29 July 2005
RP prepares for possible trade accord with US
By NIEL V. MUGAS, The Manila Times Reporter
Baby steps have begun in engaging the United States on a possible trade pact, the trade department said in a report to President Arroyo.
Trade Secretary Peter Favila on Friday said the Philippines will begin preparations for a possible free-trade agreement (FTA) with the US, including a study on the continued viability of local industries under a zero tariff environment.
Favila said his report to Malacañan cited the Department of Trade and Industry is holding preparatory steps to start talks over a possible trade accord with the US, the country’s second largest trading partner.
Japan, the Philippines’ biggest export market and the biggest donor of overseas development assistance is the country’s biggest trading partner. A bilateral trade agreement with the said nation is already under way.
Favila said DTI’s steps responds to the American government’s long standing offer for both countries to sit in the negotiating table.
Favila said the DTI will consult industry representatives on the impact of a zero-tariff deal with the US and their willingness to enter such deal. He added these talks will be based on a study by the Philippine Institute for Development Studies (PIDS), which covers impact analysis on the general economy as well as on specific sectors, following the renewed interest of the US government.
Favila said these consultations are important for an RP-US FTA negotiation to gain ground.
"We’ll identify the necessary structural adjustments to ensure that our industries remain competitive in an FTA environment," he added.
Annual bilateral trade between the US and the Philippines exceeds $18 billion and cumulative direct private investment is at $3.5 billion. It is also a top destination of Philippine exports and is the Philippines’s second source of imports. In 2002, two-way RP-US trade amounted to $15.06 billion.
The Philippines continues to enjoy a favorable balance of trade with the US, registering a trade surplus of 42.30 billion last year.
In the investment arena, Central Bank figures show that US foreign direct investments (FDI) in the Philippines by the end of 2002 were valued at $3.3 billion, or 22 percent of total FDI.