EXPLAINER: What is RCEP? Will PH benefit from it?

Metro Manila (CNN Philippines, February 22) — The Philippines officially joined the Regional Comprehensive Economic Partnership (RCEP) despite strong opposition from Filipino farmers. But why is it important for the country?

With almost a decade of negotiations, RCEP, considered the world's largest trade pact, was implemented in 2022 seeking to establish a mutually beneficial economic partnership, and beef up regional trade and investment-related activities.

It is a free trade pact among the 10 members of the Association of Southeast Asian Nations (ASEAN), and Australia, China, Japan, New Zealand, and South Korea.

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

The Philippine government was the last country to ratify the deal after President Ferdinand Marcos Jr. expressed his support for RCEP, a shift from his earlier pronouncement that he would study its impact on the local agriculture sector.

RCEP is designed to eliminate tariff rates—or the taxes imposed on imported products—on 90% of goods between the signatories within 20 years.

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

Benefits to PH?

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan has long been pushing for the Philippines to join RCEP, seeing this as a “vehicle” that would drive the local economy’s sustained growth.

Balisacan even previously warned that the country’s delayed participation in the trade deal would translate to lost opportunities to bolster exports to more markets.

According to NEDA, only 15 agricultural commodity groups will see lower tariff rates.

Former trade secretary Ramon Lopez, however, said earlier that tariff protection would remain for sensitive products under RCEP. These include swine meat, poultry meat, potatoes, onions, garlic, cabbages, sugar, carrots, rice, and cement.

“Joining RCEP will enhance our market access for key agri-based exports, as partner countries agreed to lower tariff rates on Philippine exports. Non-participation or delayed RCEP ratification may result in foregone opportunities,” Balisacan said.

“We aim to promote greater openness, create a business-friendly environment, and provide a more stable and predictable system of trade,” he added.

The NEDA executive also said joining RCEP would help the Philippines secure more investments.

“The future of our country depends so much on our ability to attract investors, particularly foreign capital because the domestic capital is not enough... By being a member, we are saying to the world that we are ready for business, we play the rules of the game well, and your investments are safe with us,” he said.

RCEP to hurt local farmers?

Several agricultural groups are against the Philippines joining RCEP, with former agri chief Leonardo Montemayor stressing the country was not yet ready for the deal.

Monetamayor said farmers would suffer as there would be a surge of cheaper products from other countries, particularly China.

But Balisacan said RCEP would “unlikely” trigger an influx in agricultural imports.

“With regards to the allegation that the agricultural sector will be hurt, there's no truth to that… whether or not there is RCEP, we need to invest in agriculture,” Balisacan said.

Opposition Senator Risa Hontiveros also said she was not convinced that RCEP would help the Philippines.

She cited a study of Rashmi Banga, a senior economist at the United Nations Conference on Trade and Development, which found that the Philippines' goods trade balance would worsen by $264 million a year and it would lose tariff revenues of $58 million annually.

Hontiveros said more than 100 organizations from different sectors across the country are opposed to the pact.

“These represent millions of Filipinos who say that our country is not ready for this deal, that we already obtain the benefits from our other agreements, and that we even stand to lose,” the lawmaker said.

Senior executives from the Agriculture department also failed to consult with agricultural workers, according to Montemayor, who is also the president of Federation of Free Farmers, in an interview with CNN Philippines’ The Exchange.

But now that the RCEP is ratified, he said, “We will hold them up to account kung ano 'yong mga pinangako nila [on what they have promised]. We will check if the actions now and the future match those commitments.”