Four business groups on Friday backed the Regional Comprehensive Economic Partnership as they urged the Senate to ratify the Philippine membership in what is considered the world’s largest trade bloc.
“We see our membership in RCEP as an important challenge to our government to step up genuine and meaningful support for Filipino producers, especially in the agriculture sector, which is the backbone of the Philippine economy,” the groups said in a statement Friday.
The groups, composed of the Financial Executives Institute of the Philippines, Makati Business Club, Management Association of the Philippines and the Philippine Council for Foreign Relations also called on the government to provide a substantial increase in the agriculture budget that is comparable to those of ASEAN neighbors.
The groups said the RCEP partnership would provide a huge market where Filipino producers and traders are expected to gain preferential access through membership in the trade bloc.
RCEP, consisting of the 10 ASEAN members plus Australia, New Zealand, China, Japan and South Korea, account for 30 percent of the world’s population and global GDP.
RCEP entered into force on Jan. 1, 2022, having been ratified earlier by 10 signatories. South Korea will come in as the 11th member on Feb. 11, 2022 after its government ratified the agreement on Dec. 2, 2021. The other countries—Indonesia, Malaysia and Myanmar—are also expected to ratify the agreement.
The business groups said RCEP provides wide economic opportunities, along with certain threats to uncompetitive industries and individual producers and their workers. Trade experts said like in other free trade agreements the country joined, the overall economic gains in terms of net job creation, economic growth and price stabilization would well outweigh the costs.
RCEP will help micro, small and medium enterprises expand market access, especially with more liberal rules of origin on traded products to qualify for trade concessions, according to the Trade Department.
The agency said this would also provide broader and cheaper alternative sources for inputs and reduce costs of doing business through improved trade facilitation, especially customs and trade clearance procedures.
“Exclusion from RCEP would be immensely costly to our economy and our people. We can anticipate a significant decline in our exports to RCEP countries, which now account for nearly two-thirds of our total exports, as trade with us will logically be diverted to fellow members. It would also make us even more unattractive to job-creating investments than we already are, as these would best locate in RCEP member countries to take advantage of free access to its vast market,” the business groups said.
They said the Philippine membership would attract more foreign investments into the country from firms wishing to produce and sell to the large RCEP market.
“RCEP skeptics should find comfort in the fact that little will immediately change in the country’s trade relations, since RCEP only reaffirms existing trade concessions we already have with all RCEP members via the ASEAN Trade in Goods Agreement among ASEAN members and the ASEAN-Plus Free Trade Agreements with the rest,” the groups said.
Studies showed that tariff elimination would take up to 20 years, giving ample time for the Philippines to achieve the competitiveness that would allow producers to take full advantage of the vast market opportunities RCEP offers.