Contentious items in RCEP remain unresolved

By Richmond Mercurio (The Philippine Star), Sep 4, 2017 –

MANILA, Philippines – Issues continue to prevent the China-led Regional Comprehensive Economic Partnership (RCEP) from moving forward, with major “contentious” subjects remaining unresolved, a trade official said.

Trade Undersecretary Ceferino Rodolfo said contentious issues on services, investment and trading of goods persist a few months before the Philippines’ end-2017 target of reaching a “substantial conclusion” for the regional trade deal.

In terms of trading of goods, Rodolfo said there remains no unified decision among the 16 countries involved as to what level of liberalization would be implemented, with some agreeing for the inclusion of 92 percent of their products, while some have committed to a lower level of about 70 percent.

As far as investment and services are concerned, Rodolfo said some countries want to integrate “next generation” concepts like the ratchet and the automatic most-favored nation (MFN) into the RCEP.

These two concepts are seen binding and may affect the country’s policy flexibility, according to Rodolfo.

Rodolfo said ratchet is a concept wherein once a country decides to liberalize on a certain sector, it could not anymore undo its action and the only way moving forward is a progressive action or further increasing the liberalization of the said sector.

Under the automatic MFN concept, meanwhile, any future concession given by a country to a trading partner under a bilateral treaty or non-RCEP members would automatically get extended to RCEP members as well, the trade official explained.

“We have not committed on these in any of our free trade agreements that’s why we’re very careful in evaluating these two concepts. We have yet to agree on that ever. We can, but we have to seek the approval of Congress,” Rodolfo said.

“Normally when we negotiate, we don’t tie the hands of our Congress because that is their prerogative. What if down the line, they want to undo liberalizing a sector that has been liberalized and they can’t? But if Congress tell us to give into that, then okay but as of now we don’t have the go signal,” he added.

Rodolfo, however, said these remaining issues are targeted to be ironed out during the RCEP ministerial meeting in Manila on Sept. 10.

“Given the global context, you have no other choice but this because this is really biggest (trade deal) being discussed right now so I think there is a strong incentive and motivation for everyone on the table to really reach something significant by the end of this year,” he said.

“It will still not be the signing but at the very least, pave the way so that the most contentious issues are discussed and the agreement on how to move forward is reached on trading of goods, services, and investments,” Rodolfo added.

RCEP aims to achieve a modern, comprehensive, high-quality and mutually beneficial economic partnership agreement between the 10 ASEAN members states and six free trade agreement partners that include China, Korea, Japan, Australia, New Zealand, and India.

RCEP is poised to boost global growth by expanding the ASEAN consumer base of 620 million to 3.5 billion, integrating the major economic player markets, which will account for almost half of the world’s population and almost 30 percent of global gross domestic product.

Trade Secretary Ramon Lopez said the ministers on their upcoming meeting would consider the report of the Trade Negotiating Committee which contains key elements for significant outcomes in the negotiations to be achieved by the end of 2017.

“This is follow-up action on the decision made by the ministers in Hanoi in May,” Lopez said.

After the ministerial meeting, the RCEP Trade Negotiating Committee is set to hold one final negotiating round by October.