Deadly rush into trade agreements
Without proper due diligence, rushing into trade agreements can mean the death of businesses, the loss of jobs and a significant increase in poverty. This happened to our agriculture sector when we joined the World Trade Organization (WTO). We never got the promised support services to make our agriculture competitive. We also agreed to very low tariffs without demanding compensating action from other countries. It was unilateral disarmament.
The promised increase in investments and income never came. We do not want this to happen again. Joining WTO was the right move, but we did not exercise due diligence. This should not happen again.
The Senate is discussing this week the Regional Comprehensive Economic Partnership Agreement (RCEP). But has the due diligence been done to merit joining RCEP now?
The information presented below on RCEP’s negative impact on our people should be carefully studied. If it is concluded that RCEP is harmful, this should still be compared to the disadvantages occurring from not joining RCEP. If the latter is worse, and we can do nothing about them, then we must choose the lesser evil and adopt the RCEP.
Let us look at the reported RCEP disadvantages. An ideal trade agreement for us should result in more exports and less imports, thus increasing rather than losing our jobs.
1. Imports: A study by Trade Justice Pilipinas and Focus on the Global South shows that, while we will have decreased imports from Asean (Association of Southeast Asian Nations) countries, there will be increased imports from China and Korea. Our total imports may rise by P7.4 billion.2. Exports: RCEP will result in a decline in exports, estimated at P5 billion. This means we will actually lose our jobs to other countries.
3. Balance of trade: Asean countries are expected to be net losers in the balance of trade amounting to P425 billion. Of this amount, the Philippines will lose P13 billion.
4. Revenue loss: Our tariff revenue will fall by P2.9 billion. This could be better spent supporting our agriculture sector, such as providing the necessary post harvest facilities in corn, fisheries and vegetables.
5. More investments: This is the promise often made when trade agreements are made. But this often does not happen. In fact, the study showed that “11 percent of foreign firms in the Philippines plan to reduce operations, more than in other countries included in the scope of the survey.” There are other causes much more important than trade agreements in affecting investments. Examples are policies favoring subsidized imports over domestic production, stability in implementing announcements and good governance.
6. Insufficient staff work: It is reported that not enough time and study has been given to issues such as the above. Nor has there been a thorough study of what will really happen to us if we do not join RCEP.
Elias Jose Inciong, president of the United Broiler Raisers Association and executive vice president of Alyansa Agrikultura, stated two important considerations : “(a) We are already in the last place in terms of trade balance is 2018 among the member countries, and (b) India opted out of RCEP as it deemed it was hurtful to its citizens.”
Is RCEP hurtful to our citizens, and should we therefore opt out of RCEP like India did? If due diligence has not been done, our Senate should postpone the RCEP concurrence decision until the required work is done.
Private sector participation
What is extremely unfortunate is that the legally mandated public-private Philippine Council of Agriculture and Fisheries terminated the quarterly meetings of its international trade committee two years ago. Consequently, the private sector has been effectively silenced on critical trade agreements like the RCEP and other international trade issues. Examples are rice tariffication without the necessary safeguards, the sudden reduction of tariffs for subsidized products like pork, and smuggling.
This lack of transparency and biased position favoring imports over domestic production should be stopped. In addition, the private sector should be allowed to participate.
This was identified in one of 12 recommendations given for the presidentiables to answer in well-publicized open Town Hall agriculture meetings starting on Nov. 23, one presidentiable per day: “#3. Emphasis must be placed on self-reliance in domestic production, coupled with farmers’ productivity, profitability and protection from pandemics, calamities and climate change events. The government should implement safeguard measures and other trade measures to protect local producers from serious market disruptions and unfair trade practices. Importation must be a last resort.”
Any decision on RCEP should be guided by this recommendation, which was approved in a historic first joint position by leaders from three sectors: farmers and fisherfolk, agribusiness, and science and academe. It is time the private sector be properly heard in critical issues like the RCEP.
The author is Agriwatch chair, former Secretary of Presidential programs and projects and former undersecretary of DA and DTI. Contact is Agriwatch_phil@yahoo.com.