MANILA, Philippines – The business community is all eyes on the Senate, waiting for its decision on the Philippines’ inclusion in the world’s biggest trade deal, deemed to either boost economic growth or obliterate local players, depending on who is asked.
The Senate, which is due to go on recess starting Saturday, February 5, ahead of the campaign period for the 2022 elections, has yet to concur with the Regional Comprehensive Economic Partnership (RCEP), a trade pact between the 10 members of the Association of Southeast Asian Nations (ASEAN), along with Australia, China, Japan, South Korea, and New Zealand.
RCEP aims to eliminate tariffs on 91% of goods and introduce rules on investment and intellectual property to promote free trade. The deal was supposed to be adopted by all participating countries at the start of 2022, but the Philippine Senate has yet to decide on the matter. Eleven countries already ratified the trade deal. (READ: EXPLAINER: What RCEP means for Philippines)
It is estimated to be the largest trade bloc in the world, representing 30% of global gross domestic product or $26.2 trillion.
But groups like Trade Justice Pilipinas issued a last-minute appeal to the Senate to deny concurrence, noting that it is “an added burden in the time of the COVID-19 pandemic.”
“RCEP – the text of which was concluded in 2019, before the pandemic – could severely constrain the policy space needed to effectively address the health and economic crisis. We asked that the government clarify the impact of rules under RCEP on these concerns,” Trade Justice Pilipinas said.
Trade Justice Pilipinas also emphasized that tariff liberalization can lead to substantial revenue losses of some $58 million (P2.9 billion) per year.
Farmers’ groups, led by the Federation of Free Farmers, earlier urged legislators to reject, “or at the very least,” defer the decision on the matter.
“While the country may have gained some concessions which are better than those under existing free trade agreements with RCEP countries, these involve a very small percentage of total agricultural tariff lines and trade value. Moreover, many of the purported gains are insignificant,” the farmers’ groups said in a joint statement.
“For instance, the Japanese offer to drop tariffs on chocolates to zero applies to a single and obscure tariff line for ‘other’ chocolates, which we most probably do not export. Likewise, we need to wait 20 years before China’s tariff on our canned pineapples becomes zero, even as the current tariff is already very low at 5%.”
Business groups’ pressure
Business chambers, in general, have supported RCEP, saying that the pact would expand market access for small businesses and attract more foreign investments in the Philippines.
“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,” said the Financial Executives Institute of the Philippines, Makati Business Club, and Philippine Council for Foreign Relations in a joint statement.
“Tariff elimination will take up to 20 years, giving ample time for us to shape up and achieve the competitiveness that will allow our producers to take full advantage of the vast market opportunities RCEP offers.”
The business groups also noted that Philippine negotiators had excluded from tariff liberalization “sensitive” farm products including swine and poultry meat, potatoes, onions, garlic, cabbages, sugar, carrots, and rice, along with manufactured products like cement and certain steel products.
The government’s investment promotion agencies likewise issued similar statements touting RCEP’s benefits.
Senators are expected to conduct interpellations on the matter on Monday, January 31, during their plenary session. They will tackle at least 166 new bills, four laws for amendments, and nine matters for interpellation until Friday, February 4, before recess. – Rappler.com