Trade deal with EU to go beyond tariffs
BusinessWorld | November 21, 2010
Trade deal with EU to go beyond tariffs
BY JESSICA ANNE D. HERMOSA, Senior Reporter
THE EUROPEAN UNION wants a trade deal with the Philippines to go beyond tariffs and will seek as well commitments on services, government procurement and intellectual property (IP) protection, an official last week said.
This is in line with a new EU trade policy blueprint released this month which aims to expand output and employment in the Western bloc.
The Philippines, however, may find it difficult to comply with the additional requirements and should thus be wary of their inclusion, local experts said.
"Tariffs themselves are not the biggest problem to trade," EU Ambassador Alistair MacDonald told BusinessWorld in a chance interview.
"That’s what we meant in [saying that we are] looking for an ambitious free trade agreement (FTA)," Mr. MacDonald said, confirming that the tack laid down in the new EU trade agenda would be applied to negotiations with the Philippines.
The 24-page blueprint states that while tariff cuts are still important, "what will make a bigger difference is market access for services and investment, opening public procurement, better agreements on and enforcement of protection of IP rights protection, unrestricted supply of raw materials, and overcoming regulatory barriers".
As such, EU negotiators will be pursuing "investment protection together with investment liberalization" in trade talks, the document states.
It adds that the Western bloc will be seeking access to public procurement contracts as these mostly involve sectors where the EU claims to have high competitiveness: public transport, health care and green technologies.
The Philippine constitution, however, limits and even bans foreign equity and professionals in companies here depending on the industry. The procurement law (Republic Act 9148), meanwhile, allows state agencies to patronize local suppliers over foreign ones to ensure timely delivery of goods.
These could be among the trade and investment barriers the EU will be citing in an annual report the blueprint promises the bloc will be piloting next year.
"There’s a question of the capacity of the Philippines to meet demands of negotiations in those areas," Jeremy I. Gatdula, Ateneo Law School professor for international economic law, said in a telephone interview yesterday, claiming that some of the local think tanks offering help are funded by the EU.
There are already existing provisions on procurement, IP rights, and services in the draft global trade pact negotiated by World Trade Organization members, Mr. Gatdula added.
"We shouldn’t close our minds [to the RP-EU FTA] but our priority, I believe, should be the Doha round instead," he said.
An export group expressed concern that the side issues could put off a deal on much needed tariff cuts.
"It’s complicating things. These might delay us again," Philippine Exporters Confederation President Sergio R. Ortiz-Luis, Jr. said in a separate telephone interview yesterday, noting that several Southeast Asian neighbors have a headstart with their own negotiations for a trade deal with the EU.
The Philippines, in contrast, can only start exploratory discussions when it meets with the EU next month to sign a framework deal dubbed the Partnership Cooperation Agreement, Trade Undersecretary Adrian S. Cristobal, Jr. has said.
In Zamboanga, Trade Assistant Secretary Ramon Vicente T. Kabigting said the government was looking into the composition of the negotiating team that will meet with EU representatives.
The "structure," Mr. Kabigting told BusinessWorld on the sidelines of a department-sponsored information campaign, is being realigned "so that we can have a better negotiating team."
The EU blueprint, meanwhile, cites Malaysia and Vietnam, stating that the Western bloc "will seek to expand and conclude bilateral negotiations with Association of Southeast Asian countries, beginning with [these two members]."
"By 2015, 90% of world growth will be generated outside Europe... So in the years to come, we need to seize the opportunity of higher levels of growth abroad, especially in East and South Asia," it adds.
The EU was the Philippines’ top export market in 2009, accounting for roughly a fifth or $7.949 billion of total export sales of $38.435 billion. — with a report from Darwin T. Wee in Zamboanga
