RCEP's Potential Impacts on Philippine Agriculture

ECONOMICS AND
College of Economics and

Management
University of the Philippines Los Baños
MANAGEMENT MATTERS
College, Laguna 4031
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CEM Discussion Paper
No.2021-02
Potential impacts of Regional Comprehensive

Economic Partnership on Philippine Agriculture
Emmanuel Genesis T. Andal and Agham C. Cuevas
Department of Economics, College of Economics and Management,
Abstract: This paper assesses and compares the potential impacts of membership in Regional
Comprehensive Economic Partnership (RCEP) on the agricultural sector of the Philippines. To do so, this
paper employs a gravity model of trade to analyze if the opportunity cost in not being a member of RCEP
is substantial, and to estimate the potential effects of the membership to either trade deal on agricultural
bilateral trade flows.
Keywords: RCEP; agricultural trade; agricultural trade policy; gravity model of trade
Introduction
As the Philippines pursues new bilateral (e.g., Philippines-European Union or PH-EU,

Philippines-European Free Trade Association or PH-EFTA) and plurilateral trade agreements
(e.g., Regional Comprehensive Economic Partnership or RCEP), it is crucial for it to have a critical
assessment of its readiness to meet the obligations and commitments set out in such new
agreements, along with the strategic opportunities and challenges these may present. It is
noteworthy that these pursuits should be looked at vis-à-vis the structure of its existing trade
relations. First, the country is a member of the Association of Southeast Asian Nations (ASEAN),
and hence is committed to ASEAN Economic Community (AEC). The Philippines also concluded
bilateral free trade agreements (FTAs) with some members of the trade groupings being eyed for
plurilateral trade agreements. There is therefore a need to investigate on how these new bilateral
and plurilateral agreements might affect the existing trade ties of the Philippines. A related issue
is whether these new agreements will indeed be a considerable boost in the country’s trade links,
given that the Philippines already has existing FTAs, either on a bilateral basis or as a member of
ASEAN with some of the member countries of these trade groupings. Furthermore, the ASEAN
region is strategically significant, as it stands astride the transport links that connects the Asia
and the Middle East and Europe through its waterways (Petri and Plummer 2014). The World
Trade Organization (2013) did CGE simulations of world trade, and determined a range of
possible global trade patterns in the next two decades. ASEAN share in global GDP will rise from
2% in 2012 to as high as 4% by 2035. Its share in global exports is 7% in 2012, and will be up to 8%
by 2035.
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These developments have made ASEAN a preferred partner as far as trade deals are
concerned, and seemed to trigger two main trajectories along which FTA negotiations are being
carried out in the Asia-Pacific region, set to characterize the economic structure of the region: the
“Trans Pacific track”, which refers to the formation of bilateral agreements across the Pacific, and
the “Asian track”, which includes agreements involving ASEAN, negotiations between China,
Japan, and South Korea, and all other endeavors to form pan-Asian FTAs (Petri and Plummer
2012). It can be said that these two tracks of trade liberalization and economic integration are
represented by two major trade initiatives in the Asia-Pacific region. Representing the Trans
Pacific track is the Trans Pacific Partnership (TPP), being worked out by 12 countries including
four ASEAN members. Representing the Asian track is the Regional Comprehensive Economic
Partnership (RCEP), a framework envisioned to unify the FTAs concluded by ASEAN throughout
Asia and Oceania, starting with China in 2003. Both these initiatives generally have the goal of
liberalizing trade and investment. Given their aims and the corresponding potential benefits, TPP
and RCEP will steer the direction of the Trans-Pacific track and the Asian track respectively in
defining the extent of economic integration in the Asia-Pacific region. It has been noted that TPP
and RCEP are possible pieces in creating a free trade area of the Asia-Pacific (FTAAP) (Ministry
of Trade and Industry, Singapore 2012).
This paper focuses on RCEP, aiming to assess the policy requirements of this new
generation free trade agreement and how the Philippines’ current policy environment stands
relative to such requirements, with particular focus on the agricultural sector. It aims to help
identify appropriate courses of action that will properly situate the agricultural sector within the
more open trading environment that has become inevitable with closer economic integration and
interdependence. The study is expected to help provide government with stronger basis with
which to (i) make an informed decision on joining RCEP and other emerging new trade
agreements, (ii) develop strategies to address specific challenges or issues attendant to such
membership, and (iii) advance the Philippines’ trade and economic interests in such new
agreements. Also, this paper aims to do a study that evaluate the potential impacts of RCEP
membership to the trade performance of member nations. Particularly, this paper empirically
assesses the nature of agricultural trade flows between current negotiating members of RCEP.
This will help us evaluate the potential effects of RCEP membership on bilateral agricultural trade
flows.
An Overview and Analysis of Agricultural Provisions in RCEP
RCEP was formally launched among the ASEAN member states (Brunei Darussalam,
Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and
Viet Nam) and the “+6” ASEAN FTA partners namely Australia, China, India, Japan, South Korea
and New Zealand at the ASEAN Summit held in Cambodia in November 2012. The RCEP is
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envisioned to be a modern, comprehensive, high-quality and mutually beneficial economic

