Procrastination, in the case of the Philippines being the last signatory to the Regional Comprehensive Economic Partnership (RCEP), has translated to huge losses in terms of forgone opportunities that could have been contributory to further economic growth.
The intention to go over these missed chances is not so much as crying over spilt milk, but to be able to face them squarely in the face and come up with appropriate strategies that could build on whatever leftover morsels of lost opportunities. As we Filipinos are wont to say: Huli man daw at magaling, maihahabol din.
RCEP was initiated in 2012 by all 10 ASEAN members and its six free trade agreement (FTA) partners in a bid to consolidate trade and economic relations, thereby forming the largest trade bloc in the world.
Negotiations ensued in the following years to define trade terms and conditions that would eliminate about 90 percent of tariffs on imports within 20 years of the agreement coming into force. On November 2020, all countries – including the Philippines – formally signed the treaty.
RCEP came into force on Jan. 1, 2022 after the minimum number of ASEAN member states and non-ASEAN signatories submitted their countries’ individual instruments of ratification.
By then, only three other countries were still to submit their instruments of ratification to avail of the treaty opportunities. Malaysia complied with its ratification instrument in January of 2022, Indonesia in November of 2022, and finally, the Philippines, on Feb. 21, 2023.
Missing out
The Philippines continues to be averse to signing trade agreements, and the delay in ratifying RCEP reflects the general reluctance by lawmakers, who have to affix their signatures on treaties, and many sectors that fear they will be marginalized by liberalized trade agreements.
Filipinos have never been happy with treaties, not because they present lopsided disadvantages, but because we are unable to take full advantage of the opportunities made available even while blunting most or all of the possible harm.
The Philippines has missed out on the RCEP benefits by more than a full year, and at a crucial time when we needed to utilize all possible instrumentalities to boost our economic recovery from the pandemic. Meantime, many of our neighbors have already been hard at work.
Countries like Laos, Cambodia, Thailand, and Vietnam would have by now fine-tuned how they will make full use of the opportunities that the RCEP offers, especially with big economies like China, Japan, South Korea, Australia, and New Zealand.
We are just about to start finding ways to maximize the RCEP opportunities for over 50 percent of our exports, 67 percent of our imports, and 58 percent of foreign direct investments. These include, among others, benefiting from a simpler and more efficient cross-border trade, where the old complicated ways represented time and money lost for our importers and exporters.
All our government agencies must work double, even triple time, to lay down the new rules that willd align our trade terms with RCEP, and pass on the benefits quickly to all concerned, most important of which are the micro, small, and medium-sized entrepreneurs (MSMEs) that represent over 98 percent of Philippine businesses.
MSME power
This year, and in the coming years, our MSMEs hold the potential of lifting economic productivity the greatest if they are galvanized to act and take advantage of the import and export benefits accruing from the RCEP’s liberalized trade opportunities.
By being able to access to cheaper raw materials and intermediate goods that can be used in the export of manufactured produce, MSMEs gain the advantage of competing on equal grounds with our neighboring countries, and more importantly, of finding appeal with foreign investors.
The new laws passed by the previous administration easing business transaction rules and encouraging the entry of foreign capital in the Philippines would have all gone to naught had we not become signatory to the RCEP.
Somehow, the Philippines must move on to building its own army of MSME powerhouses that can provide better job opportunities for Filipinos, initially to supplement earnings that our overseas migrants remit to the country, and perhaps one day, to become the major movers of the economy.
The government must also immediately harness the economic and technical cooperation support available through the RCEP that may be useful to strengthen MSME competitiveness. We must strengthen also our intellectual property rights as we participate more rigorously in the world market.
Professional ranks
One other area that RCEP offers, which should continue to be strengthened, is in the provision of business and professional services, especially to developed economies like China, Japan, and South Korea, where Filipinos encounter higher hurdles because of language barriers.
Aside from encouraging mastery of the appropriate foreign languages, the government must introduce the needed environment that will allow many of our professionals to compete for the jobs available in the above countries without fear of going through discriminatory practices that often result in a downgrade of job level and salary.
This only means that we must improve our educational standards to align with agreed RCEP standards, particularly with the non-ASEAN signatories. Furthermore, a review of our restrictive policies towards professions like dentistry, nursing, medical services, accountancy, architecture, and engineering is needed to allow Filipinos to take advantage of these new employment opportunities.
Instead of thinking only about downsides like the so-called brain-drain, we should see this as an opportunity to encourage more Filipinos to invest in a good education in such fields that can bring higher pay, even if the job opportunity is from a company based outside the country.
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