The Effects of CPTPP on Philippine Employment and Earnings: A CGE Approach

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This Policy Note determines the potential impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on the Philippines using a computable general equilibrium (CGE) microsimulation model. It finds that the Philippines’ participation in the CPTPP will benefit workers, especially the unskilled, by raising their employment and earnings as export diversification is achieved. However, these benefits will come at a cost, as high-value-added industries favored by the existing trade barriers will experience a loss. This will cause a decline in the country’s gross domestic product. Hence, to optimize the benefits of CPTPP, the government must create the necessary conditions to improve technology, minimize the costs of export diversification, and differentiate its exports from the rest of the world.