RCEP AND 'TRICKLE-DOWN ECONOMICS'

The ASEAN Economic Integration program has just scaled up into a broader collaboration from the ten ASEAN countries to now including the heavyweight countries of Japan, China, South Korea, New Zealand and Australia to form a free trade bloc called the Regional Comprehensive Economic Partnership or RCEP.

The key outlook here for countries like the Philippines, if and when they ratify the agreement, is the impact of the RCEP's ‘trickle-down economics’.

If, to start with, PH imports went up from October at $10.43B to $10.98B in November, offhand, increase in imports will benefit not only industries like PH manufacturing but also the consumer market.

A layman’s understanding of the import/export balance is it might be better off if exports are higher than imports for the country to simply earn more than spend more.

Total external trade in goods with ASEAN countries amounted to $40.02B or 21.9 percent of the country’s total trade. The RCEP may not only mean more exports from the Philippines but a corresponding increase in imports. Our country will definitely need to enhance its total exports at $70.93B vs. $111.59B in imports.

Benefits accruing higher exports will be improvements in infrastructure, simplified systems of doing business, more investments in labor development and resources and even education. It seems that the sectors achieving gains much more are those in both the labor and consumer markets. From a total labor force population (as of Oct. ’20) of 43.65 million, total employed were at an estimated 39.84 million or more than a third of our total population of 109,035,343 million (earlier at 2019).

The Covid19 pandemic will definitely decimate further those employed and lower its total to at least a third of the country’s population.

The consumer market emanates from the total number of households in the Philippines estimated at 21.8 million in 2021 compared to 20.2 million in 2016. Early in 2020, household consumption expenditure for food and non-alcoholic beverages was valued at about P5.2T; for recreation and culture, P178B.

The question is: will RCEP’s ’trickle-down economics’ benefit more the export trade vs. the import trade or production vs. consumption, laborers vs. consumers?