Gov’t gearing up for RCEP, EU trade deal negotiations in 2017

by E.J.C. Tubayan, Businessworld

THE PHILIPPINES is gearing up to negotiate two big free trade agreements (FTA) next year, as countries under the Regional Comprehensive Economic Partnership (RCEP) approach a consensus on the partnership’s terms, and with trade talks with the European Union (EU) set to resume in the first quarter next year.

Finance Secretary Carlos G. Dominguez said that the government will give the trade deals “our priority attention.”

Mr. Dominguez said with a newly-installed government the Philippines wants to thoroughly review the proposed FTAs.

“So we have to think about [these] very carefully, we are a new administration, we want to see the pros and cons, we want to see how we will benefit,” Mr. Dominguez was quoted saying in a statement by the Department of Finance.

The RCEP is a free trade agreement (FTA) between the 10 Association of Southeast Asian Nations (ASEAN) member-states and its major Asia-Pacific trading partners China, Japan, South Korea, India, Australia, and New Zealand.

Mr. Dominguez has said that the government is more open to the China-led RCEP, which it views to be in line with its goal of pursuing stronger integration in Asia.

“I personally would like to look at RCEP closely because that’s the 10 ASEAN countries, I think. That one, we are more open to,” he said.

Mr. Dominguez said regional integration “is similar to what has been done in the EU, NAFTA (North American Free Trade Agreement) in North America and Mercosur (Mercado Comun del Sur) in South America.”

RCEP is considered a rival to the US-led Trans-Pacific Partnership (TPP), from which China was excluded.

In terms of merchandise exports, TPP is smaller than RCEP, as China’s $2.3 trillion in exports in 2014 exceed these of the US and Canada’s combined $2.074 trillion.

The future of the TPP remains uncertain however, with the election of America-first advocate Donald J. Trump to the US presidency.

Trade Secretary Ramon M. Lopez said earlier this month that he favors RCEP as the Philippines was not included in the first round of negotiations for TPP.

“This is better. This is what we’ve been prioritizing ever since. The Philippines never has been a part of the TPP. We were not part of the first batch so it’s okay if TPP doesn’t go ahead,” he said.

RCEP countries are considering opening up their markets to between 80% and 92% of all categories of goods. RCEP accounts for half of the world’s population, nearly 30% of global trade and $22.7 trillion in combined gross domestic product.

Moreover, the second round of FTA talks between the European Union (EU) and the Philippines is expected to resume early next year, after initial talks with a European delegation were held in May.

According to government data, exports to EU member countries account for 11%, or $525.29 million, of the total merchandise exports as of October. Imports from EU on the other hand, represent 10.3% of total imported goods valued at $710.48 million over the same period. —