Gov’t urged to join US-led trans-Pacific pact

AN ECONOMIST has urged the new administration to follow through with the Philippines’ intention to become a member of the TransPacific Partnership (TPP) Agreement as the country will not only lose prospective trade and investment opportunities, but even its existing businesses as well.

Former economic planning secretary and Inquirer columnist Cielito Habito noted that this early, some manufacturing companies based here were already mulling over the possibility of transferring their operations to a TPP member country such as Vietnam, which was deemed the closest to the Philippines in terms of circumstances.

Habito also pointed out that while the Philippines currently enjoyed preferential treatment of its exports to the United States under the generalized system of preferences (GSP), this scheme was only temporary and would lapse by 2017. The US GSP eliminates duties on about 5,000 types of products if American firms import these from 122 beneficiary countries and territories, including the Philippines.

“The Department of Trade and Industry has recognized the need to be among the first to come in the TPP once they open the doors because we stand to lose tremendous business opportunities and existing businesses even. That’s the reason why former Trade Secretaries Adrian S. Cristobal Jr. and Gregory L. Domingo even before already recognized the importance of aspiring to be members of the TPP,” he said.

According to Habito, the Philippines, apart from putting sectors such as garments at a high disadvantage, would likely lose out more on the prospective business opportunities that local industries have yet to see and realize.

For instance, there are potentials in areas that the country is currently at an advantage such as chemicals, traditional manufactures such as apparel and furniture, as well as services, particularly the local IT-business process management industry, whose biggest clients are based in the US, one of the lead proponents of the TPP. If the country is unable to join the TPP, it will not be able to cash in on these opportunities as well.

The TPP, which is expected to generate an additional $225 billion to the world economy by 2025, is a landmark agreement that eliminates or reduces tariffs, lowers the cost of trade and sets new and high standards for global trade while addressing next-generation issues. It is envisioned to promote economic growth, create jobs, raise living standards, reduce poverty, promote good governance and enhance labor and environmental protections.

The 12 TPP members—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam—have a combined population of 800 million and are projected to account for 40 percent of the world’s gross domestic product and 30 percent of world trade.