The positive impact of the Regional Comprehensive Economic Partnership (RCEP) on the Philippines can be further augmented by other policies like increasing productivity and competitiveness, according to an economist.
Dr. Caesar Cororaton, research fellow at the Virginia Polytechnic Institute and State University and a visiting scholar at the De La Salle University told a forum hosted by the American Chamber of Commerce of the Philippines the benefits of joining RCEP “would be bigger, would be much higher if (government will be aggressive and) apply other competitive and productivity measures. “
Senate is yet to give its concurrence on the ratification of the RCEP which took effect last January.
Cororaton said joining the deal will boost GDP by .2 percent this year and by 2 percent in 2031.
Crouton warned of a 0.02-percent reduction in the gross domestic product of the Philippines this year and 0.26 percent by 2031 if the country does not ratify the RCEP.
“One of the key issues in RCEP is the reduction in trade barriers… the elimination of tariffs and the reduction of non-tariff measures among member countries… which will lower trade costs. That means a shift in trade flows from high-cost producers (or those) outside of the partnership to low -cost producers within the partnership,” Cororaton said.
“Economies within the RCEP will expand but those outside will see a reduction in trade flows. Therefore, you would expect some contraction in the economies outside of the partnership,” he added.
RCEP is estimated to improve the country’s trade balance by as much as $128.2 million.
ororaton noted the increased trade flows will result in faster reduction of prices with lower cost of raw materials.
But economic contraction and slower reduction in prices would eventually increase poverty level, he said.
In contrast, joining RCEP will increase overall welfare by $ 541.2 million and lower poverty incidence by 3.62 percent in 2031.
Cororaton said four sectors will see notable improvement in exports: electronic equipment and machinery equipment in non-agriculture, and vegetable, fruits, nuts and other food products in agriculture and food.
