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The Department of Trade and Industry urged the Senate to ratify the critical Regional Comprehensive Economic Partnership (RCEP) Agreement that will boost economic growth and make the Philippines more competitive in the export market. The deal will take effect on January 1, 2022.
The DTI said in a statement economists and international organizations had vouched the importance of the RCEP Agreement to the Philippines and to the region.
The Philippine Institute for Development Studies said non-participation in the RCEP will cause the Philippines to miss out on the opportunity to speed up he much-needed economic growth and recovery. A delay or non-participation in the RCEP would lead to a 0.26 percent decline in real gross domestic product of the Philippines.
“Economies that fail to ratify the agreement (when the rest of the countries do) will be adversely affected. The Philippines and Vietnam are among the countries that have positive export growths once the RCEP is in effect, and much of the growth is coming from new-product margin where innovations stem,” said PIDS economist Francis Quimba.
The RCEP is a free trade agreement among the Asia Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and Vietnam. The 15 member-countries account for about 30 percent of the world’s population and 30% of global GDP, making it the largest trading bloc in history.
Quimba estimated that while East Asian countries stand to benefit the most in terms of increased exports, the Philippines and Vietnam will gain the most in terms of real GDP due to lower trade costs and higher factory gate prices.
Meanwhile, a study conducted by a research fellow at the Virginia Polytechnic Institute and State University Caesar Cororaton noted that the RCEP is estimated to improve the Philippines’ trade balance by as much as $128.2 million, increase overall welfare by $541.2 million, contribute to a 1.93-percent real GDP growth and lower poverty incidence by 3.62 percent in 2031.
The Asian Development Bank said in a study recognized the RCEP has a strong potential to mold regional trade and investment patterns well into the future and to influence the direction of global economic cooperation at a challenging time.
The study added the RCEP would deepen regional production networks and raise productivity in the area.
Trade Secretary Ramon Lopez said East Asian countries stand to see the largest increase in incomes as the agreement will be the first FTA among them.
“Prior to RCEP, there had been no FTA between China, Japan, and Korea which means there is no pre-existing preferential treatment on traded goods among them, and MFN rates are applied. The same can also be said with trade in services and investment where these countries do not accord special treatment to services and investments coming from the other two countries,” said Lopez.
