CUISIA BARES 'ROAD MAP' TO PACIFIC TRADE PACT BUT IS PH READY?

The Philippines wants to join the Trans-Pacific Partnership (TPP) but some experts warn the window for enacting reforms that would qualify the country in this elite club could be fast closing.

Ambassador Jose L. Cuisia, Jr. outlined a “roadmap” for joining the TPP during a panel discussion at the 2013 Annual Conference on Trade Policy and International Marketing organized by Georgetown University and the American Marketing Association in Washington DC last week.

 

TPP currently has 11 “partner nations” – Brunei, Chile, New Zealand, Singapore, Australia, Peru, the United States, Vietnam, Malaysia, Canada and Mexico. The 16^th round of negotiations was held in Singapore last week.

To join them, the Philippines will have to be invited – but it has to meet certain requisites.

The Philippine plan, Cuisia explained, is anchored on three broad pillars of “stakeholder engagement in trade policy-making; trade policy research network and capacity-building; and enhanced interagency cooperation.”

He said this showed the Philippine’s “interest in joining after it had undertaken adequate preparations for the commitments required under the agreement.” Those “preparations” appear to be the proverbial elephant in the room at least where the Philippines is concerned.

Most experts say it will involve amending the 1987 Constitution, tearing down some of the most restrictive foreign investment rules in Asia, and aligning the Labor Code with International Labor Organization (ILO) standards on the rights of workers, an early staple of TPP agreements.

Not only is there a wide gap between what is and what should be, the process revives old fears about opening the Charter to changes. It’s apparently been deemed so risky that at least two past administrations (indications are there will be a third) opted to kick the can down the road despite earlier acknowledging the need for the amendments.

The five ILO principles are freedom of association; the elimination of all forms of compulsory or forced labor; recognition of the right to collective bargaining; abolition of child labor; and the elimination of discrimination in employment and occupations -- the last three said to be “problem areas” for the Philippines according to some.  

The Philippine remains in a US watch list of Intellectual Property Rights (IPR) violators. The US Trade Representative said they are “encouraged” by the decline in movie piracy and remain hopeful about “improving the quality of criminal investigations and prosecutions.” They also urged the government to open the market for US-made pharmaceuticals.

 

And assuming a TPP agreement is forged, will they be accepted by Filipinos?

Three years ago, Assistant US Trade Representative Barbara Weisel said in Manila that the Aquino administration would likely need to build “domestic consensus” to achieve all these.

With a move fraught with political peril, why pursue TPP at all?

For one, the Philippine’s long-term viability apparently depends on it. The Department of Trade & Industry in Manila estimates a TPP pact could be worth as much $10 billion in additional export revenues. Cuisia said the proposed free trade area would eventually account for 40 percent of global Gross Domestic Product (GDP).

“Aside from trade in goods and services, (TPP) also covers foreign investment, government procurement, intellectual property rights and environmental and labor protections,” Cuisia argued, pointing to the wide-ranging effects of joining the pact.

He stressed the Philippines simply can’t afford not to be part of it, along with the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) with dialogue partners Australia, China, Japan, South Korea, India and New Zealand that aims to remove 95 percent of tariffs on goods.

Japanese Prime Minister Shinzo Abe announced this week their intentions to join TPP negotiations, raising the prospect that the Philippine’s top two trading partners and sources of foreign investment – the US and Japan – would fall under one convenient yet critical umbrella.

It’s uncertain whether the Philippines can craft a garments trade agreement with the US – the SAVE Act – under the prevailing climate in Washington, when the concessional terms it seeks from an increasingly deficit-conscious US Congress can also be availed under TPP.

TPP is envisioned to eventually become the Free Trade Agreement of the Asia-Pacific (FTAAP).

“The risk of not joining the TPP is that the Philippines might very well find itself competitively shut out of key markets come 2015, particularly in North and South America and perhaps even in our own ASEAN backyard,” business columnist Ben Kritz warned in the Manila Times.

It is perhaps remarkable that Vietnam, one of the late additions to ASEAN, was able to tap early into the TPP (it began negotiations in Nov. 2010) and push structural, legal and market reforms at a pace that’s brought them closer to an agreement, possibly by this year.

One difference appears to be President Aquino. Although he’s given the green light to pursue the TPP, press reports as late as last January suggested he still wasn’t sold on the TPP. 

“Before we do it (charter change), let us have concrete evidence first that this will be helpful to our nation,” according to the Philippine Star. He noted that the TPP’s partner nations were still reviewing their agreements and signalled he was in no hurry.

“We are not being invited yet. If we get invited, there are certain qualifications that must be done. The process is long,” he averred.

“The longer the government waffles on making comprehensive reforms in critical areas—which most would say it ought to be doing anyway, TPP or no TPP—the less likely it will be able to participate,” Kritz wrote in his column.