The Executive Department through the Department of Trade and Industry (DTI) responded anew to concerns raised by stakeholders in the agricultural sector against the Regional Comprehensive Economic Partnership (RCEP) Agreement.

Trade Secretary Ramon M. Lopez reiterated that the RCEP Agreement did not only exclude highly sensitive agricultural products from tariff liberalization. Perforce, RCEP even provides enough safety nets and flexibilities to address any threats to industries that may arise as a result of the implementation of the agreement.

“Under RCEP, tariff protection remains for these highly sensitive products, including swine meat, poultry meat, potatoes, onions, garlic, cabbages, sugar, carrots, rice, cement, and flat-rolled products of iron or non-alloy steel, among others”, Lopez clarified.

He further stressed that nevertheless, these products while excluded from RCEP would still enjoy the other benefits that the agreement offers. In addition, appropriate trade remedies remain in place including WTO global safeguards and an RCEP Transitional Safeguard.

Should there be increased imports that threaten the local industry, the agreement provides that WTO safeguards can still be availed of. The agreement also provides a transitional safeguard to address the said scenario by allowing Parties to suspend further reduction of customs duties or increase customs duties following a surge in imports caused by a Party’s commitments under RCEP. Anti-Dumping and Countervailing Measures are also available which reaffirm Parties’ rights and obligations under relevant WTO agreements. “In other words, issues and concerns of some group of farmers are fully addressed”, Lopez added. Addressing fears of foreign competition, Trade Assistant Secretary Allan B. Gepty explained that said competition is already present since the Philippines is a member of the WTO and other free trade agreements. Several of these free trade agreements include ASEAN Member States and other countries participating in RCEP. “In other words, in terms of competition the same is not totally new. If there is something new in RCEP it is more of coverage of the free trade area and the rules and disciplines”, Gepty added.

Asec. Gepty stressed that the RCEP Agreement has mechanisms providing for adjustments to commitments within the agreement, noting that the agreement tries to accommodate the circumstances of RCEP parties, which are at differing levels of development.

“There may be cases wherein commitments made in the RCEP Agreement need to be adjusted or addressed due to exceptional circumstances that affect our economy and industries, as well as our farmers. The RCEP negotiators acknowledged this possibility and therefore incorporated various mechanisms in the FTA that act as safety nets so that RCEP countries are able to address these circumstances. These are on top of the available measures to the Philippines under the WTO agreements”, he explained.

“Given this, our local industries including the agricultural sector should look at RCEP as a platform of more and bigger opportunities ranging from improved market access in the RCEP region, cheaper access to raw materials, wider cumulation area, trade facilitative measures, and even investments in smart agriculture and research and development”, Gepty added.

In addition to the range of trade remedies, the RCEP Agreement provides enough flexibilities to cover, among others, emergency, essential security, and health and safety concerns through relevant provisions such as General Exceptions and Security Exceptions. This is in addition to some reservations made in the Philippines’ Schedule of Commitments.

The provision on General Exceptions incorporates Article XX of GATT (1994)[1] and Article XIV of GATS. Under this provision, RCEP countries such as the Philippines are not prevented from implementing measures that are necessary to protect public morals, human, animal or plant life or health, among others. There is also an article on Security Exceptions which states that RCEP countries are also not prevented from taking any action or measures considered necessary to protect essential security interest. There are also provisions that carve out Taxation Measures, as well as Measures to Safeguard Balance of Payments which allows Parties to adopt measures should they be in serious balance of payments and external financial difficulties or under threat thereof.

Trade Secretary Lopez emphasized that the Philippines cannot afford to have an inward-looking trade policy, citing the impact on investor confidence should the country not accede to RCEP.

“The Philippine economy is already well integrated into the global economy. Not joining RCEP will be catastrophic in terms of trade and investments.  The signal to the country’s trading partners and would be investors is negative as it conveys that the Philippines is embracing an inward policy, not to say protectionist stance. This is aligned with our current economic reforms and policy direction”, he said.

In various engagements, trade officials cited the study conducted by Dr. Caesar Cororaton, which provides an insightful analysis on the Philippines’ significant gains from the Agreement. From the study, it was noted that the RCEP is estimated to improve the country’s trade balance by as much as US$ 128.2 Million, increase overall welfare by US$ 541.2 Million, contribute to a 1.93% real GDP growth, and lower poverty incidence by 3.62% in 2030. ♦

Date of Release: 28 January 2022