional Comprehensive Economic Partnership (RCEP) is an opportunity to change our economic endeavor. If joining RCEP could significantly increase our standard of living, maybe we can suggest to diversify in producing other goods that will command better price and measuring our GDP consequent to our membership with RCEP.
Current indicators show that we remain economically marginal with the rest of the ASEAN using our exports as ledger. Last year, RCEP countries represented 51 percent of Philippine exports, 68 percent of the country’s imports, and 58 percent of investments. This means we import most of our goods and have not attracted foreign investors as touted.
For instance, the diversification of our sugarlands to the production of other crops did not result in the collapse of our economy or hunger to the contractual sugar workers or “sacada”. Instead, the introduction of land reform subsequently improved the livelihood of those workers through the production of other crops that commanded higher value. Most importantly, our diversification of crops eliminated the problem of insurgency proving that low income is the root cause of the problem.
Most of those who want to stick to agriculture as our main export are, in fact, landlords. Often, they reflect their interest on the land than the product.
Our membership with RCEP is in fact our agreement to achieve common progress through the mechanism of free trade. Accordingly, RCEP will be guided by the following principles:
1. RCEP will be consistent with WTO, including GATT, specifically Articles XXIV and V.
2. RCEP will provide members broader choice to improving the existing ASEAN+1 FTAs while recognizing the diverse participation of others. The concept of trading with other industrialized countries is to ensure that no member will be left out in the new trade arrangement.
3. RCEP will include provisions to facilitate trade and investment, enhance transparency and participation, and facilitate the engagement of global and regional supply chains.
4. RCEP will include other regional and extend special and differential treatment, plus additional flexibility to the least-developed ASEAN members, consistent to the applicability of the ASEAN+1 FTA.
5. ASEAN+1 FTAs will not detract the terms and conditions between and among the participating countries.
6. RCEP agreement will also have an open accession clause to enable the participation of any Asian FTA partner that did not participate after the completion of the negotiations.
7. Provisions for technical assistance and capacity building may be made available, building upon the ASEAN+1 FTAs, to developing and least-developed countries of RCEP to enable all parties to participate, implement their obligations and enjoy the benefits from RCEP.
8. Negotiations on trade, in services, investment and other areas will be conducted to ensure a comprehensive and balanced outcome. RCEP is bound to change the concept of FTA.
Beginning January 1, 2022, RCEP became the world’s largest trading bloc entered into by the majority of the 15 Asia-Pacific economies promising to reduce to zero-tariff nearly a third of the global economy. From January to November 2021, total imports and exports exceeded $1.7 trillion.
That represents nearly a third of Beijing’s total foreign trade value on the back of its trade linkages with RCEP. Thus, RECP is estimated to increase world trade by nearly $500 billion annually by 2030 and increase income by $263 billion annually. It is estimated by the East Asian Economic Review that RCEP will increase regional income by $245 billion on a permanent basis and create 2.8 million jobs in the region.
There was undoubtedly geopolitics involved prior to the creation of RCEP. Most countries courted by the US to join its proposed Trans Pacific Partnership (TPP) are also members of the ASEAN, including the industrialized countries in the Asia-Pacific like South Korea, Japan and China. Surprisingly, Australia, despite trade differences with China, joined RCEP.
The formation of RCEP was strengthened when the Trump administration opted to abandon TPP. The incentive to join was hastened after he increased tariff on China, Canada, Mexico and on the members of the European Union in a bid to offset the US trade deficit.
US propaganda to discredit China fell flat when ASEAN and the rest joined RCEP, which means they refuse to pursue the US- sponsored TPP than bend to impose boycott and trade sanctions to countries for political and trade differences. The latest case is Xinjian. Notably many of those goods exported by China are products made in Xinjian.
Notably, the US incurred more than $600 billion trade deficit with China. China offered to RCEP a zero tariff. The US failed to anticipate that almost all countries wanted to avail of China’s forwarding facilities offered by the completed Belt and Road Initiative (BRI) via Central Asia and onward to Europe and Africa. That would allow them to widen their export market, faster and at cheaper cost. This is an offer which China impliedly laid down to members of RCEP.
Thus, instead of defining the rules on trade, countries, like the Philippines, should focus on how to increase the volume and value of their products. We should adopt the economies of scale enunciated by David Ricardo. This dictum is being observed by China today. It is this principle that allowed it to accumulate export surplus and enough capital to allow it to improve its products. This is an ace the US cannot offer to RCEP.
In fact, requiring developing countries to make their products at par with EU and US trade regulations could only lessen their exports and increase the cost of production. Strict observance of IPR makes it more difficult for ASEAN to compete.
Marxist economic philosophy tells that economic development comes in stages; that once it reaches the stage of economic development, say from feudalism to capitalism, but still lacking capital to fully industrialize, it has to apply the system of mixed economy. Lack of capital could turn its economy to one of semi-feudal.
The Chinese learned fast when they incorporated into their economy some features of private ownership to some industries even after capturing the superstructure of society. This explains why the transition in the Chinese economy was so successful.rpkapunan@gmail.com
