The Philippines and RCEP negotiations

Earlier this week, trade ministers of the Association of Southeast Asian Nations (ASEAN) and its partners committed to sign the Regional Comprehensive Economic Partnership (RCEP) by November this year.

The announcement was made eight years since the inception of the free trade agreement between ASEAN member states and six trade partners in August 2012.

ASEAN member states include Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Meanwhile, trading partners involved are Australia, the People's Republic of China, India, Japan, the Republic of Korea, and New Zealand.

In November 2019, however, Indian Prime Minister Narendra Modi announced the country's withdrawal from the trade deal as he said the version of the agreement did not sit well with concerns of India.

Origin

The RCEP negotiations -- which officially started in 2013 -- seek to broader and deepen the engagement among parties and to enhance participation in the economic development of the region.

"The RCEP was built upon the existing ASEAN+1 FTAs with the spirit to strengthen economic linkages and to enhance trade and investment-related activities as well as to contribute to minimising development gap among the parties," according to the ASEAN.

Negotiations for the trade deal aim to achieve a "modern, comprehensive, high-quality, and mutually beneficial" partnership agreement between parties.

Coverage

The RCEP negotiations include trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-commerce, small and medium enterprises (SMEs), and other issues.

Once finalized, the regional agreement is expected to be the world's largest trade deal in terms of both population and gross domestic product (GDP).

It is also expected to strengthen the regional economic development through easier market access for goods and services, as well as stabilize the market predictability on trade regulations and rules.

What it means for business

"RCEP has the potential to deliver significant opportunities for businesses in the East Asia region, given the fact that the 16 RCEP participating countries account for almost half of the world’s population; contribute about 30% of global GDP and over a quarter of world exports," said the ASEAN.

With RCEP in place, it will provide a framework that will lower trade barriers and ensure improved market access for goods and services for businesses across the region.

The agreement will recognize ASEAN Centrality in the emerging regional economic architecture, facilitate trade and investment, and enhanced transparency in trading relations, as well as broader and deepen ASEAN's economic engagements.

"RCEP recognises the importance of being inclusive, especially to enable SMEs leverage on the agreement and cope with challenges arising from globalisation and trade liberalisation," said the ASEAN.

SMEs, including micro enterprises, make up over 90% of businesses across participating countries.

What it means for the Philippines

In the Philippines, micro enterprises are defined as those with total assets worth less than P50,000; cottage enterprises with assets worth P50,001 to P500,000; small with P500,001 to P5 million; and medium from over P5 million to P20 million.

When the Philippines hosted the ASEAN Ministers Meeting in 2017, the RCEP was among the topics discussed by representatives of partner countries.

"RCEP is imperative as it holds many opportunities for all parties involved. With our markets integrated, we will be more attractive and competitive in partnering for change and engaging the world," Trade Secretary Ramon Lopez said in 2017.

Lopez then said that parties have agreed to liberalize tariff lines -- defined by the World Trade Organization as "a product as defined in lists of tariff rates -- to 90-92%.

RCEP vs. TPP

Aside from RCEP, several countries involved in the planned trade deal also earlier signified interest in the Trans-Pacific Partnership Agreement (TPP).

Envisioned to account for 40% of the global economy, the TPP was signed by 12 member countries in February 2017 -- Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States of America, and Vietnam.

The Philippines was interested in joining the trade agreement and did some consultations under the administration of former President Benigno S.C Aquino III.

However, in 2017, the Philippines backtracked and said it was no longer likely to push for membership in the TPP which also aims to expand economic ties and slash tariff barriers among its members.

Negotiations are currently ongoing for the trade deal, which has been revamped to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

In 2016, Finance Secretary Carlos G. Dominguez III said the Philippines was likely to put prospects of joining the US-led TPP in the backburner, and take a closer look at the possibilities surrounding the China-backed RCEP. —LDF, GMA News