partnership agreement (ASEAN 2012). In 2014, the group of 16 RCEP countries account for more
than 3.5 billion of the world’s population, nearly US$ 23 trillion of global GDP and over a quarter
of world trade (ASEAN 2015). Cheong and Tongzon (2013) estimated that if RCEP negotiations
will be successful, the total trade volume and GDP of the trading bloc is expected to reach
US$10.13 trillion and US$19.76 trillion respectively. As of November 2019, India has already
pulled out of the talks because of fears of the latter’s labor force being adversely affected by the
expected influx of cheap goods primarily from China1.
As of October 2018, according to the Asian Trade Center (ATC), issues tackled in RCEP
negotiations include, among many others, are market access goods, technical barriers to trade,
sanitary and phytosanitary rules, trade facilitation and customs, dispute settlement (ATC 2018).
As of June 2019, in the last parts of 29 rounds of negotiations, four issues are yet to be addressed,
namely rules of origin, depth of services commitments, e-commerce and provisions on the digital
trade, and investor protection (ATC 2019). RCEP is expected to deliver tangible benefits through
improvements in market access and coherent trade facilitation and regulatory rules and
cooperation. The RCEP framework intends to progressively eliminate tariff and non-tariff
barriers on substantially all trade in goods to establish a free trade area among the RCEP
participating countries providing early tariff elimination priority on products of interest to the
least developed ASEAN Member States (ASEAN 2012).
RCEP negotiations are guided with provisions of the World Trade Organization (WTO).
The Agreement was expected to enter into force in around mid-2012 but negotiations between
major economies such as China and India are taking longer than expected2. There was a pressure
for India to eliminate tariffs completely as Singapore has near zero tariffs on most goods and
Malaysia with almost 90% of the trade is at negligible customs duty. India fears that a steep tariff
reduction will rush cheap goods from China across their border threatening the local industry3.
The Asian Trade Center (ATC) suggested that RCEP must provide substantial tariff cuts with
wide-ranging coverage in terms of tariff lines that are traded among nations to maximize benefits
from the agreement. Agricultural products for instance are highly sensitive industries for almost
every RCEP member, and excluding them from tariff cuts will reduce the prospects of economic
1 “Asia Pacific Forges Ahead on Trade Deal Without India.” Hellenic Shipping News, accessed 27 November 2019,
https://www.hellenicshippingnews.com/asia-pacific-forges-ahead-on-trade-deal-without-india/
2 Teng A. “Trade Minister Says Lack of Free Trade Agreements Among Dialogue Partners a Challenge,” Today Online, accessed 9
March 2017, http://www.todayonline.com/business/rcep-progress-take-bit-longer-lim-hng-kiang.

