Going regional: Which mega trade deals should the Philippines join?

An IRRI Seminar

By Ramon L. Clarete
Professor, UP School of Economics
UP Diliman, QC

12 March  2015
1:15-2:15 p.m.
Havener Auditorium
IRRI




Abstract:

Like other trading countries in the Asia-Pacific region, the Philippines may need to join mega-trade deals to stay competitive. The Trans Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) are the large trade agreements that exist in the region. The Philippines is already a negotiating party of the RCEP, being an ASEAN member state, and has been invited to join the TPP but has not made the decision to do so yet. Using a gravity model of trade, this study observes that RCEP countries tended to have a more positive growth in exports after the 1990s. The average RCEP country's exports have a 29.18% boost over the average trading country's performance. However, if the Philippines decides to join the TPP and carries out the structural reforms that take it to become more open to trade as an average TPP member, it stands to gain 48.88% over the average export performance. The Philippines’ imports could be higher by 92.76%, while exports could increase by 127.9%.  The country should stay in the RCEP and join the TPP at the next opportunity to accede.