PHILIPPINE participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) may result in a decline in gross domestic product (GDP), according to the Philippine Institute for Development Studies (PIDS).
鈥淭he decline in the GDP connected with the Philippines鈥 participation in the CPTPP can be seen in the deterioration of the country鈥檚 trade balance. The Philippines gains a positive trade balance when it does not join the CPTPP,鈥 PIDS said in a study.
鈥淭his GDP decline will be greater if all other countries interested in the free trade agreement join the block,鈥 the government think tank added.
Signed in 2018, the CPTPP is a free trade agreement involving Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
In 2021, the Philippines expressed interest in joining the trade deal.
鈥淪ince some CPTPP members are the Philippines鈥 top trading partners, the free trade agreement鈥檚 existence 鈥 even without the country鈥檚 participation 鈥 significantly affects the country鈥檚 trade,鈥 PIDS said.
If the Philippines joins the trade deal, PIDS said that there is a likelihood of a wider trade deficit due to the accessibility of more imports.
鈥淗igh value-added industries favored by the existing trade barriers will experience a loss, thus causing a decline in the country鈥檚 gross domestic product,鈥 it added.
The Philippines is a net importer. Its trade balance has mainly been in deficit for more than two decades.
In January, the trade deficit widened to $5.74 billion, the highest single-month total since August 2022.
The Development Budget Coordination Committee set a 3% growth target for exports and a 4% growth target for imports for this year.
On the other hand, PIDS said that joining the CPTPP will boost employment of unskilled workers and improving earnings as exports diversify.
鈥淭he country can optimize the benefits of CPTPP if the government creates the necessary conditions to improve technology, minimize the costs of export diversification, and differentiate its exports from the rest of the world,鈥 PIDS said.
鈥淭he gainers are sectors where the country seems to have a comparative advantage and where firms do not require relatively high skills. The losing sectors are those where labor appears to be more intensive but (whose products are) not highly valued abroad,鈥 it added.
It said that the trade deal could increase employment in Luzon, particularly the National Capital Region and Central Luzon.
鈥淎n increase in employment is also (projected) for Western Visayas, Eastern Visayas, Zamboanga Peninsula, and the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM). However, participating in the CPTPP reduces employment for the rest of the country,鈥 it added.
If the Philippines joins the trade deal, the metal, apparel, vegetables and fruits, wool, and leather industries will see an increase in output.
鈥淚n agriculture, the rice sector may experience losses, but vegetables and fruits are seen to gain more. In industry, there appear to be substantial gains in metals and wearing apparel but possible losses in the motor vehicle sector,鈥 it added.
PIDS said that the government can mitigate potential losses by increasing the differentiation of the country鈥檚 product offerings and producing them more efficiently.
鈥淭o increase the benefits from export diversification, the country can increase earnings by improving technology and moving toward more differentiated products. This does not require creating new products but simply indicates producing currently available goods with greater efficiency and lower costs,鈥 it added. 鈥 Luisa Maria Jacinta C. Jocson