3 Rohit S. and N. Geethanjali. “Regional Comprehensive Economic Partnership (RCEP): Issues and Way Forward,” The Diplomat,
accessed 19 March 2017, http://thediplomat.com/2013/07/regional-comprehensive-economic-partnership-rcep-issues-and-way-

forward/.
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development in the future4. However, small and medium farms’ concern on the lowering of tariffs
for agricultural products is increasing as this could threaten them. The sensitivities of the
agriculture sector among every RCEP member cast doubts on how much agricultural products
will be committed for the liberalization.
The text on intellectual property in the RCEP is also one of the biggest issues in the
agriculture industry. The deals in the IPR for seeds is perceived to threaten the control of small-
scale farmers over their seeds as the agreement requires to allow companies to take out patents
on plants and adopt the rules of the International Union for the Protection of New Plant Varieties
(UPOV) 5. It is worth noting that most countries that have a Plant Variety Protection (PVP) system
chose to have their system follow UPOV for an effective and internationally recognized system
(UPOV 2005), wherein the intended benefits of having an effective PVP system include incentives
to innovate in plant breeding, access to foreign varieties, and complementing trade liberalization
by benefitting countries that are relatively export competitive (van Wijk 2003). The UPOV and
patent laws makes it illegal for farmers to save, exchange or modify seeds from the patented plant
varieties. It is perceived that these measures potentially give monopoly powers to big seeds
companies like Monsanto, Dow and Pioneer and prevent farmers to freely reproduce and re-use
the seeds. It is feared that these measures will make seeds more expensive and will obligate
farmers to purchase seeds from corporations year after year increasing food production costs and
reducing food diversity in the long run.
The countries aggressively pushing for these measures through bilateral and regional
trade deals are Australia, Japan, the US, and certain countries in Europe, two of which are RCEP
members. Ironically, these countries house the world’s top seed corporations, with US firms
accounting for more than 51 percent of commercial seed sales around the world (ETC Group
2015). The other RCEP members that are also members of UPOV are China, New Zealand,
Singapore, South Korea, and Vietnam. Other RCEP members that are non-UPOV members are
being persuaded to join UPOV6. There is growing concern among farmers from different member
countries such as Malaysia, Thailand and Philippines. These countries have PVP laws that
provide greater protections for farmers’ rights to exchange and sell seeds.
The provisions on Rules of Origin (RoO) would allow integration of production processes
across the region. ATC (2016) suggested that RoO must be consistent among the 16 members and
should allow multiple calculation methods to encourage sourcing of raw materials among RCEP
4 “RCEP: Proposals for Trade in Goods and Rules of Origin”. Accessed 19 March 2017,
http://www.asiantradecentre.org/talkingtrade/2016/6/7/rcep-proposals-for-trade-in-goods-and-rules-of-origin.
5 “New Trade Deals Legalise Corporate Theft, MAKE FARMERS’ SEEDS Illegal,” GRAIN, accessed 19 March 2017,
https://www.grain.org/article/entries/5511-new-trade-deals-legalise-corporate-theft-make-farmers-seeds-illegal.
6 Bhutani, S. “The RCEP, IPRs, and the threat to traditional farming,” Third World Network, accessed 31 May 2017,
https//www.twn.my/title2/resurgence/2016/314-315/cover05.htm
