Postponement of RCEP: an opportunity to rethink trade policy


The Senate complied with the wishes of more than 100 farmers’ organizations and 200 mayors of municipalities involved in organic agricultural production. The senators postponed until May the decision of the chamber on whether or not to ratify the Regional Comprehensive Economic Partnership (RCEP).

This postponement is a historic break for the nation. It shouldn’t be wasted. This should give the Senate and Malacañang the opportunity to rethink the country’s trade policy.

Trade policy is an instrument used by countries around the world to build their national capacities. Watch how the European Union, a staunch proponent of liberalizing global agricultural trade, continues to maintain its Common Agricultural Policy, a program that offers a costly support price to EU farmers whether or not they produce too much milk and butter. Watch how the United States similarly maintains a costly subsidy program for American farmers (through its Farm Bill program that is renewed every five years) while pushing World Trade Organization members ( WTO) to open their agricultural markets. Watch how India’s Narendra Modi swallowed his pride last year by repealing grain supply laws (similar to the Philippines’ 2019 rice pricing law) that his free-trade technocrats put in place in 2020 amid the pandemic.

And yet, in the Philippines, trade policy has been reduced to a simple matter of opening up the internal market in the naïve belief of economic technocrats that trade liberalization per se will lead to greater competition, more investment, economic efficiency, higher productivity and jobs and prosperity for all. As we all know, the authors of such unilateral trade liberalization cannot prove that their policy works.

The only evidence they can offer are manual calculations of expected economic gains from trade liberalization using CGE economic modeling exercises. And when the actual market outcomes from such exercises deviate from their modeling predictions, these neo-liberalizers of free trade turn to simplistic slogans, for example, “we can’t afford to be left behind.” account” or “foreign investors will ignore us. Look how they failed to explain why the neoliberal predictions made during the 1994 Senate debate on the ratification of WTO membership did not materialize: 500,000 new jobs and 60 billion pesos GVA in agriculture every year. What lastima!

The fact is that the main objective of trade policy should be to preserve, improve and support jobs, businesses and farms at home. This means that we must not accept or promote trade policies and negotiations which tend to weaken existing industry and agriculture and jobs in these sectors. This does not mean maintaining a universal type of protectionism. Rather, it is to work towards an orderly adjustment and a reasonable transition program for any sector affected in the event of a liberalization process. This means that we must not lower our tariffs or open a sector before other countries. Our tariff reduction or liberalization program must meet our requirements to survive, grow and prosper.

The problem with the Philippines’ proposed participation in RCEP, an agreement that requires the wholesale opening of industrial and agricultural markets on the basis of a zero-for-zero tariff agreement, is that there is very little government business development strategies and planning. For example, the Ministry of Agriculture has agricultural attachés posted in China, ASEAN, Europe and the United States. And yet, at a recent DA meeting on international trade, none of these attachés even discussed RCEP and its implications for Filipino producers and consumers. The attaché assigned to China is also unable to monitor and report the smuggling of Chinese agricultural and fishery products dumped in the Philippines.

Apparently, the general orientation of the Filipino agricultural attachés is reduced to a simple task: to research potential markets for Filipino products and help facilitate their entry into these markets, such as compliance with phytosanitary standards or the use of certain preferential tariffs offered by some developed countries. countries. These attachés hardly address the problem of agricultural trade deficits. More importantly, they do not discuss how small farmers and fishers can be involved in this business called global trade and how this trade can affect them at the farm level.

As things stand, attachés are naturally attached to those who are directly involved in world trade. These include large exporters/shippers, agro-processing companies, corporate plantations, agricultural integrator companies and large importers/retailers. Reporting on how small-scale farmers and fishers may be affected by RCEP and global trade is obviously not within the mandate of agricultural attachés. One wonders what is the TDR of commercial attachés under the supervision of the Department of Commerce and Industry (DTI).

This brings us back to the urgent need for an honest and candid review and overhaul of the country’s trade policy regime. The Senate and Malacañang should involve all stakeholders, small farmers and producers in particular, in such a review process. There should be a multi-stakeholder review and dialogue, which can address the following points:

1. Review and reverse trade policies that erode and subvert the country’s industrial and agricultural base.

2. Identification of unfair and predatory practices such as dumping and smuggling committed by trading partners.

3. Institutionalization of corrective remedies against unfair trade practices.

4. Full disclosure of the Philippines’ trade commitments under the WTO and the proposed RCEP.

5. Identification of winners and losers under various trade agreements.

6. Programs to transform potential business losers into survivors and winners.

7. Formulation of a comprehensive trade and production development program based on the needs of Philippine industry and agriculture.

As for RCEP, the following “questions” or “tests” should be raised by the Senate before making its decision on ratification:

  • Will participation in RCEP lead to more jobs, businesses and income, or will it be the other way around?
  • Are RCEP’s trade clauses consistent with the country’s growth capacity?
  • Can the Philippines survive the commercial juggernaut posed by China and the major RCEP economies?
  • Is RCEP not a threat to the country’s food security?

These are just a few questions for the Senate to answer. It would be best for the Senate to engage in more dialogue with farmer organizations and pro-organic mayors before making its final decision on whether to ratify RCEP. Agricultural trade policy must be farmer-centred.

Dr. Rene E. Ofreneo is Professor Emeritus of the University of the Philippines.

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