The RCEP train has left without us, but by our own choice. At the start of the year, the world’s biggest regional economic pact to date, the Regional Comprehensive Economic Partnership, came into force. Oppositors fearing dire consequences from our joining the agreement have convinced our senators to sit on its ratification. Of its 15 signatories—the 10 Asean member states and five of their largest trading partners China, Japan, South Korea, Australia, and New Zealand—10 had already ratified the agreement to set it in motion on Jan. 1. South Korea’s legislature ratified it on Dec. 2, putting them on board on Feb. 1 (60 days after ratification). That leaves Indonesia, Malaysia, Myanmar, and the Philippines as the only ones yet to get on board.
Apprehensions being raised against our joining the RCEP remind us of those that surrounded our accession to the World Trade Organization (WTO) in 1995, and to the Asean Free Trade Agreement (AFTA) in 1992. As a direct participant in the senior officials’ negotiations in 1991 for the latter, I recall how our Asean counterparts called out our country then (along with Indonesia) for being the “drag” on proceeding with the pact. We stood out as raising the most objections and exceptions to easing trade barriers especially on “sensitive” agricultural products, particularly rice and sugar. And as we later ratified the WTO agreement, we likewise held back on liberalizing farm products, especially rice, for which we obtained a time-bound waiver on the agreed commitment to eliminate import quantitative restrictions (QRs) and convert them into more transparent tariff protection (aka “tariffication”).
When the 2005 deadline for the waiver came, we sought an extension to 2012, then asked for yet another extension to 2017, by which time we had the dubious distinction as the only remaining country in the world with rice QRs. Beyond rice, we also set import tariffs of 30-50 percent for meats, vegetables, sugar, and rice, with the highest rate on the last two (even as the government actually continued to control and restrict their imports). With all other import tariffs already within 0-30 percent since the 1990s, these farm products became our most highly protected commodities, as the bias of our trade protection actually shifted from manufacturing to agriculture in the 1990s. This is quite contrary to what left-leaning critics claim that our agriculture saw “unbridled liberalization.”
Let’s face it: Our stunted agriculture really traces to persistent government mishandling of the sector, and bridling farm trade only abetted that. It allowed our past agriculture authorities to sleep on the job, and at worst, misuse the funds meant to help modernize our farms and fisheries and achieve enhanced competitiveness. It led production costs, hence domestic food prices, to rise over time, making our poor more and more food insecure—while it became increasingly attractive to smuggle these commodities in, with the widening price differential yielding fabulous profits. How do we explain that our neighbors, full WTO members, saw their farm sectors leave ours far behind?
The RCEP hardly changes our trade commitments already prevailing under the AFTA and the existing bilateral Asean FTAs with the five other countries. Its main difference lies in how those other five countries now also have FTAs with one another where none existed before. India, originally part of the RCEP initiative, left at the last minute for fear of opening trade with formidable China. But we’ve already had open trade with China under the Asean-China FTA since 2010, as we do with all other RCEP members under the AFTA and the other bilateral Asean FTAs with the rest. So what is there to be afraid of?
Staying out of the RCEP, and restricting farm trade in general, is like keeping the training wheels on a child’s bicycle indefinitely, which only retards his ability to bike on his own. I’d say it’s time we looked more at the RCEP’s opportunities (and there are many) rather than cower in paranoia and defeatist mindsets. If we only truly help our farmers the way we should, I believe our farms and farmers could come out the stronger for it.