RCEP to come into force by early 2022, PH rushes completion of ratification within Nov

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Metro Manila (CNN Philippines, November 4) — The Philippines hopes to ratify the Regional Comprehensive Economic Partnership (RCEP) within the month, as foregone opportunities loom if the government fails to participate in the mega-trade pact, which takes effect in January 2022.

According to the country's trade chief, the Senate Foreign Relations Committee started deliberations on the deal last week.

"There will be another Committee hearing and hopefully after this, the RCEP can be presented and passed at the Senate plenary for ratification this November," Department of Trade and Industry (DTI) Secretary Ramon Lopez said Thursday.

In September, Malacañang ratified RCEP and it has been taken up by the Senate for concurrence.

The deal is touted to make it easier for member-states — including the Philippines and China — to import and export across the region. The other parties from the 10-member Association of Southeast Asian Nations (ASEAN) are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, and Vietnam. Neighboring Australia, Japan, South Korea, and New Zealand also joined the free trade arrangement.

ASEAN Secretary-General Dato Lim Jock Hoi said Wednesday the implementation of the RCEP deal will begin on Jan. 1, 2022, following the ratification of Australia and New Zealand.

"[This] will give tremendous boost to the post COVID-19 economic recovery efforts," he was quoted as saying in a statement.

Lopez also admitted that the Philippines' non-participation in the said trade deal may result in "the negative impact on growth, trade, investments, and jobs."

"We should not be left behind," he said.

While other agricultural products—like rice, meat, vegetables—are excluded from the commitment, Lopez stressed there are "enough safety nets to vulnerable sectors".

Failure to complete the ratification will lead to foregone opportunities, with a possibility that some Asean countries may eventually surpass the Philippine economy, analysts said.

"With the RCEP trade deal, it is not far that Cambodia, Myanmar and Laos may have a wonderful opportunity to overtake the Philippines, especially if we fail [to] play our trade cards right and eventually spawn into a decent manufacturing destination to rival that of Vietnam," Ruben Carlo Asuncion, chief economist of the Union Bank of the Philippines said in an email interview.

"Our own reforms need to be in place to also help spur a faster recovery from the pandemic. Of course, we cannot discount the institutional weaknesses of the countries mentioned, but we also have our own challenges. I say this because economic institutions matter on how citizens of a particular country directly benefit from these institutions," he added.

Rizal Commercial Banking Corp. chief economist Michael Ricafort, meanwhile, said ASEAN countries that are part of the RCEP could appear more attractive to global companies wanting to "expand market reach at much lower costs".

"Thus, there would be foregone incremental/additional GDP/economic growth for not being part of RCEP," Ricafort added in a mobile phone message.

But lower labor costs alone are not enough to keep economies attractive to investors, Asuncion said.

"Let me say that there are other reasons why another country is more attractive an investment destination from another country. There are other reasons like, the quality of labor, infrastructure, ease of doing business, etc. Hopefully, the Philippines can further improve in these various areas and not be a laggard in the region," Asuncion said.