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member countries. Currently, the ASEAN+1 FTAs use four basic rules in determining the origin
of the product: Wholly-Obtained (WO), Regional Value Content (RVC), Change in Tariff
Classification (CTC), and Specific Process Rule. These rules could be used individually or in some
combination to encourage better utilization of the FTA (Fukunaga and Isono 2013).
The RCEP negotiations also considers including new and emerging issues relevant to
business realities. RCEP recognizes the importance of SMEs across all RCEP participating
countries as they make up more than 90% of business establishment and are important to achieve
inclusive growth in each of the respective economies. RCEP will provide the framework on the
facilitation of trade and investment of SMEs’ to enhance transparency and facilitate engagements
in global and regional supply chains for RCEP countries7. These trade facilitation measures will
help improve market access. It is expected that this will help simplify customs clearance
procedures and mutual recognition of standards which might help lower import costs of inputs
and reduce the overall production costs for businesses of RCEP countries.
Results from various studies reveal that economic welfare is expected to improve for most
of the RCEP countries as exports within the region will increases. Cororaton (2016), using a CGE
model, showed that RCEP effects vary among member countries with Indonesia, Vietnam and
Philippines expected to benefit the most in terms of higher exports within RCEP. On the other
hand, Cambodia's benefits from higher exports within RCEP is offset by the reduction in its
exports to the rest of the world. Smaller net export is expected for Malaysia and Thailand because
of negative export changes to the rest of the world. The net export effects across “+6” countries
are also positive. The dynamic GTAP model results of Itakura (2015) reported that RCEP could
bring economic benefits to all participating countries.
As for Philippines, with low entry barrier for goods, it is expected that there will be an
upsurge of cheaper rice in the market. Low income households will benefit from this while posing
a big threat for the domestic rice producers. Itakura (2015) revealed that the Philippines will
experience negative welfare results attributed to changes in the regional households’ holdings of
foreign wealth. On the contrary, the CGE result of Cororaton (2016) showed that the Philippines
is expected to benefit from RCEP with an improvement in GDP by three percent and welfare by
US$2 billion. Poverty level is also expected to decline from 24.9 percent to 23.3 percent.
Potential Issues and Concerns
While the text of agreement is not yet finalized, there are already a number of NTBs
imposed by RCEP member countries. These NTBs cover customs practice, subsidies, and foreign
7“Regional Comprehensive Economic Partnership (RCEP),” ASEAN, accessed 3 December 2019, http://asean.org/?static_post=rcep-
regional-comprehensive-economic-partnership
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currency controls. Major concerns for the Philippines with the RCEP include low entry barrier for
goods that could lead to an upsurge of cheaper products in the market. In the case of the rice
industry, low income households will benefit from this while posing a big threat for the domestic
rice producers. RCEP has agricultural provisions on the issues relating to trade in goods and
services, investment, economic and technical cooperation, intellectual property, and competition,
and dispute settlement.
Methods
A gravity model is used to estimate the potential effects of FTA membership to

