IF the Philippines joins the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the country’s gains could reach $15 billion by 2027, according to estimates by the Asian Development Bank (ADB).
The Philippines, Indonesia, and Thailand have already indicated their interest to join the regional trade bloc but are not yet members to date. Of the three Asean economies, Thailand is expected to see the biggest gain—$20 billion—while Indonesia, the least gain at $11 billion.
Expanding the CPTPP to include the Philippines, Indonesia and Thailand is expected to generate $156 billion in gains for all members, incrementally adding $63 billion over CPTPP 2—which adds Chile, Malaysia, the UK and the Republic of Korea by 2024.
“We define the second enlargement of the CPTPP as adding three more members, Indonesia, the Philippines, and Thailand in 2027. The results of the CPTPP3 scenario include CPTPP2, the first enlargement, so the net effects of adding the three economies can be calculated as the benefits of CPTPP3 less those of the CPTPP2,” the report stated.
“CPTPP3 generates $156 billion in gains for all members, incrementally adding $63 billion to CPTPP2. The marginal gains of Asean economies are significant, as all three new CPTPP members are Asean members,” added the report titled, “Asean and Global Value Chains: Locking in Resilience and Sustainability.”
Joining the CPTPP, ADB said, will improve the Philippines’s global reach, with exports seen growing by $27 million. The Regional Comprehensive Economic Partnership (RCEP), which the country recently ratified, could bring in an addition of $12 billion.
“The CPTPP2 and CPTPP3 enlargements are feasible and arguably likely. But is there hope—as there was only a decade ago—for a breakthrough agreement that offers an even more solid step toward global liberalization,” the ADB said.
These simulations include global estimates for increases in global employment from 2021 to 2035, especially for skilled workers in light of improvements in global value chains. The report said most 2035 employment levels are expected to exceed by 100 percent compared to 2021.
In the new normal scenario, for example, global employment of unskilled workers in 2035 is 13.4 percent higher; and for skilled workers, 65.3 percent higher than 2021 employment.
In terms of wages, scenarios showed spikes in global real wages from 2021 to 2035, especially for unskilled workers. Unskilled real wages rise by 38.3 percent and skilled real wages by 11.2 percent for the world; and by similar amounts in most regions.
“Thus, real wage gaps between unskilled workers and skilled workers will tend to narrow. Also, there is much less cross-economy variation in real wage growth results than in the employment results,” the report said.
“These are interesting and hopeful findings; given the projected global shift in employee qualifications from unskilled to skilled categories, supply changes may make unskilled workers relatively more scarce than skilled workers, warranting larger wage gains over time, in percentage terms,” it added.
The ADB report finds that global value chains proved more resilient to the impacts of Covid-19 than expected, even as firms had to adjust to the disruption, given their dependence on only a few suppliers for essential inputs and goods. As such, the region needs to build stronger resilience in its global value chain segments while expanding trade, investment, and regional integration.
The report also found that the competitive advantage of employing low-skilled labor is diminishing as new technology continues to upgrade global value chains. The region, thus, must create a critical mass of workers apace with new technology and with technological skills.
In 2021, the Department of Trade and Industry (DTI) said the Philippines is keen on engaging with the CPTPP members after expressing its intent to join the regional trade pact.
Trade Undersecretary Ceferino Rodolfo told reporters DTI is reaching out to CPTPP members to discuss requests on market access as Manila aims to be part of another mega trade deal. He explained that the market access schedule differs in each country.
CPTPP is a free trade agreement (FTA) among Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam. It was signed on March 8, 2018 in Santiago, Chile.