The Duterte administration will look “closely” at the Regional Comprehensive Economic Partnership (RCEP), given its new policy of moving the country swiftly towards economic integration with fellow-members in the Association of Southeast Asian Nations (Asean) and major trade partners in Asia and the Pacific, Finance Secretary Carlos Dominguez III said.
“I personally would like to look at RCEP closely, because that’s the 10 Asean countries, I think. That one, we are more open to,” Dominguez said in a recent interview.
The RCEP is the proposed 16-nation free trade area comprising the 10 ASEAN member-nations—Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, Philippines, Singapore, Thailand and Vietnam—and six trading partners Australia, China, India, Japan, New Zealand and South Korea.
Before the Asia Pacific Economic Forum (APEC) summit in Lima, Peru, trade ministers from the 16 RCEP countries met on November 3-4, in Cebu City and discussed the proposal to remove or drastically reduce duties on a number of goods traded across the region.
Dominguez said the head of the delegation of the European Union to the Philippines also noted a possible free trade agreement between the EU and the Philippines —“and we will look at that and give that our priority attention.”
Because the Duterte administration is relatively new, it wants to study such proposed free trade deals.
“So we have to think about [these]very carefully. We are a new administration, we want to see the pros and cons, we want to see how we will benefit,” Dominguez said.
The RCEP was conceptualized about a decade ago but was launched only in November 2012. It accounts for almost half of the world’s population, almost 30 percent of the global gross domestic product (GDP) and over a quarter of the world’s exports.
In terms of merchandise exports, RCEP is larger than the Trans-Pacific Partnership (TPP), as China alone exported $2.3 trillion worth of goods as of 2014—larger than the combined exports of the US ($1.6 trillion) and Canada ($474 billion), the two lead members of the TPP.
The RCEP covers trade in goods and services, investment, economic and technical cooperation, intellectual property rights, competition policy, and dispute settlement, among other issues. It does not cover labor, environment and state-owned enterprises
During the Duterte’s state visit to China, Dominguez and Socioeconomic Planning Secretary Ernesto Pernia noted that while the administration will maintain its good relations with Western economies, it will now push for “stronger integration” with its neighbors in the region.
The Philippine economic integration with the Asean, China, South Korea and Japan will open trade and investment opportunities to a market of 1.8 billion people.
“We will maintain relations with the West but we desire stronger integration with our neighbors. We share the culture and a better understanding with our region,” Dominguez and Pernia said.
The regional integration envisioned by the Duterte administration is similar to what has been done in the EU, NAFTA (North American Free Trade Agreement) and Mercosur (Mercado Común del Sur) in South America.
Dominguez earlier told senators that the President is not changing Philippine foreign policy, merely “recalibrating” it, after Duterte claimed the Philippines would build new alliances with China and Russia.
The recalibration of Philippine foreign policy is supposed to open the country to markets other than the traditional economies in the West.
“The President has indicated to us that he’d like to strengthen and exploit opportunities in countries other than our traditional trading partners,” Dominguez said.