agricultural bilateral trade flows using cross-section data. The study utilizes disaggregated
agricultural trade data from the United Nations Comtrade Database (Comtrade). As with the
calculation of the total trade indicator, import reports are primarily used following the approach
described in Head et al. (2008). Nominal Gross Domestic Product (GDP) and population data
from the World Development Indicators (WDI) published by the World Bank, bilateral distance
and other country-specific data are from the GeoDist dataset, available from the Centre d’Études
Prospectives et d’Informations Internationales (CEPII) database were also included in the model.
The gravity model is initially estimated with the following stochastic multiplicative form:
β β β β β
fij = GYi 1 Yj 1 Pi 3 Pj 4 Dij5 eβ6 Lij+β7 Bij+β8 Ii +β9Li +β10 Ij+β11 Ij+β12 Mij+β13 Mi +β14 Mj ) (1)
The model is usually run as an ordinary least squares (OLS) regression, with the natural logarithm
of (1) taken, and the equation transformed as,
ln fij = β0 + β1 lnYi + β2 lnYj + β3 ln Pi + β4 ln Pj + β5 ln Dij + β6 Lij + β7 Bij + β8 Ii + β9 Li +

β10 Ij + β11 Ij + β12 Mij + β13 Mi + β14 Mj + ut (2)
where the intercept, β0 , is the natural logarithm of G, and ut is the error term. The dependent
variable is the natural logarithm of trade flow fij from country i and country j. Subscripts i and j
then denote origin and destination countries, respectively. The model is controlled for, in the
order specified in (2), undeflated GDPs and populations of origin and destination countries, their
respective bilateral distances, being landlocked, being an island, sharing a common border,
sharing a common language, and FTA membership.
There are many observations in the dataset used that reports zero trade flow values. Since
the dependent variable is in natural logarithm, an OLS regression excludes observations that have
zero values causing loss of information. This will also lead to sample selection bias.
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Furthermore, the error term in (2), ut , is the natural logarithm of some random variable
Ut . The latter is derived from a stochastic version of the gravity model:
yij = e𝐱𝐢 𝛃 + ϵt (3)
where ϵt is the error term that measures the deviation of fij from its conditional mean. A stochastic
multiplicative form of the gravity model is thus obtained as
yij = e𝐱𝐢𝛃 Ut (4)
ϵ
where Ut = 1 + e𝐱t𝐢𝛃 . The error term ut is thus defined as a function of ϵt . The presence of
heteroskedasticity will make the variance of ϵt depend on e𝐱𝐢 𝛃 , which will make ut depend on the
regressors. Silva and Tenreyro (2006) has shown that because of this, a log-linearized model
renders OLS estimates inconsistent.
To address these issues, a Poisson regression is run instead. Poisson estimation is

