RCEP: Promise or peril?

For agriculture, the Regional Comprehensive Economic Partnership (RCEP) can either be a promise or a peril. This depends on what happens in the next few weeks, as the Senate decides whether to ratify it or not.

At the Feb. 13 meeting of the Senate RCEP technical working group, the AgriFisheries Alliance (AFA) proposed six conditionalities if the RCEP is to be ratified. The AA represents the three major sectors of farmers and fisherfolk (through Alyansa Agrikultura), agribusiness (Philippine Chamber of Agriculture and Food, Inc.), and science and academe (Coalition for Agriculture Modernization in the Philippines).

Two days later, during the Senate plenary session, a resolution was presented that included four of the six conditionalities. This document was unprecedented in that the main resolution covered only one fourth of a page. However, the conditionalities (referred to as guidelines or instructions) occupied four pages.

Unless certain government action is taken on specific issues, the RCEP might become a peril. It was also an indication that the executive branch had not delivered on several critical governance issues that are preventing agriculture from developing properly.

Inaction

What caused much of the delay in the Senate ratification was government inaction on the suggested conditionalities. This was brought up more than a year ago on Jan. 5, 2022 to the public-private Philippine Council of Agriculture and Fisheries (PCAF). Two months later, on March 11, the PCAF international trade committee approved specific conditionalities for RCEP. Still, no action was taken.

Finally, at the Feb. 7 meeting of the Senate committee handling RCEP, Sen. Loren Legarda said she would ensure that the conditionalities would be part of any recommended ratification, or else she would resign. Legarda made good on her strong position.

Her sponsorship speech last Feb. 15 endorsed this written resolution: “For its effective implementation of the RCEP agreement and the Free Trade Agreement for which the Philippines is a party, the Senate of the Philippines deems it necessary that the following be encrypted and implemented …”

Among the conditionalities given prominence were four of the six suggested AFA conditionalities: 1) first border controls to address rampant smuggling and quarantine issues; 2) private sector monitoring of the agriculture budget to prevent significant corruption and wastage; 3) a legally mandated management information system to enable effective planning and implementation; and 4) consolidation and clustering of the relevant average 1.5-hectare holdings to achieve economies of scale.

The two conditionalities not included were: 1) identification of RCEP threats and corresponding measures; and 2) specific one-year action plans and budgets for the critical agriculture subsectors. It was stated that these would be more appropriate in a separate document.

Critical

The most important RCEP conditionality is “the creation of the Senate Special Oversight Committee on the RCEP Agreement.”

In his opening statement, Senate President Miguel Zubiri said they would also require an advisory body composed of private sector stakeholders while making special mention of agriculture. There would be improved governance measures that would ensure “trust, transparency, and accountability.”

This critical conditionality was not part of our previous World Trade Organization (WTO) accession. Consequently, after 25 years, it resulted in peril.

The P60-billion promise of added value resulted in our agriculture share to total value decreasing from 21 percent to 10 percent. The promise of 500,000 new agriculture jobs annually showed our workers declining from 11.1 million (or 40 percent of total labor) to 9.7 million (or 23 percent).

The promise of improving our trade balance went the opposite way from a positive P292 million to a negative P8.9 billion in 2021 and an expected further deterioration of 35 percent for 2022.

Will the promise of RCEP result in the same peril that our agriculture industry experienced in WTO? Much depends on the unprecedented conditionalities to be decided upon by the Senate in the next few weeks to reverse a gloomy forecast.