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The Philippines and 14 other countries signed a mega free trade agreement on Sunday, which is expected to improve the level of market access among participating countries.
The Regional Comprehensive Economic Partnership (RCEP), which includes 10 Southeast Asian economies along with China, Japan, South Korea, New Zealand and Australia, is the world’s largest trade pact in terms of gross domestic product (GDP), they say. analysts.
First proposed in 2012, the deal was finally sealed at the end of a Southeast Asian summit as leaders push to get their pandemic-hit economies back on track.
“I am happy that after eight years of complex discussions, today we officially conclude the RCEP negotiations,” Vietnamese Prime Minister Nguyen Xuan Phuc said before the virtual signing.
The deal to cut tariffs and open up intra-bloc trade in services does not include the United States and is seen as a China-led alternative to a now-defunct Washington trade initiative.
Commerce Secretary Ramón López joined the Commerce Ministers of Brunei, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Singapore, Thailand and Vietnam and their five trading partners Australia, China, Japan, Korea and New Zealand, to sign the RCEP. agreement.
López hailed the signing of the pact as a milestone for the Association of Southeast Asian Nations.
“RCEP will further expand the Philippines’ economic commitments to its trading partners through better trade and investment, greater transparency, integrated regional supply chains and strengthened economic cooperation,” he said.
“This agreement will also complement ongoing programs and policies to make the country a manufacturing and investment center in the region,” added the Chief of Commerce.
A chapter dedicated to supporting the development of micro, small and medium-sized enterprises (MSMEs) is one of the key features of the agreement and is expected to facilitate the integration of MSMEs in the global value chain.
“This RCEP Agreement will be a catalyst for the country’s economic development as it provides not only better market access for key Philippine products such as apparel, auto parts, and agricultural products such as canned food and canned fruits, but also a platform for more investments. in the country in vital sectors such as manufacturing, research and development, financial services, game development, e-commerce and the IT-BPO (information technology business process outsourcing) sector, ”said the assistant secretary of the main negotiator, Allan Gepty.
“RCEP will provide job opportunities for Filipinos in the country, as it facilitates inclusive and open regional economic policies, especially for MSMEs, which can take advantage of increasing globalization and the creation of new links in the supply chain. In addition, it opens more services that can be provided by Filipinos or Filipino companies in RCEP participating countries, ”said López.
“As a historic free trade agreement, the RCEP has been approved by the Cabinet Committee for Trade and Related Affairs of the National Authority for Economic Development and Development with the assistance of the agencies involved in the negotiations,” he added.
The RCEP will be implemented once ratified by the member states.
RCEP “solidifies China’s broader regional geopolitical ambitions around the Belt and Road initiative,” said Alexander Capri, a trade expert at the National University of Singapore Business School, referring to Beijing’s flagship investment project that foresees China’s infrastructure and influence around the world.
But many of the signatories are battling severe coronavirus outbreaks and also hope that RCEP will help mitigate the crippling economic cost of the disease.
Indonesia recently fell into its first recession in two decades, while the Philippine economy contracted 11.5 percent year-on-year in the latest quarter.
India absent
India withdrew from the deal last year due to concerns about cheap Chinese goods entering the country.
You can join at a later date if you wish.
Even without India, the agreement covers 2.1 billion people, and RCEP members account for about 30 percent of global GDP.
Fundamentally, it should help reduce costs and make life easier for companies by allowing them to export products anywhere within the block without meeting separate requirements for each country.
The deal is also seen as a way for China to write the rules of trade in the region, after years of US withdrawal under President Donald Trump, which have seen Washington withdraw from a trade pact of its own, the Trans-Pacific Partnership.
Although US multinationals will be able to benefit from RCEP through subsidiaries within member countries, analysts said the deal may cause President-elect Joe Biden to reconsider Washington’s commitment to the region.
WITH AFP
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