THE benefits of improved market access brought about by the newly-signed Regional Comprehensive Economic Partnership (RCEP) will outweigh any disruption that less-competitive economies might experience, Fitch Solutions Country Risk and Industry Research said.
Fitch Solutions, in a report issued Monday, said that the long-term consequences of the agreement will improve market access and increase the variety of goods and services made available to treaty signatories.
The RCEP counts as its members China, Australia, New Zealand, Japan, South Korea and all 10 ASEAN member countries. The members account for around a third of the global economy and population.
Fitch Solutions said that the agreement will also strengthen regional supply chains as manufacturing firms relocate out of China.
“ASEAN economies can also stand to gain from increased technical cooperation with advanced economies in the bloc to improve their competitiveness,” it said.
Citing issues specific to the Philippines, Fitch Solutions said exporters continue to be hindered by ease-of-doing-business and logistical issues.
“While the RCEP agreement provides the Philippines with greater access to the larger consumer markets of China, Japan, South Korea and Australia, we at Fitch Solutions highlight that red tape restrictions are only part of the barriers businesses face exporting from the Philippines,” Fitch Solutions Senior Asia Country Risk Analyst Michael Langham said in an e-mail.
“Logistical issues, energy security and domestic bureaucracy will hamper the potential to build out a greater manufacturing base in the Philippines. Indeed, the Philippines lags its ASEAN peers in its ability to attract diversifying supply-chains away from China, with Vietnam and Thailand better placed in the near term,” he said, adding that the trade deal could still be advantageous for the Philippine outsourcing industry.
Trade Secretary Ramon M. Lopez said the deal will incrementally increase the Philippines’ trade ties and market access within APEC. The Philippines has active free trade agreements with several APEC countries.
“The RCEP basically covers now a lot more areas, not only in trade in goods — it now has trade in services, investments, discussions on intellectual property protection as well as micro-SME, e-Commerce,” he said in an interview with ANC Monday, adding that the agreement will broaden the country’s sourcing of raw materials.
According to Trade Justice Pilipinas, which advocates for equitable trade, the agreement will deepen inequality as it does not grant sufficient flexibility for less-developed ASEAN member states, noting that it could threaten the jobs of worker in the Philippines.
ANZ Research in a report also released Monday said economic benefits will not be immediate, as member-countries go through a ratification process of about two years.
“But the strong signal that it sends about the region’s commitment to integration cannot be underestimated, especially given recent concerns about de-globalization,” it said. — Jenina P. Ibañez