MAP Insights

Part 2 of 2 Parts

 

The trade agreements past and present guaranteed market access to every firm. What we want to explore is what happens between the day the market opened, and the day a firm starts earning something from it. In that space is where most trade agreements die quietly – not in the negotiating room but in that gap between a legal right and an operating capability. Market access is a condition; market advantage is a capability. Access is granted but advantage is built.

 

RCEP cannot build that advantage for businesses. It cannot find the customers, develop products, create trust, or decide where they should compete. It cannot execute the strategy. Those remain the job of business. How then can we convert access into advantage? It starts by not assuming that access means a jump into immediate growth – a mistake we often make with large regional initiatives.  There is no flying leap; we need to climb stairs made up of small, even slow and unglamorous but sequential steps — something that even an ordinary firm with ordinary resources should be able to do. Let us go through these five steps.

 

SEE. First, see where the real opportunities are – not just in market size but where demand is growing, where capabilities are complementary, where supply chains are reorganizing, where technology, capital and talent are moving, and where a company, an industry or an economy has something distinctive to contribute. Opportunity is not evenly distributed, and the first competitive advantage is knowing where to look.

 

CHOOSE. We cannot pursue everything – we must choose our battles. We do not run after every market, or every sector, not even after every opportunity. We look at where we can actually win because we have the capabilities and capacities. Strategies require these choices.

 

CONNECT. Then, connect because opportunity requires relationships, customers, partners, distributors, investors, suppliers, technology providers, financial and other institutions, and governments. Regional integration does not happen because countries sign agreements. It happens because people and businesses begin doing things together. No company—and for that matter, no economy—creates competitive advantage entirely by itself.

 

INTEGRATE. Connection is not enough, however. The greater opportunity is to participate in the regional value chain – be a part of the system, shifting and moving up and across trade routes to value networks.

 

SCALE. Finally, scale. One successful transaction can be merely opportunistic, but repeated transactions create a business. A business that can replicate its model across several markets begins to create competitive advantage. When something works, replicate it, deepen it, invest in it, expand into adjacent markets. We keep participating, whether in bigger or smaller roles, until participation becomes an advantage, and that advantage begins generating the next opportunity.

 

In other words, there are no quick fixes; only a painstaking equation until we arrive at better solutions. Access means we can enter. Participation means we are doing business. Integration means we have become part of the system. Scale means we can replicate and deepen that position, and advantage means what we have accumulated make it easier for us to compete again.

 

We now see an impressive regional architecture waiting to be used – but access does not automatically ensure participation. While underutilization is a symptom, it is not necessarily the root problem. Procedures can be cumbersome and rules can be too difficult to understand. Information does not reach the businesses that need it and regulatory differences remain. Compliance can cost more than it saves, and smaller companies simply do not have the resources to navigate the system.

 

On the flipside, there is something less visible but equally important – the economics of confidence. A business will tolerate complexity if the opportunity is sufficiently attractive. It will invest across borders if it has confidence in the market, the partners and the operating environment. If the opportunity is uncertain, even the most beautifully designed agreement may remain underused; so, the challenge is not simply to make RCEP easier to use. It is to make participation valuable enough that businesses want to use it. When accessed, we begin fueling the regional growth engine.

 

This is NOT A ZERO-SUM GAME. Regional integration does not have to mean every economy competing for the same piece of the pie. It can mean creating a larger pie by connecting complementary strengths. A market gives us somewhere to sell. An engine gives us a system that keeps generating opportunities. Businesses do not invest in agreements. They invest in opportunities.

 

INTEGRATION DOES NOT HAPPEN AUTOMATICALLY.

 

One cautionary note is that we should recognize the danger in becoming too enthusiastic about the opportunity just because we have seen regional initiatives elsewhere that promised enormous potential. We should ask the question: did they fully realize the intended benefits? These experiences matter not because they tell us integration does not work, but because they tell us what can prevent it from failing. Experience, after all, is an economic asset.

 

Five lessons stand out:

 

Access without utilization creates very little value. An agreement can exist, but if businesses do not understand it or cannot navigate it, its potential remains largely theoretical.

 

Integration without competitiveness is fragile. Connecting businesses does not automatically make them competitive. If the economics do not work, the relationship will not last.

 

Cooperation without commercial logic can become ceremonial. We can have forums, memoranda, delegations and announcements but eventually, somebody has to buy something. Somebody has to invest. Somebody has to produce. Somebody has to create value. That is where integration becomes real.

 

Regional integration must not become an exclusive club for the largest companies. If MSMEs and smaller businesses cannot participate, then we may create integration—but not necessarily broad-based development.

 

And finally, efficiency alone is not enough. We need resilience as well, because time and again we have been shown that the most efficient value chain is not necessarily the most resilient one. In a world of geopolitical tensions, disruptions, climate events and rapidly changing technologies, the regional growth engine must be designed to absorb shocks as well as generate growth.

 

EAST ASIA: WHERE THE OPPORTUNITY IS

 

RCEP can be a genuine moment in this region’s trade evolution, but it is not the answer, and it is not the opportunity. It is the infrastructure that allows us to pursue the opportunity. The opportunity is East Asia itself, with its enormous markets, inter-connected supply chains, investment flows, technology and complementary economies. The goal is to become more deeply connected to how East Asia produces, consumes, invests, innovates and grows — and in doing so, to transform market access into market advantage, and market advantage into sustained and shared growth.

 

As had been said, RCEP opens the door, but it does not walk us through it. It creates a common framework within which businesses can increasingly think across markets. It does not create the whole chain, but it lowers some barriers and creates a platform. Businesses have to build the rest.

 

RCEP requires work.  We must understand the rules, the documentation, the standards and the market requirements. That same work can likewise turn bureaucracy from an obstacle into capability, but only when we stop thinking of it as the cost of RCEP and start treating it as the price of learning how to play in a much larger economic system. For governments, that means creating the conditions for businesses to connect and compete. For institutions, it means turning the agreement into usable knowledge, relationships and opportunities. For companies, it means going beyond what markets can we enter, to asking what role we can play in this regional system.

 

I believe we are ready to build the engine and for RCEP to become much more than an agreement that gives us access. RCEP must become the platform on which we build something much bigger – an integrated East Asian growth engine capable of generating opportunity, creating value, building resilience and compounding growth across the region. We should share the aspiration that if we can do this right this time, or at least, give it a serious try – that success will create the conditions for the next frontier — a borderless trade.●

 

(The author is Co-Vice Chair of the MAP Trade, Investments and Tourism Committee; Chair of the MAP CEO Conference Committee; President and CEO of Health Solutions Corporation; and former Undersecretary of the Department of Tourism. Feedback at map@map.org.ph)