Editor's Note: As the policy dividends of RCEP continue to unfold, trade activities among member countries are becoming increasingly vibrant. According to customs statistics, in the first five months of this year, China's imports and exports with other RCEP member countries totaled 5.11 trillion yuan, a year-on-year increase of 4.5%. Trade with other RCEP member countries now accounts for over 30% of China's foreign trade.
June 2nd of this year marked the one-year anniversary of the comprehensive enforcement of the Regional Comprehensive Economic Partnership (RCEP) among its 15 signatory countries. On June 2nd, 2023, RCEP officially took effect in the Philippines, signifying the comprehensive implementation of the agreement among all 15 signatory nations.
China-Philippines relationship now stands at a crossroads. What after the implementation of the RCEP agreement in the Philippines on Sino-Philippine trade. How can we better leverage the RCEP agreement to unlock more benefits? Wilson Lee Flores, an economics and politics analyst and a columnist for the "Philippine Star", shares his insights with us. In his view, the tense political situation may weaken the previously positive momentum of bilateral trade growth. It is crucial not to allow non-trade issues to escalate and unnecessarily undermine the many mutually beneficial economic benefits brought about by RCEP.
COA: How has the implementation of RCEP impacted trade, investment, and economic cooperation between China and the Philippines?
Wilson Lee Flores: The Regional Comprehensive Economic Partnership (RCEP) is the world’s largest free trade agreement, covering about a third of the world’s economic output, trade, and population. Since its implementation, participating ASEAN countries have been reaping multiple benefits. The Philippines was one of the last to join, only ratifying the agreement in June 2023, but still the country has been reaping benefits from RCEP and will continue to do so in the coming years.
In the first year, the Philippines has started to see positive impacts on trade and investment. Filipino businesses now benefit from easier access to key Asian markets, thanks to reduced tariffs and improved trade facilitation. This has particularly helped small and medium-sized enterprises (SMEs) and e-commerce operators.
The RCEP’s digital trade initiatives, such as paperless trading and electronic signatures, have lowered transaction costs and increased efficiencies. The easing of customs duties by about 92% over a 20-year timeframe offers Filipino SMEs new opportunities in sectors like agriculture, garments, and electronics. This is crucial for a country where the business process outsourcing (BPO) industry is a major economic pillar.
Overall, RCEP has started to create a more business-friendly environment, encouraging greater economic integration and a stable, predictable rules-based system of trade.
COA: What are the key achievements and challenges encountered during the implementation process of RCEP agreements? What are the implications of RCEP implementation for bilateral relations, including diplomatic ties and regional cooperation?
Wilson Lee Flores: The key achievements include the facilitation of more trade and investment opportunities with RCEP economies, which have bolstered economic cooperation and opened new markets for Filipino businesses. The challenges, however, are significant. Philippine companies need to decisively and continuously upgrade our efficiencies to become more globally competitive. Additionally, the often news headline-grabbing geopolitical tensions, particularly the South China Sea disputes, pose some daunting serious challenges that could dampen the otherwise consistently positive bilateral trade growth momentum.
Politically, RCEP has the potential to significantly enhance diplomatic ties and regional cooperation with member economies. The increasing economic engagement between the Philippines and China through RCEP could help mitigate some disruptive political misunderstandings. I believe it is crucial that non-trade issues should not be allowed to worsen and unnecessarily derail the numerous mutually beneficial economic benefits brought by RCEP.
COA: How do you foresee the development of economic and trade cooperation between China and the Philippines under the RCEP rules?
Wilson Lee Flores: I foresee significant long-term growth potential for economic and trade cooperation between the Philippines and China. The two economies are complementary rather than competitive. The Philippines is rich in natural and human resources, while China excels in technology innovations, infrastructures, manufacturing and finance. This synergy of the economies of the Philippines and China can drive mutual development and significantly help improve living standards in both countries.
COA: What strategies or initiatives do you believe could enhance awareness and utilization of RCEP among businesses in the Philippines?
Wilson Lee Flores: To enhance awareness and utilization of RCEP, there should be increased exchanges, communications, and dialogues between the Philippines and RCEP member countries like China, ASEAN countries, South Korea, Japan and others. This includes increasing mass media, technical, youth, cultural and diverse business group visits and dynamic interactions among RCEP countries. Promoting ease of travel and tourism between among the RCEP countries countries, hosting trade and tourism fairs, and pursuing more cooperative joint projects are essential strategies. These pro-active regional or bilateral initiatives will help Philippine businesses better understand and capitalize on the vast opportunities RCEP offers.
COA: How can RCEP implementation be enhanced to maximize its benefits for both China and the Philippines?
Wilson Lee Flores: I recommend high-level trade and business summit meetings and dialogues between the Philippines and China. Regular interactions between finance ministers, trade and industry ministers, and business chambers will strengthen economic cooperation. These annual meetings can help address challenges, identify new opportunities, and ensure that both countries maximize the benefits of RCEP. Additionally, establishing joint committees to monitor and facilitate RCEP implementation can further enhance bilateral cooperation.
Wilson Lee Flores
An Economics and politics analyst and a columnist for the "Philippine Star", board member of the Federation of Filipino Chinese Chambers of Commerce and Industry, Inc. (FFCCCII)
(The article reflects the author's opinions and not necessarily the views of China-ASEAN Observation. If you have a specific expertise, or would like to share your thought, please send us your writings at CAobservation@outlook.com)
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