US-PH free trade agreement seen likely

A former Philippine tariff commissioner said the United States government would likely be willing to have a free trade agreement (FTA) with the Philippines amid the costly trade war between the United States and China.

George Manzano, a former member of the Philippine tariff commission, said the US Congress might be amenable to having an FTA with the Philippines despite the recent changes in the US political landscape.

In order to start formal trade negotiations, US President Donald Trump needs to notify Congress, whose lower house is dominated by Democrats that are critical of his administration. The notification period, according to US law, will take 90 days.

How the US congress views the prospects of having a deeper economic tie with the Philippines remains to be seen, especially given Duterte’s unpopular reputation due to his drug war and his tirades against his critics.

However, for Manzano, the US-China trade war — which has already cost billions of dollars in losses on both sides — might make the US Congress more supportive of having an FTA with the Philippines.

“With the ongoing trade war with China, they need allies and trade partners in the Asia-Pacific region. US investments in China would be in search of alternative locations, if the trade war would last quite long. The Philippines is a good candidate to receive these investments,” he said.

Moreover, he said the Philippines did not have a large trade deficit with the United States, unlike China, which meant the Philippines was not a threat to their industries.
The Philippine Department of Trade and Industry is just waiting for the US Congress to be notified. According to Trade Undersecretary Ceferino Rodolfo, this might happen early this year.

Trade Secretary Ramon Lopez said last August that the political events in the United States might affect the prospects of an FTA with the Philippines. Around that time, members of Trump’s inner circle were getting implicated in crimes that could be linked to the US President.

Back then, he attributed the speed of the initial talks to “good relationship between the two leaders (Trump and Duterte).”
As of now, the Philippines enjoys a preferential trade scheme with the US that allows the duty-free shipments of Philippine goods to US market. Called the US General System of Preferences (GSP), this arrangement will be replaced by an FTA, assuming the talks lead to an actual agreement.

Lopez said an FTA would be better as it would be “more encompassing and long term” compared to the US GSP, which is subject to renewal by US lawmakers.