equivalent to running a type of nonlinear least squares on the actual multiplicative form of the
gravity model. The Poisson regressions involve the level values of trade and flows as dependent
variables. The interpretation of Poisson coefficient estimates follows the same pattern as that in
OLS. The coefficients of any independent variables entered in logarithms can still be interpreted
as simple elasticities, and the coefficients of independent variables entered in levels are
interpreted as semi-elasticities (Shepherd 2013).
Three membership dummies are included for the regressions on trade flows; a dummy
with a value of one if both origin and destination countries are RCEP members and zero
otherwise; a dummy with a value of one if the origin is an RCEP member, zero otherwise; and, a
dummy with a value of one if the destination is an RCEP member, zero otherwise. These
dummies are defined as such to measure the trade creation and diversion associated with RCEP.
The first dummy described is included to measure if there is trade creation, or if there is an
increase in trade flows between RCEP members. The last two dummies are to measure trade
diversion, or the decrease of trade flows to and from non-RCEP trade partners of RCEP members.
If the coefficient of the first dummy is positive and statistically significant, then there is trade
creation. If the coefficients of the last two dummies are negative and statistically significant, then
there is trade diversion. The ideal outcome is that there is trade creation and no trade diversion.
The regressions are done for each agricultural commodity group of interest. The coefficients
obtained from the regression is used to determine the actual magnitude of trade creation and
trade diversion. The actual proportionate growth or fall in trade flows among members is given
by
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eβ i − 1 (5)
where e is the Euler’s number.
Since RCEP, while in the home stretch, is yet to conclude the negotiations, the ones being
measured are the potential effects of RCEP to bilateral trade flows. Each gravity model estimates
the potential opportunity cost of not being a member of RCEP. The ones being measured here are
the trade flow differentials that is due to just being included in the group made up of RCEP
members. If, for instance, trade within this group of RCEP members is higher on average, this
means that there are indeed incentives of being in that group of economies comprised of RCEP
members, in which the Philippines indeed is included. This is because if trade within the group
of RCEP members is higher on average, an economy outside the group will miss that higher-on-
average trade within the group. There are therefore opportunity costs of not being a member of
such a group, and hence of not being a member of RCEP. Furthermore, if the trade within such a
group is higher on average, there are incentives to harness this higher-on-average trade into a
full-blown trade creation when RCEP is already in force, hence potential gains from being a
member of RCEP. While this seems to be a procedure for doing an ex ante analysis on trade
impacts of FTAs, in actuality, this procedure is just really for measuring the opportunity costs
associated with RCEP featured in the study8.
Results and Discussion
The gravity model was run on data involving RCEP. To assess the overall potential effects
of RCEP to agricultural trade flows, trade flow data from UN Comtrade were used. The data used
span over 200 economies for 2018. The commodity groups included are the top ten trade
commodities of the Philippines, plus the emerging commodity groups of coffee, tea, malt, and
spices; cocoa and cocoa preparations; natural rubber; and textile fibers. Separate regressions were
run for each of these commodity groups.
Appendix Tables 1-3 summarize the results using the gravity model, reporting estimates
obtained. Appendix Table 4 meanwhile show the actual potential opportunity cost associated
with being a non-member of RCEP in terms of average trade flow percent gap. So for instance,
we see from Appendix Table 4, summarizing the results for meat and offal, that for RCEP, the
coefficient for the intra-trade dummy is positive (0.824), and likewise for the destination dummy
(0.375). The origin dummy is meanwhile negative (-0.704). This implies that for meat and offal as
far as RCEP is concerned, there is potential trade creation, potential export diversion, and no
potential import diversion. Specifically, this means that intra-RCEP trade is almost 128 percent
8While primarily used in ex post assessment of an impact of a trade agreement, gravity models were also used in the literature to do
ex ante analysis (see Felbermayr et al. 2013; Péridy 2005).
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higher on average. Imports from outside RCEP is more than 45 percent higher on average, while
exports to outside RCEP is more than 50 percent higher on average.
By inspecting Table 2, one can see that RCEP can both potentially create and divert trade
in all the agricultural commodity groups included in the study. RCEP seems to perform the best
in fish and crustaceans, where there is potential trade creation and no potential trade diversion.
It is only in fish and crustaceans where RCEP has accomplished this feat among the commodity
groups included in the study. Furthermore, there are four commodity groups where RCEP is both
potentially trade creating, and both import and export diverting. These are dairy products; edible
fruit and nuts; coffee, tea, malt, and spices; and miscellaneous edible preparations. In all the other
commodity groups RCEP can both create trade, and at the same time either divert exports or
imports. Overall, RCEP can be deemed as a two-edged sword: as far as RCEP is concerned, there
can potentially be both trade creation and diversion. The Philippines therefore can indeed benefit
from being a member of RCEP because it can potentially strengthen its trade ties with its fellow
members. The Philippines nonetheless can also be harmed by being an RCEP member at the same
time, in the sense that the FTA can potentially weaken the Philippines’ trade ties with partners
without.
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Teng, A. “Trade Minister Says Lack of Free Trade Agreements Among Dialogue Partners a
Challenge.” Accessed 9 March 2017. http://www.todayonline.com/business/rcep-
progress-take-bit-longer-lim-hng-kiang.
World Trade Organization. 2013. World Trade Report 2013. Geneva: WTO Publications.
van Wijk A. 2003. “Implementation of Plant Variety Protection.” Paper presented at the WIPO-
UPOV Symposium on Intellectual Property Rights in Plant Biotechnology, organized by
the World Intellectual Property Organization and the International Union for the
Protection of New Variety of Plants, Geneva, October 24, 2003. International Union for the
Protection of New Varieties of Plants.
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Table 1. Summary of Poisson Gravity Model Estimates
Coffee, Tea, Malt, and

