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Analysis: The ABC Behind a US-Philippines FTA

By Paul L. Quintos

Contributed to

19-25 October 2003

Not surprisingly, American big business is the most ardent advocate of a new comprehensive trade and liberalization pact between the U.S. and the Philippines. Last April 2002, senior executives from 15 of America’s Fortune 500 companies led a mission to the Philippines as part of the Philippine Business Committee of the U.S.-ASEAN Business Council to push further liberalization of trade and investment in the country.

The U.S.-ASEAN Business Council (U.S.-ABC) is composed of over a hundred of America’s largest corporations with extensive business interests in the ASEAN region such as Citigroup, Chevron-Texaco, Cargill, Ford, GE, IBM, Lockheed, Nike, AOL Time Warner, McDonalds, Pricewaterhouse Coopers, Boeing, United Airlines, Microsoft, Dupont, Del Monte, Procter & Gamble, and so on.1

The 2002 mission produced a Business Framework Agreement (between the U.S.-Philippine Business Committee and the Philippine-U.S. Business Council) in order to steer their corporate lobbying both in the U.S. and in the Philippines.2

By May of this year, the U.S.-Philippines Business Committee boasts of having exercised influence with regards reforms in the energy sector, capital market development, airlines ("open skies"), customs modernization, telecommunications, biotechnology and port security.

In its May 2003 progress report, the Business Committee cites having created a "Philippines Energy Ad Hoc Working Group" which has "developed an advocacy plan to encourage more investment in the Philippines energy sector. The Ad Hoc Working Group meets regularly and has discussed this plan with Philippine energy officials, consumer advocates, and energy project lenders."

The report also proudly notes its success in pushing "the commercialization of biotechnology ... in partnership with the Government of the Philippines." The report states: "... the U.S.-Philippines Business Committee, led by two of its biotechnology members, worked with the administration of President Macapagal-Arroyo to address the political and logistical needs of an Executive Order permitting the commercialization of biotechnology in the Philippines. The U.S.-Philippines Business Committee has thanked the administration for its work on biotechnology and has offered its further assistance to the President and to the Secretary of Agriculture of the Philippines. "

Congressional caucus

Perhaps most significantly, the Business Committee gleefully reports having successfully launched - with the help of the Philippine Embassy in Washington - a Congressional U.S.-Philippine Caucus with the primary purpose of "educating members of the U.S. Congress and their staff on the bilateral trading and investment relationship" between the two countries.

Last month, the U.S.-ABC’s Philippine Business Committee was in town once again as part of the preparations for President Bush’s state visit this October.3 The Business Committee lauded the economic reforms undertaken by the Arroyo government but pushed for further liberalization, particularly in terms of lifting restrictions on foreign ownership in the telecommunications and property sectors- reforms that would require amending the country’s charter. The business mission also called for the immediate passage of the Transco Franchise bill which would pave the way for U.S. corporations to participate in an estimated US$1-2 billion worth of investments in the power sector, and the optical media bill which would strengthen protection of monopoly rights of American transnational corporations (TNCs) over intellectual property and information technology.


Mirroring these private sector initiatives, the U.S. revitalized the U.S.-Philippines Trade and Investment Council (TIC) after a decade of dormancy. The TIC is essentially the official body responsible for doing groundwork for a bilateral trade and investment agreement between the governments of the U.S. and the Philippines. The TIC held two meetings last year with the Philippine government (one at the ministerial level) to address business and investment issues that corporate America deemed prejudicial to their interests. A third meeting was held last May (via videoconference) preceding President Arroyo’s state visit to Washington early this year. The two sides agreed on the need for regular consultations under the existing Trade and Investment Framework Agreement (TIFA) to resolve bilateral issues and to consider other steps to help lay the groundwork for a free trade agreement, as envisioned by Bush’s Enterprise for ASEAN Initiative.

For the U.S. government, these "issues" refer to existing laws and policies of the Philippine government that American business interests consider as impediments to the freer entry of imports and investments from the U.S. These include what remains of quantitative restrictions on the importation of rice; what remains of restrictions on foreign ownership of land and strategic industries such as telecommunications, mass media, public utilities, domestic shipping, etc.; preferential treatment of local suppliers in government purchases and infrastructure projects; restrictions on foreigners in practicing the licensed professions such as law, medicine, accountancy, engineering, etc.; and a host of other measures. Indeed, the 2003 report of the U.S. Trade Representative on "Foreign Trade Barriers" faced by U.S. industries abroad devotes no less than 11 pages on the Philippines.4

The U.S.-ASEAN Business Council was an important participant in each of these TIC meetings, even offering to draw up a feasibility study for the prospective U.S.-Philippine Free Trade Agreement (FTA). Through such an extensive and intimate participation in the political process behind economic reforms, U.S. monopoly capital is able to shape the contours of U.S.-Philippine "special relations" for its own avaricious ends.


1 and

2 Ibon Facts and Figures, Vol. 25, No. 15 & 16, 15 & 31 August 2002

3 Manila Bulletin, Sept. 17, 2003, "US Businessmen cite RP reforms, eye liberalization"