February 21, 2018, 10:43 am
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US pull out from TPP levels playing field

The withdrawal of the United States from the Trans Pacific Partnership (TPP) puts the Philippines in a very good position, placing it in an even level of playing field against other Southeast Asian countries which have initially joined the trade agreement, said Ceferino Rodolfo, undersecretary of the Department of Trade and Industry.

In an interview, Rodolfo also said the US’ move makes the idea of the Philippines forging a free trade agreement (FTA) with that country more compelling.

According to Rodolfo, the feared advantage over the Philippines that Vietnam, Malaysia, Singapore and Brunei would have enjoyed with the US will be negated now that the latter is no longer part of the agreement.

The Philippines is especially threatened with Vietnam and Malaysia with regard to garments and electronics and automotive parts, respectively.

Rodolfo said the Philippines also becomes a more attractive alternative site for companies located in China due to US-Sino tensions.

He said about 70 percent of local products that go to the US now enjoy zero duties because these are either qualified under the US generalized system of preferences or pegged at zero under the most-favored nation tariffs imposed by the US.

“Only a few of our products are slapped positive duties such as garments, wrist watches, some agriculture products such as seaweed and carrageenan, and some small automotive parts. Now without US in TPP, we are all equal,” said Rodolfo.

While the Philippines has long indicated interest to join the TPP, “there is a timing issue here,” said Rodolfo.

He noted this development also opens the opportunity for the Philippines to push a bilateral FTA with the US.

“(Former US President Barack) Obama’s strategy was to stop all bilateral agreements and shifted to the TPP for countries wishing to get preferential arrangements with the US. The Trump administration may be more open (for a bilateral FTA),” he said.

Rodolfo added the US has issued its criteria on countries with which it would distance itself, such as those engaged in unfair trade like manipulation of currency.

“The Philippines does not fall in any of those criteria,” he noted.

He said the policy makers that Trump had installed are trade dealmakers who would have a pragmatic approach to trade.

“There is a big chance for the Philippines to enhance its trade relationship (with the US) including discussing the possibility of FTA,” Rodolfo said..

He added that the US cannot be ignored because of its sheer size and some of the trade in the region arising from the global value chain still go to the US

“With TPP out, RCEP is the name of the game,” said Rodolfo, referring to the Regional Comprehensive Economic Partnership of Asean with its dialogue partners China, Japan, Korea, Australia, New Zealand and India.
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