Meat and Offal Fish and Crustaceans Dairy Products Edible Fruit and Nuts
Spices
Coefficient z-value Coefficient z-value Coefficient z-value Coefficient z-value Coefficient z-value
Natural log of GDP, origin 0.557 4603.88 0.444 4908.79 0.936 5669.78 0.325 4135 0.034 277.27
Natural log of GDP, destination 0.699 6508.66 0.929 7483.73 0.558 4402.74 0.876 8474.361 0.885 5511.72
Natural log of population, origin -0.126 -975.47 -0.089 -881.53 -0.657 -3853.28 0.139 476.22 0.551 3796.74
Natural log of population, destination -0.121 -998.88 -0.268 -2028.93 -0.040 -281.76 -0.179 -1552.35 -0.172 -979.11
Natural log of bilateral distance -0.093 -665.59 -0.418 -3350.21 -0.611 -4208.56 -0.167 -1258.85 -0.514 -2410.97
Landlocked dummy, origin -0.899 -1695.18 -2.981 -1982.79 -1.276 -2466.52 -1.565 -2470.52 -0.045 -85.21
Landlocked dummy, destination -0.652 -1378.27 -1.508 -1944.33 -0.693 -1399.10 -0.555 -1183.82 -0.241 -372.70
Island dummy, origin 0.299 919.21 -0.457 -1345.82 0.386 1030.83 -0.533 -1392.26 0.260 556.84
Island dummy, destination -0.054 -141.50 -0.005 -12.58 0.146 283.15 -0.249 -511.09 0.699 876.77
Common border dummy 1.491 4598.66 0.975 3082.97 1.581 4613.96 1.183 3841.75 1.005 1992.13
Common language dummy -0.015 -55.33 -0.088 -293.56 -0.065 -216.42 -0.114 -419.78 0.070 171.85
Membership dummy, origin 0.704 -1600.94 0.245 713.70 -0.040 -71.14 -0.827 -2094 -0.119 -237.52
Membership dummy, destination 0.375 1081.89 0.301 860.75 -0.247 -472.25 -0.986 -2330.04 1.248 -1701.84
Membership dummy, origin & destination 0.824 1348.17 0.264 520.80 0.937 1234.50 2.203 3549.11 0.405 401.05
Obs.: 3,128 Obs.: 5,590 Obs.: 4,718 Obs.: 6,940 Obs.: 7,194
Note: all coefficients are significant at 1% level.
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Table 2. Summary of Poisson Gravity Model Estimates (cont.)
Animal/Vegetable Oil Miscellaneous Edible Cocoa and Cocoa

Cereals Food Residues
and Fats Preparations Products
Coefficient z-value Coefficient z-value Coefficient z-value Coefficient z-value Coefficient z-value
Natural log of GDP, origin 0.467 4914.63 0.096 1062.87 0.136 1010.87 0.994 6487.725 0.519 4529.884
Natural log of GDP, destination 0.125 1397.54 0.342 3691.47 0.875 4927.461 0.677 158.47 0.503 277.96
Natural log of population, origin 0.095 889.90 0.277 2719.06 0.253 654.70 -0.394 -2495.08 0.073 594.14
Natural log of population, destination 0.332 3251.45 0.402 4124.35 -0.296 -1551.82 -0.107 -781.12 -0.046 -361.86
Natural log of bilateral distance -0.310 -2163.43 -0.711 -5508.22 -0.664 -3592.31 -0.585 -4116.18 -0.330 -2066.13
Landlocked dummy, origin -0.329 -652.68 -1.319 -1890.95 -0.981 -1464.12 -0.720 -1272.50 -0.286 -565.51
Landlocked dummy, destination -1.013 -1815.26 -0.531 -960.93 -0.669 -1060.22 -0.466 -918.89 -0.761 -1333.27
Island dummy, origin -0.595 -1227.46 0.615 2176.13 -0.261 -458.68 -0.047 -123.24 -0.549 -1015.29
Island dummy, destination 0.315 1076.43 -0.291 -682.29 0.254 516.29 0.348 -959.05 0.231 606.87
Common border dummy 1.193 3689.69 0.788 2479.87 1.143 2626.69 0.960 2506.41 1.319 3566.11
Common language dummy -0.184 -590.84 0.069 228.92 0.323 894.83 0.610 1999.10 0.242 772.80
Membership dummy, origin -1.104 -2341.87 0.879 2795.82 -0.921 -1138.78 0.169 369.53 -1.056 -1841.93
Membership dummy, destination 0.237 688.03 -1.013 -2154.07 -0.491 -780.31 -0.256 -526.79 0.357 924.08
Membership dummy, origin & destination 0.998 1547.14 0.439 780.28 1.032 879.52 0.969 1413.48 0.710 886.33
Obs.: 4,406 Obs.: 6,046 Obs.: 5,652 Obs.: 7,628 Obs.: 4,746
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Table 3. Summary of Poisson Gravity Model Estimates (cont.)
Natural Rubber Textile Fibers

