Dialogue on the study entitled “Comprehensive and Progressive Agreement for Trans-Pacific

Partnership (CP-TPP): Estimating the Potential Economic Impact of Possible Philippine

Accession”

Will the PH gain from joining the CP-TPP

- Caesar B. Cororaton

What is CP-TPP?
- 11 countries in the Pacific Rim: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New
Zealand, Peru, Singapore, and Vietnam
o 12.6% of the world GDP and 6.7% of the world population
- Signed: 8 March 2018
- Effective: 31 October 2018
- Key features: Elimination of tariffs and reduction in non-tariff measures (NTMs) among members
- Driver: Reduction in trade barriers within partnership
- Effects:
o Lower trade cost within partnership
 Will shift trade flows from high-cost producers (outside partnership) to low-cost
producers (partnership)
o Trade creation – expand trade within the partnership (economies expand)
o Trade diversion – trade flows outside partnership (economies contract)

Dr. Cororaton presented CP-TPP simulations

Considerations for the simulation/scenarios:

- Original 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand,
Peru, Singapore, and Vietnam
- Expanded CP-TPP:
o Philippines (11 + P)
 o United Kingdom, Taiwan, China, and South Korea; Philippines (11 +BTCK + P)
o United States, United Kingdom, Taiwan, China, and South Korea; Philippines (11 +
UBTCK + P)

- 25% reduction in NTMs in 2022-2031

- 50% reduction in NTMs in 2022-2031 (Aggressive)

- PH includes sensitive products (rice, sugar)

- PH includes all products

- All simulation results are comparable to the baseline, where baseline entails no reduction trade
barriers in all countries

Regional Trade Effects:

- Positive trade creation for imports and exports for 11 + P, 11 +BTCK + P, and 11 + UBTCK + P
- Negative Trade Diversion for imports and exports for 11 + P, 11 +BTCK + P, and 11 + UBTCK + P

Phil. Trade Effects, Diff. From baseline, 2031 US$ mil.:

Phil. Macro Effects. % Ch. From baseline, 2031 (except welfare)

Phil. Demand for Labor, Diff. From baseline

Phil. Sectoral Export Effects of Participation, Diff. From Baseline
- This shows the positive export effects to PH

Phil. Sectoral Output Effects of Participation, Diff., from baseline, 2031, US$

Insights
 - Trade liberalization in CP-TPP generates trade creation effects; will benefit the Philippines if it
participates
o Higher GDP growth; lower commodity prices; higher factor prices; higher household
income; positive net exports; higher welfare; lower poverty
o Will support growth in strategic sectors
 Electronic equipment (semi-conductor); wearing apparel; machinery and
equipment, metals
 Labor-intensive sectors:
 Non-stable/non-traditional food sector (vegetables, fruits and nuts, other
food products)
 Service sectors (through indirect effects)
o The Philippine effective are larger as the membership expands
o All potential positive effects could be larger if complementary policies are implemented to
increase productivity and competitiveness of Philippine sectors
 Infrastructure, telecommunications, energy, etc.

OTHERS:

Ph Sectors which are negatively affected:

- Mineral products, wood products, construction (very slight negative effects on 10 sectors) (Please
see highlighted portion below)

- Per Dir. Cerefino Rodolfo:

o There is a lot of flexibility and remedies in the FTAs (WTO, etc.)
o For GP, we are not part of GP Agreement.
o Is there anything in the WTO that prevents us from giving preference to local suppliers?
None.
o Use of GP even during GP is more muted compared to other countries.
o We have not fully used GP as a development tool.