RCEP Trade Ministers Set to Conclude World’s Mega Trade Deal

MANILA—Trade Secretary Ramon Lopez reported that the recent meeting of the trade ministers of the Regional Comprehensive Economic Partnership (RCEP) participating countries resolved almost all remaining outstanding issues of the trade deal.

During the virtual 8th RCEP Intersessional Ministerial Meeting (8th RCEP MM) held on 27 August 2020, the trade ministers of the Association of Southeast Asian Nations (ASEAN) and its five partners—namely, Australia, China, Japan, New Zealand, and South Korea—, advanced significantly the negotiation, which paves the way to its signing in November 2020.

“While there were many challenges along the way, we kept our focus on the value and importance of RCEP and the merit of fostering regional cooperation,” Sec. Lopez said.

He added: “The conclusion of RCEP negotiation is a good symbol that notwithstanding the current pandemic, many great things can be accomplished, such as the affirmation of an international rules-based system for trade and investment in the region.”

Launched in November 2012, RCEP is an initiative by ASEAN to encourage trade among its member states and its Free Trade Agreement (FTA) partners. Without India, RCEP accounts for 30% of the world’s global population at 2.2 billion and 28.2% of the global GDP at a combined USD23.9 trillion, much larger than other regional trading blocs.

The bloc would also account for 27.8% of the total trade at USD10.5 trillion, with USD5.5 trillion in exports and USD4.9 trillion in imports, and contribute to 23.6% of global inward foreign direct investment (FDI) and 33.5% of global outward (FDI).

“With RCEP, enhanced market access for trade and investment will be established. This means that the Philippines can improve its export competitiveness in key products—such as garments, automotive parts, and agricultural products like canned food and preserved fruits—while encouraging more investments in the country in vital sectors such as research and development, financial services, game development, and IT-BPO,” said lead negotiator Assistant Secretary Allan Gepty.

Sec. Lopez added: “RCEP is a major milestone for the region and its partners, and is definitely more comprehensive than any FTA of ASEAN.”

Notwithstanding the significant progress of the negotiations, the trade ministers remained open to the participation of India in RCEP.

Meanwhile, the Trade Secretary also cited that the momentous trade deal, poised to be signed by November this year, will have major impact on jobs for the Filipino people and the enhanced participation of MSMEs in the global value chain.

“We are optimistic for the future of the country as we are set to conclude a historic milestone, especially in this time of crisis and the region’s post-pandemic recovery,” Sec. Lopez said.

DTI Chief and SB Corp Chairman Convenes SB Corp Board of Directors

Department of Trade and Industry (DTI) Secretary and Small Business Corporation (SB Corp) Chairman Ramon Lopez on September 13, 2019 convened the Corporation’s Directors and Officers to discuss SB Corp’s loan programs for micro, small and medium enterprises (MSMEs), especially the administration’s landmark program Pondo sa Pagbabago at Pag-asenso (P3). The P3 program has extended financing assistance to over 96,000 micro entrepreneurs as the government's flagship program that aims to topple loan sharks has widened its reach throughout the country since its inception in 2017. As of September 16, 2019, the SB Corp has released a total of P3.3 billion worth of loans to micro entrepreneurs through its 378 credit delivery partners that has reached rural and far-flung areas in the country. Under the P3 Program, a micro enterprise can borrow between P5,000 up to P200,000 depending on its business need and repayment capacity with no collateral requirement.  Interest rate and service fees, all in, do not exceed 2.5% monthly. The P3 Program serves as an alternative to the P30 billion “5-6” money lending industry that charges 20% nominal interest rate to MSMEs. Led by SB Corp Chairman and Trade Secretary Lopez (center, seated), in photo are (seated from L-R) SB Corp Director Merly Cruz, SB Corp President and CEO Ma. Luna Cacanando, DTI Undersecretary for Regional Operations Blesila Lantayona, and Department of Finance Representative Reina Cuarez. (Second row) Directors Joe Jay Doctora, Santiago Lim, Benel Lagua, Ferdinand Tolentino, and Manuel Bendigo.