Coefficient z-value Coefficient z-value
Natural log of GDP, origin -0.446 -1638.80 -0.407 -337.55
Natural log of GDP, destination 0.599 1880.63 0.446 312.70
Natural log of population, origin 0.536 1516.79 0.666 451.98
Natural log of population, destination 0.109 344.89 0.262 168.96
Natural log of bilateral distance 0.016 29.34 0.916 287.81
Landlocked dummy, origin -1.116 -482.18 -3.275 -58.23
Landlocked dummy, destination 0.510 342.09 -0.475 -36.68
Island dummy, origin 0.468 747.96 0.657 182.33
Island dummy, destination -0.906 -884.60 0.112 22.57
Common border dummy 0.070 71.35 2.095 402.82
Common language dummy -0.100 -91.81 0.208 52.60
Membership dummy, origin 1.970 2036.02 -1.754 -277.95
Membership dummy, destination -0.211 -120.77 0.095 21.75
Membership dummy, origin & destination 1.234 674.04 2.125 263.13
Obs.: 1,718 Obs.: 819
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Table 4. Potential Opportunity Costs Non-Membership
Percent
Coefficient
Gap
Meat and Offal Origin dummy -0.704 -50.56
Destination dummy 0.375 45.45
Destination & origin dummy 0.824 127.90
Fish and Crustaceans Origin dummy 0.245 27.76
Dairy Products Origin dummy -0.040 -3.93
Destination dummy -0.247 -21.86
Edible Fruit and Nuts Origin dummy -0.827 -56.24
Coffee, Tea, Malt, and Origin dummy -0.119 -11.21
Spices Destination dummy -1.248 -71.30
Cereals Origin dummy -1.104 -66.86
Animal/Vegetable Oil Origin dummy 0.879 140.78
and Fats Destination dummy -1.013 -63.67
Miscellaneous Edible Origin dummy -0.921 -60.19
Preparations Destination dummy -0.491 -38.80
Food Residues Origin dummy 0.169 18.37
Cocoa and Cocoa Origin dummy -1.056 -65.21
Products Destination dummy 0.357 42.88
Natural Rubber Origin dummy 1.970 617.33
Textile Fibers Origin dummy -1.754 -82.68
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RCEP's Potential Impacts on Philippine Agriculture

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ECONOMICS AND

College of Economics and

Potential impacts of Regional Comprehensive

As the Philippines pursues new bilateral (e.g., Philippines-European Union or PH-EU,

An Overview and Analysis of Agricultural Provisions in RCEP

envisioned to be a modern, comprehensive, high-quality and mutually beneficial economic

March 2017, http://www.todayonline.com/business/rcep-progress-take-bit-longer-lim-hng-kiang.

accessed 19 March 2017, http://thediplomat.com/2013/07/regional-comprehensive-economic-partnership-rcep-issues-and-way-

Potential Issues and Concerns

A gravity model is used to estimate the potential effects of FTA membership to

ln fij = β0 + β1 lnYi + β2 lnYj + β3 ln Pi + β4 ln Pj + β5 ln Dij + β6 Lij + β7 Bij + β8 Ii + β9 Li +

yij = e𝐱𝐢 𝛃 + ϵt (3)

yij = e𝐱𝐢𝛃 Ut (4)

To address these issues, a Poisson regression is run instead. Poisson estimation is

Results and Discussion

Table 1. Summary of Poisson Gravity Model Estimates

Coffee, Tea, Malt, and

Table 2. Summary of Poisson Gravity Model Estimates (cont.)

Animal/Vegetable Oil Miscellaneous Edible Cocoa and Cocoa

Table 3. Summary of Poisson Gravity Model Estimates (cont.)

Natural Rubber Textile Fibers

Table 4. Potential Opportunity Costs Non-Membership

Destination & origin dummy 2.125 736.89

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