Philippines seen gaining $7 billion in exports from RCEP

by Louise Maureen Simeon – The Philippine Star, 23 Nov 2021

MANILA, Philippines — The Regional Comprehensive Economic Partnership (RCEP) is seen providing the Philippines an additional $7 billion in exports by 2030 even amid trade uncertainties.

In its latest blog, Manila-based Asian Development Bank (ADB) said the RCEP could be instrumental in helping Asian economies, including the Philippines, recover from the pandemic.

Estimates from ADB showed that additional exports may expand 3.7 percent to reach $7 billion by 2030, allowing total exports to hit $184 billion.

ADB’s forecast already assumes that the US-China trade war will remain in place in the coming years.

The RCEP will take effect by Jan.1, 2022 as the required number of countries have deposited their instruments of ratification of the deal.

Considered as the world’s largest free trade agreement covering 29 percent of global trade and economic output, RCEP was ratified by President Duterte last September and is now with the Senate for concurrence.

The Department of Trade and Industry has been hoping that the RCEP can be presented and passed at the Senate plenary for ratification this month.

The RCEP is led by the 10 Southeast Asian members, including Australia, China, Japan, Korea and New Zealand.

The agreement aims to rebuild supply chains that were severely disrupted during the pandemic and promote greater regional cooperation in trade and investment, addressing regulatory issues to ease cross-border movements.

By 2030, RCEP is expected to increase the income of member economies by 0.6 percent while adding $245 billion and 2.8 million jobs to the regional economy.

ADB economists Cyn-Young Park, Sanchita Basu-Das, and Pramila Crivelli said this would be significant given the pandemic has dampened economic growth and caused job losses in many countries.

The ADB experts said there are three aspects of RCEP that would allow recovery to move forward, namely trade liberalization, regional investment, and digital economy.

RCEP allows member economies to lower tariffs for about 92 percent of goods traded within the region over a committed time frame. It targets the opening up of 65 percent of all service sectors with increased shareholding limits.

“Regional investment may increase further as RCEP prohibits performance requirements – such as a specified percentage of domestic content or requirement of technology transfer – being placed on investors as conditions for market access, and locks in future easing of measures, thus lowering risk of backtracking,” they said.

The experts emphasized that the agreement also takes a pragmatic approach to the digital economy as members agree on ICT-driven trade facilitation measures, free cross-border flow of data, and less stringent approaches to data localization.

“Going forward, greater use of RCEP will be reliant on the political will needed to undertake its deep regulatory reforms and implement its integrity provisions,” the ADB experts said.

“While further work is needed to match its potential, RCEP holds promise if participating economies are motivated to undertake greater economic liberalization to support the post-pandemic recovery. As the pandemic dissipates, RCEP may well act as a catalyst for greater regional cooperation,” they said.