BusinessWorld | July 10, 2011
Trade deal entry offered
WASHINGTON has asked Manila to consider joining a regional free trade agreement to open up the Philippine economy, the United States ambassador said.
The invitation came as officials met last month on expanding assistance to the Philippines and easing economic and trade barriers under President Barack H. Obama’s Partnership for Growth (PFG) initiative, the United States’ latest effort to implement a global development policy. Other countries chosen for the initiative are El Salvador, Ghana and Tanzania.
Discussions on trade barriers were also opened as the US, along with eight other countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam — pursues talks for the Trans-Pacific Strategic Economic Partnership (TPP).
“[T]wo weeks ago, we brought two teams to meet with secretaries [Florencio B.] Abad, [Cesar V.] Purisima, [Gregory L.] Domingo, [Cayetano W.] Paderanga to discuss constraints on economic growth and to see how the Philippines could one day see to the Trans-Pacific Partnership,” US Ambassador Harry K. Thomas Jr. said in a roundtable with BusinessWorld editors and reporters on Thursday.
“Out of that meeting it was agreed with US Trade Representative Ambassador Ron Kirk, who was here last July 1st ... that the Philippine delegation [would] come to Washington [DC] in September to go through the [TPP] chapter and verse to see what exactly the Philippines needs to do — should the Philippine people, government, and Congress decide — to be part of this trade agreement,” he continued.
TPP proponents have cautioned interested countries of the stringent conditions for joining the trade agreement, particularly, those concerning labor, environment, intellectual property, and services sector liberalization.
Furthermore, once the Philippines joins the TPP, it would no longer qualify as a beneficiary of the US Generalized System of Preferences (GSP), a trade program granting zero or reduced tariff rates to developing and least developed economies, once the US Congress approves its extension. The unilateral GSP scheme lapsed in December.
The PFG initiative, in light of such trade-related challenges, would serve as the US government’s means of assisting the Philippines improve its “development outcomes and [create] a more transparent mechanism to facilitate business investment,” the Initiative for Global Development, the US Agency for International Development’s research partner, states on its Web site.
Asked what the US government was seeking in return, Mr. Thomas said: “We would like to see the economy opened.”
“We would like to see it open, so there could be more [foreign investments], but that has to be your decision on how you want to open the economy or whether you want to open the economy,” he said.
Legal incompatibilities with welcoming more foreign investments, however, need to be resolved for free trade agreements such as the TPP.
“Clearly, there are three things that need to be done: executive orders, laws issued, and laws amended,” Mr. Thomas said.
“That is up to you to decide whether you want to become a member,” he said. “But this is to show how serious we are about having the Philippines included in the Trans-Pacific Partnership.”
The TPP, touted as a “high-quality” trade agreement, would require the Philippines to open up not just merchandise trade but also the services sector, where there are constitutional restrictions on foreign equity. For instance, foreigners can only own up to 40% of public utilities and are totally barred from sectors like education, media and the practice of professions.
In February, Australian Ambassador Rod Smith said he was confident the government could comply with the deal’s conditions.
Ministers of TPP countries assured interested parties in May that the agreement’s drafting process would consider the possible entry of other Asia-Pacific Economic Cooperation countries.