MANILA, Philippines — Firms waiting for the ratification of the Regional Comprehensive Economic Partnership (RCEP) should not be discouraged despite the delay as the Philippines can still catch up, according to the Asian Development Bank (ADB).
Still, the ADB said the deferment of the ratification of RCEP, which is considered as the world’s largest free trade agreement, is unfortunate.
During the launch of the Asian Economic Integration Report (AEIR) yesterday, ADB chief economist Albert Park said RCEP presents an avenue for economies such as the Philippines to find new opportunities and global value chains that are going to be facilitated by the agreement.
“So it is unfortunate to delay the implementation of that agreement. But at the same time, the agreement just went into force in January and I think its impact is going to be quite gradual,” Park said.
The RCEP took effect on Jan. 1 as the required number of countries had deposited their instruments of ratification of the deal.
However, the Philippines failed to ratify the agreement. The Senate last week adjourned its session for the election break.
President Duterte ratified the RCEP last September. It has since awaited concurrence of the Senate.
Amid the delay, Trade Secretary Ramon Lopez expressed hope that the Senate would give its concurrence once session resumes in May.
Park said the impact of RCEP would unfold over time as companies understand and then react to the changing opportunities brought about by the agreement.
“I don’t think companies in the Philippines or workers should feel discouraged as long as there’s agreement to get there eventually. I’m sure as the years unfold, those opportunities will also be made available. And that’s true for any country, not just the Philippines,” Park said.
In particular, ADB economist Cyn-Young Park said the trade deal would significantly help the business process outsourcing (BPO) sector in creating jobs and income for many Filipinos.
“The Philippine government, I do believe, is taking measures to ratify. I share the optimistic sentiment that it will provide a great potential for promoting more active employment generation in the BPO sector in the Philippines,” she said.
The Philippines is a major hub for the services exports through BPOs such as call centers and high-end outsourcing or knowledge process outsourcing and business process management.
The Philippines accounts for over 12 percent of the global IT-BPO market and is expected to cover 15 percent of the global outsourcing market this year.
In an earlier report, ADB said the RCEP could provide the Philippines with an additional $7 billion in exports by 2030 even amid trade uncertainties, allowing total exports to hit $184 billion.
Meanwhile, the AEIR showed that trade among economies in Asia-Pacific jumped to its highest level in three decades amid recovery from the pandemic.
Trade in the region grew nearly 30 percent in the first three quarters of 2021 following a 3.1 percent contraction in 2020.
Intra-regional trade made up almost 60 percent of the region’s total trade last year, the highest share since 1990.
ADB said the strong intra-regional trade, along with the release of global pent-up demand and the early economic recovery in China, underpinned the region’s economic resilience.