"We should take a serious look at our ability to compete, sector by sector, segment by segment."
The Regional Comprehensive Economic Partnership brings the Philippines and the rest of the ten member ASEAN group together with China, Japan, Australia, New Zealand and South Korea to form the world's largest free trade alliance.
Meant to facilitate the free flow of goods and services among its members, the agreement opens up markets for a wide range of products with targeted tariff reduction and a rules based trading system opening up at least 20 areas for such initiative including cross-border data flows. Under the deal, duties on 61 percent of imports from the ASEAN member states, Australia and New Zealand will be reduced, 56 percent from China and 49 percent from South Korea and Japan.
The deal which has been eight years in the making got a big push when US President Donal Trump withdrew from the earlier Obama authored Asia Pacific trading deal, Trans Pacific Partnership (TPP), immediately after taking office four years ago in line with his aggressive “America First” policy. The US' withdrawal from the TPP opened an opportunity for China to push for a new deal excluding the US resulting in the RCEP which was signed at the conclusion of the ASEAN Summit last week.
This powerful 14-country trading bloc which brings the world's second (China) and third (Japan) largest economies, accounts for 28.3 percent of global GDP valued at US$23.9 trillion; 27.8 percent of the world's trade amounting to US$10.5 trillion; 23.6 percent of global inward foreign direct investments (FDIs) and 33.5 percent of global outward FDIs. It is also home to 29.7 percent of the world's total population, a good number of which are in their early working years which, in economic terms, is considered a sweet spot for growth being a huge source of an able workforce and, yes, a ready market for goods and services.
So even as the RCEP excludes the US, the world's largest economy, and India, the second most populous nation on earth, which account for a considerable percentage of the GDP in the Asia-Pacific region, this grouping represents a huge market for jobs, exports, technology transfer and investments for the country. The question is: Are we prepared to take advantage of the opportunities which this trading alliance brings?
While Trade Secretary Ramon Lopez and some of his friends in the various chambers of commerce and industry have been generally upbeat about the prospects for the country, serious questions about our ability to rise to the challenge remain. For one, over the years, we have lagged behind in terms of productivity and investments in most of our basic sectors. Sad to say, our agriculture, for example, has almost stagnated for years that we have remained a net importer of such basic items as rice, sugar, pork and poultry and an increasingly wide variety of products like supposed-to-be-readily propagated vegetables like onions, garlic and ginger.
On the other hand, a huge chunk of our industrial base has hollowed out that even the allure of opportunities for SMEs may not be as easily achievable as Secretary Lopez would like us to believe. That concern is not limited to us but to other ASEAN members. The entry of cheap consumer goods, not to mention large-scale investments in traditional industries, is expected to drown many of the SMEs in the ten-member grouping.
About the only bright spot we can look up on a competitive basis is on services where our skilled and professional workers can readily excel. But even that segment may not be "ours" for long if we do not aggressively push for a focused and intense upgrading of our training and educational systems to match those being done in the other RCEP member states.
So, before we start jumping like chimpanzees at the prospect of a huge market for our goods and services as well as the increased flow of investments and technology into our shores we better take a serious look at our ability to compete, sector-by-sector, segment-by-segment to ensure that we are at the very least prepared for the battles ahead. The earlier, the better.