DTI Chief: PH Gov’t to Pursue Reforms to Seize Opportunities from US-China Trade War

MALACAÑAN – According to Trade Secretary Ramon Lopez, the government needs to pursue more reforms to take advantage of opportunities resulting from the ongoing US-China trade war.

Sec. Lopez said that the Cabinet decided to adopt the recommendations of the Department of Trade and Industry (DTI) and the National Economic Development Authority (NEDA) during a joint presentation at the 41st Cabinet meeting last 4 September. The proposed solutions require a whole-of-government approach and involve several government agencies aside from DTI and NEDA.

PH is the second-best Asian export performer, with a merchandise export growth of 1.2% in the 2nd quarter of 2019. Among 11 Asian countries measured, PH, Vietnam, and Malaysia were the only countries with positive growth. Meanwhile, China, Chinese Taipei, Japan, Thailand, Singapore, Hong Kong, South Korea, and Indonesia reported contractions in merchandise exports.

“The Philippines is not as vulnerable as other countries, as exports only account for 15% of our GDP. But a prolonged trade war will eventually affect our export growth,” said Sec. Lopez.

Sec. Lopez added that the trade war is “an opportunity for the Philippines to attract more export-oriented manufacturing foreign direct investments. However, it is necessary to address key constraints in attracting investors to the country.”

Board of Investments-approved projects from the US and China are growing, albeit at different rates. US investments grew by 7.3% from PHP583 million in 2017 to PHP625 million in 2018. Meanwhile, Chinese investments grew by 8,364% from PHP576 million in 2017 to PHP48.74 billion in 2018.

To achieve this goal, DTI and NEDA proposed recommendations, ranging from short-term to long-term strategies, said the Secretary.

DTI is already implementing some of the short-term strategies, like eliminating investor uncertainty by supporting the passage of the Corporate Income Tax and Incentives Rationalization (CITIRA) Act, and to further liberalize the market through amending the Foreign Investment Act, Public Service Act, and Retail Trade Liberalization Act.

To improve ease of doing business, Sec. Lopez said the gov't is seeking to expedite web-based solutions by establishing a Central Business Portal and fully-operationalizing TradeNet, the government’s online platform for trading permits.

In tandem with these are recommendations to ensure national security and peace and order considering the rising investments from China and to assist local workers who will be displaced due to the trade war.

Lastly, Sec. Lopez said DTI will continue its “Last Touch” trade strategy, which aims to integrate PH in regional value chain production networks to enhance local value-added and attain the best access to major markets. The agency does this by deepening regional partnership through the Regional Comprehensive Economic Partnership (RCEP), while pursuing trade agreements with countries outside the Asia-Pacific region.

The Secretary likewise related long-term strategies like the collaboration of different government agencies to improve the country’s business climate. By developing state-of-the-art ports, airports and guaranteeing affordable and reliable energy throughout the country, investors will be encouraged to locate in emerging hubs outside of Metro Manila.

To improve the Philippine human capital, DTI and NEDA suggested to equip students and workers with the skills needed the Fourth Industrial Revolution (Industry 4.0). There should also be a government-led effort to promote innovation by building regional inclusive innovation centers (RIICs) in major cities and provinces. These RIICs will serve as a hub for startups and partnership projects among the industry, government, and academe.

DTI will also lead in linking domestic Micro, Small, and Medium Enterprises (MSMEs) with global businesses. The agency will also partner with other concerned agencies to strengthen national quality infrastructure for standards setting, testing and accreditation, and metrology to create more competitive products and industries.

Sec. Lopez said that these initiatives will not only shield the Philippines from the worst effects of the US-China trade war but will also improve the country’s attractiveness to foreign investors in other countries in general.

He added that attracting foreign investments is part of President Rodrigo Duterte’s promise of a more comfortable life for all Filipinos by providing decent job and livelihood opportunities.

Mega Trade Deal in the Final Stages

BANGKOK — The sixteen (16) Ministers of the Regional Comprehensive Economic Partnership (RCEP) participating countries from the 10 members states of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Viet Nam) together with its Free Trade Area (FTA) Partners from Australia, China, India, Japan, Korea and New Zealand gathered on 8th of September 2019 in Bangkok, Thailand for the 7th RCEP Ministerial Meeting.

