RCEP better than TPP for the Philippines


GIVEN his dour attitude toward the United States since taking office, President Rodrigo Duterte’s preference for joining the China-led Regional Comprehensive Economic Partnership (RCEP) rather than the US-backed Trans-Pacific Partnership (TPP) is not at all surprising. But even if it were not at least partly inspired by political leanings, it is the more practical course the Philippines could take in terms of trade and economic relationships.

The US president-elect Donald Trump has several times – most recently on Monday – vowed to withdraw the United States’ participation in the TPP, but even before Trump’s election campaign began to attract serious attention, there were clear signs that the sweeping trade pact championed by President Barack Obama was probably not going to be accepted by the Americans themselves. Several key members of both political parties in the US Congress publicly disagreed with it. Former Secretary of State and President Obama’s candidate against Trump, Hillary Clinton, was also lukewarm to the TPP.

Without US participation, the TPP can still move forward but in a much diminished form. Contrary to popular misconception, it originated with Singapore, not the US.

Meanwhile, the China-led RCEP is gaining traction, particularly among nations of our region.

Accounting for nearly 30 percent of global trade, the proposed RCEP would include the 10 member nations of Asean as well as Australia, New Zealand, India, South Korea, Japan, and China; altogether, the RCEP bloc would have a gross domestic product (GDP) of about $21.2 trillion per year.

Another big advantage of the RCEP is that it will work more effectively with the gradually deepening Asean integration under the Asean Economic Community formally launched last year. Because of its regional focus, the terms and conditions of the RCEP will presumably be more relevant to our country’s local market and capabilities than the broader TPP.

The RCEP, according to recent reports, is likely to be signed sometime in the first half of next year.

That is a huge market right in the Philippines’ backyard, so to speak, and it would be folly for the Duterte government not to try to become a part of the trade compact. There are, however, some areas of concern that must be addressed. The RCEP must be ratified as a treaty; that is not unusual, but the terms of the pact must be examined closely. One of the knocks against the RCEP – and not only from the Philippines – is that China has put in it a number of political conditions. Duterte’s friendly posture toward China notwithstanding, those have no place in a trade pact, and should not be in the RCEP.

Another consideration, which we discussed in this space yesterday, is that our own domestic laws very likely need to be reviewed and modified to take the best advantage of arrangements like the RCEP, specifically, easing investment restrictions which for too long have been an obstacle to greater economic growth and national competitiveness.

Above all, the government and the nation’s business community must realize that joining the RCEP, while providing many opportunities for the Philippines, will require a great deal of work to realize those opportunities. It will open up wider and potentially very lucrative new markets for our country’s goods and services – but it will do the same for every other participant country as well. Our policy makers and business leaders must be willing to innovate and take new risks, if the Philippines is to compete effectively.


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  1. Yonkers, New York
    24 November 2016

    A President Donald Trump is clearly averse to globalization, as he made more than abundantly clear to the whole world on the campaign trail. He is for killing NAFTA, for aborting the birth of TPP, for the US withdrawing from the World Trade Organization [which could prove its death knell!], for withdrawing US support to the NATO [because, he fumes the 27 other members have reneged on their commitment and responsibility to support it to the tune of 2% of their annual GDP], to levy a 45% tariff on exports to the United States–all of these meaning that the US will be an ISOLATIONIST and seek to be the fortress that it was once, protected by two oceans.

    The Philippines thus would in face no choice but to join China’s RCEP, if it is not to be left behind by all the other nations which have evinced their readiness to join it. Anyway, President Duterte has already converted the Philippines into a Communist state, and its accession to the RCEP will be no problem; in fact his friend Chinese President XI JINPING not only must expect the Philippines to join RCEP, he must assume that as a matter of course.