Thank you, Sen. Loren Legarda. Allow me with this opportunity to highlight the importance of the Philippines’ participation in the RCEP Agreement, and also for the opportunity to respond to issues that might be raised during this hearing.

Before we proceed to the discussions, allow me to provide a brief statement on why the Philippines must ratify this mega free trade agreement.

It must be reiterated that RCEP is an ASEAN led FTA, and we are part of ASEAN. It is aimed at maintaining ASEAN’s centrality within the broader region. It is not just a simple trade agreement, that’s already been highlighted, which provides enhanced market access and a stable regulatory framework. It is a strategic tool in ensuring the region’s continued economic advantage, and will help maintain a balance of power within the region.

Considering the rise of protectionism and ongoing geopolitical crisis, the signing and entry-into-force of RCEP reflects the ASEAN region’s unwavering commitment to a rules- based trading system that maintains an open, stable, free, and fair-trading environment.

RCEP is expected to further promote economic efficiency of member states, strengthening linkages in sectors such as manufacturing, technology, agriculture, and natural resources. As well as reinforcing MSME participation in the global value chain networks.

Through improved market access for goods and services as well as stable and predictable rules, RCEP provides a platform to encourage more investments in the country. These investments are what we need to grow our economy.

However, it must be highlighted that RCEP is not only a policy tool for trade liberalization and market access. RCEP provides a framework of rules and disciplines to ensure regulatory consistency, creating a conducive business environment that is key to ensuring the confidence of the business and spurring further economic growth.

I’d like to emphasize that RCEP is not a magic bullet that will solve our problems in various sectors. It only provides an enabling environment; the government and business will still need to do their part to make our industries more productive and more competitive.

Considering that a number of trading partners and competitors are also participating in this agreement, delays in the Philippine participation will result in the diversion of trade and investments towards other countries, our neighboring countries, which are already within the regional bloc, at the expense of our local industry and people.

As other countries in the region enjoy preferential treatment arising from enhanced market access, wider sourcing of raw materials and a strengthened and transparent trading system, the existing linkages of the Philippines to the global value chain may deteriorate as investors and businesses look to other countries for better economic environment and opportunities.

Our exports could become less competitive (including electronic and agricultural products) as intermediate goods used as inputs for further production and manufacturing become more expensive in comparison to our competitors. Those are the downsides of not joining RCEP.

As demonstrated by the high anticipation among foreign investors for the Philippines to be part of this Agreement, and alongside the recent economic reforms undertaken by the country such as amendments to the Public Service Act, Foreign Investments Act and the Retail Trade Liberalization Act, we are indeed sending a signal of our readiness and seriousness to accelerate the country’s economic recovery and growth in the overall standing in the global trading environment.

Thus, while we recognize the concerns raised by some sectors, it is important to understand the bigger picture and view RCEP in terms of the opportunities it can bring us, overall. We are situated in a dynamic region of the world and we cannot afford to remain out of its further economic integration.

In any case, the government will continue to provide the needed support and level the playing field to equip and sharpen the capacity of our businesses, including those in agriculture.

Thank you very much.*

Date of release: 08 February 2023