According to Philippine Trade Secretary Ramon M. Lopez, the RCEP Ministers expressed their collective determination to conclude the negotiations this year and recognized that the parties have reached a critical milestone as the conclusion of negotiations draws near. The Ministers mandated the negotiating teams to finish the last pending items on market access as well as a couple of issues on rules before the end of the month.

The 3rd RCEP Leaders’ Summit, to be attended by the Presidents and Prime Ministers, is scheduled at the sidelines of the ASEAN Summit in early November 2019, where the conclusion of the RCEP is set to be announced.

To ensure that the agreement will be concluded, the Ministers committed to exert utmost flexibility, and provide appropriate resources for the negotiations.

In today’s growing global economic uncertainty and trade frictions, the conclusion of the RCEP would help bring back the confidence to the international trading system and help ensure a more stable environment in trade and investment.

The agreement will also help level the playing field and help contribute in building a free and fair market in the region.

“For the Philippines, this agreement is envisaged to achieve greater market access for goods, services, and investments, and provide a business friendly and trade facilitative rules for businesses and investors.” Lopez said.

The final round of negotiation is scheduled on September 19-28, 2019 in Danang, Vietnam.

Read the 7th RCEP MM Joint Media Statement here: https://asean.org/storage/2019/09/RCEPMM7-03-RCEP-MM-7-Joint-Media-Statement-FINAL.pdf 

DRIVERS OF MSME DEVELOPMENT

Thai Prime Minister Prayut Chan-o-cha met Department of Trade and Industry (DTI) Secretary Ramon Lopez and other ASEAN Economic Ministers (AEM) prior to the opening of the 51st AEM Meeting and Related Meetings in Bangkok on 6 September 2019. The Prime Minister encouraged ASEAN countries to support micro, small, and medium enterprises (MSMEs) by teaching technological and digital know-how and encouraging innovation – the same strategies that President Rodrigo Duterte and DTI implement. The Prime Minister also underscored the importance helping SMEs level up their businesses. In the Philippines, DTI continues its effort in upgrading MSMEs and ensuring they are at the front and center of its economic agenda through various public and private partnerships. DTI implements the 7Ms framework (Mindset Change, Mastery, Mentoring, Money, Machine, Market Access and Models of Negosyo), a holistic approach of the government that would develop smarter entrepreneurs for poverty reduction.

DTI Chief Pushes for Pragmatic Direction in RCEP Deal

Trade and Industry Secretary Ramon M. Lopez urged his fellow ministers to be more realistic to conclude the Regional Comprehensive Economic Partnership or RCEP.

Sec. Lopez represented the Philippines (PH) during the 5th RCEP Intercessional Meeting in Tokyo on June 30 to July 2, 2018, where he joined Japan Prime Minister Shinzo Abe, ASEAN Secretary-General Dato Lim Jock-Hoi, and trade ministers from the 16 RCEP Participating Countries (RPC), namely the ASEAN 10 and ASEAN free trade partners: Australia, China, India, Japan, South Korea, and New Zealand. The group targets to finish negotiations this year to finalize the agreement by next year.

“It is about time that we shift gears and lean towards being more realistic than idealistic. While we attend to our own interests, we should also remember that a mutually-beneficial agreement requires trade-offs,” said Sec. Lopez.

“We should also keep in mind that this mega-regional trade pact should be inclusive and progressive and should cater not only to today's generation but also of the future,” he added.

The free trade agreement that began negotiations in 2013 covers trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues. On trade in goods, some countries' submissions were still below the targeted 92% for tariff elimination. RPCs committed to submit improved offers by the middle of July.

Meanwhile, Sec. Lopez commended the progress on e-commerce for closing several articles in the RCEP Key Elements Paper. He said that e-commerce significantly lowers the barriers to entry and operating costs for businesses, particularly Micro, Small and Medium Enterprises (MSMEs), which comprise 99.6% of all registered businesses in PH.

The RPCs will meet again in Singapore this August to assess the outcome of the 23rd round of negotiations in Bangkok, Thailand.

Once concluded, RCEP will be one of the biggest free trade agreements with the 16 participating countries accounting for almost half of the world population, 31.6% of global output, 28.5% of global trade, and a fifth of the global foreign direct investment inflows as of 2016.