THE country’s exclusion from a Pacific trade pact that would be signed by 11 countries in March is a “major threat” to the Philippine economy, a former chief of the National Economic and Development Authority said on Thursday.
Former Socioeconomic Planning Secretary Cielito F. Habito said Philippine-made goods will face tough competition against those coming from Malaysia and Vietnam—two countries that are part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The Philippines, Malaysia and Vietnam export similar merchandise to countries included in the CPTPP. With this, major economies like Australia and Canada will find it cheaper to import from Malaysia and Vietnam.
“If we have exclusive arrangements in other products, such as bilateral free-trade deals,
[nonmembership in CPTPP] is okay. But, again, there would be an effect. That was the concern about not being part of the CPTPP, with or without the US,” Habito told the BusinessMirror on the sidelines of the Ateneo Eagle Watch forum held in Makati City.
The Philippines is more keen on concluding another expansive trade pact, with President Duterte and Indian Prime Minister Narendra Modi urging their fellow leaders under the Regional Comprehensive Economic Partnership (RCEP) to prioritize the conclusion of the trade deal this year.
In their bilateral meeting on Wednesday night, Duterte and Modi agreed the 16 RCEP par-
ticipating countries need to conclude as soon as possible the agreement, which the country failed to complete in its chairmanship of the Association of Southeast Asian Nations last year. The two leaders vowed to strongly push for the conclusion of the trade deal this year—this time, under Singapore’s helm.
Habito said there is a long list of products and services, such as personal travel services, that the Philippines, Malaysia and Vietnam export to CPTPP countries.
Other Philippine exports to Australia include heating and cooling equipment and parts, mechanical handling equipment, pumps and parts and electrical machinery.
Malaysia exports crude petroleum; transport; monitors, projectors and TVs; computers; and refined petroleum. Vietnam ships refined petroleum; passenger motor vehicles; and telecom equipment and parts.
However, nonmembership in CPTPP will not be a “total loss” for the Philippines because of the absence of the United States in the agreement. The US is one of the country’s top trade partners.
Last November the United States was the country’s third-largest export market and fifth-top source of imports. Philippine exports during the period amounted to $690.47 million, while imports were valued at $580.70 million, according to data from the Philippine Statistics Authority.
“In a way, it was a blessing in disguise that [US President Donald J.] Trump withdrew from the [CP]TPP,” Habito said.
Last year Washington-based Peterson Institute for International Economics said the existing TPP framework can even be strengthened with the addition of five other countries that have initially expressed interest in joining —Indonesia, Korea, the Philippines, Taiwan and Thailand.
In a blog, Asian Development Bank Economic Research and Regional Cooperation Department principal economist Jong Woo Kang said the withdrawal of the US scales down the economic benefits from the TPP.
With the United States in the TPP, the total exports of the 12 members would have accounted for 26.6 percent of world trade. Sans the US, the share of TPP signatories in world trade and intraregional trade falls to 15.2 percent and 2.3 percent, respectively.
Kang said this is due to the United States being the largest trade player among the original 12 TPP countries, representing 11.4 percent of world trade and 41 percent of trade among members.
However, he said that, by pulling out of the TPP, the other members of the TPP will have more incentive to invest in Canada, particularly among those that still do not have free-trade agreements with Canada and the US.
RCEP
Trade Secretary Ramon M. Lopez said in a news briefing on Thursday that other aspect in the Duterte-Modi talks was “the need to conclude RCEP, or at least put forward, bring forward the discussions on the RCEP. The two leaders recognized that this will be discussed in the plenary in the [Asean-India Commemorative Summit] today [Thursday].”
“I’m sure many of the leaders will be making the call to bring forward the discussions on the RCEP,” he added. Manila, for one, is prioritizing the conclusion of the agreement in spite of the nearing completion of the TPP.
Lopez, who is in India with Duterte and a number of government officials, said the country is all eyes on Singapore—this year’s Asean chairman—and how it will lead the negotiations on the RCEP. He added Manila is focused on finalizing the trade deal, and will do everything in its capacity to ensure that it will be completed this year.
The 16 participating countries in the China-led RCEP are keen on concluding the agreement this year, Trade Undersecretary Ceferino S. Rodolfo Jr. said on January 15. The RCEP economies account for almost half of the world’s population and contribute about 30 percent of global GDP and more than a quarter of world exports.