The Market Monitor Minding the Nation's Business
By Luis Leoncio
The Philippines is being warned against hastily joining any of the trade agreements that are expected to be aggressively promoted by the United States and China during next week’s summit of the Asia Pacific Economic Cooperation (Apec).
The US is expected to use the summit to campaign for its initiative—the Trans-Pacific Partnership (TPP), which already has 12 nations as members— Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. These countries account for at least 40 percent of global gross domestic product (GDP) and 33 percent of global trade.
China, on the other hand, is expected to strongly urge Apec members to join the Free-Trade Agreements and Regional Trading Agreements (FTAAP), an initiative it launched when it hosted last year’s Apec summit in Beijing. China is likely to also press its invitation to Apec members to look into the major infrastructure-spending initiatives under the Beijing-led Asian Infrastructure Investment Bank (AIIB) and Maritime Silk Road projects.
While details are yet to be fully revealed, reports are that the TPP is expected to eliminate tariffs further on thousands of goods and services, and impose stricter rules on intellectual-property rights as well as the supremacy of investor over state interest.
Richard Heydarian, assistant professor at De La Salle University and opinion columnist of Al-Jazeera and The Huffington Post, warned the Philippines against “uncritically” jumping into Apec’s “trading bandwagon.”
The Philippines must “carefully evaluate the pros and cons of each of these initiatives and not uncritically jump into any trading bandwagon,” he said. “We have to make sure we come on top and create inclusive development for our citizens. “
Local think tank Ibon lamented that, despite the TPP’s anticipated unprecedented infringement on the economic independence of its prospective members, the Department of Trade and Industry has begun preliminary consultations toward formal discussions for the Philippines’ accession to the TPP. Joining the TPP bandwagon will only aggravate the country’s shrinking production, Ibon said.
It added that, even without the TPP, the Philippines’ steady implementation of Apec-prompted trade liberalization has already pushed tariff levels down, eroding food self-sufficiency and overall domestic production.
“By 2012, the Philippines had among the lowest agricultural and non-agricultural tariffs in Asia. From an average of 21 percent from 1991-2000, the share of agricultural production in gross domestic product (GDP) fell by about 50 percent from 2011-2014 or to its lowest in more than two decades,” Ibon said.
It added that the share of manufacturing in GDP also fell to 23 percent, the Philippines’ lowest average level in almost 60 years. Apec-framed globalization has also aggravated the “de-nationalization” and “de-industrialization” of the Philippine economy, Ibon said.
“Transnational corporations (TNCs) in the top 1,000 corporations in manufacturing accounted for almost 70 percent of annual earnings from 2004 to 2013.
“While foreign investments increased yearly by 54.6 percent in the last two decades, job creation declined yearly by 4 percent in the same period,” the think tank added.
Contrary to its stated goals of inclusiveness, Apec has identified areas for discussion this year such as food security, “blue economy,” small and medium enterprises and disaster-risk reduction, which are being explored as implementation grounds of corporate-biased policies favorable to TNCs of developed countries especially the US, Ibon noted.
Heydarian described the US-backed TPP as “a high-standard trade liberalization scheme aimed at a more comprehensive overhaul of member economies, greatly benefiting American multinationals.”
It is the cornerstone of the Obama administration’s economic policy in the Asia-Pacific, Heydarian said, and aims to deepen trade and investment in the Asia-Pacific, a key destination for US manufactured goods, agricultural products and services suppliers.
Heydarian said China’s FTAAP, on the other hand, while less stringent than the TPP, “will heavily benefit Chinese exporters.”The Philippines is still reviewing the possibility of joining the China-led AIIB, an initiative by China that is focused on supporting infrastructure development in the Asia-Pacific region.
The creation of the AIIB, however, happened amid rising tensions between Beijing and Manila over competing claims in the West Philippine Sea (South China Sea).