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US lukewarm to trade pact with RP

Business World Philippines | Monday, August 9, 2004

US lukewarm to trade pact with RP

Felipe F. Salvosa II

The United States appears uninclined to forge a bilateral free trade agreement with the Philippines, citing the latter’s seeming inability to make good its commitments.

A delegation from the Office of the US Trade Representative (USTR) told Filipino counterparts in an informal meeting last week that the country did not meet the US criteria for potential FTA partners.

Quoting the USTR delegation, Trade undersecretary Thomas G. Aquino told reporters the US wanted FTAs only with countries "that are able to live up to their commitments."

The USTR meeting was held weeks after the Malacañan presidential palace ordered the pullout of Filipino soldiers from Iraq, a move that has been criticized by the US as well as some of its allies.

Mr. Aquino said "commitments" sought by the USTR included "hassle-free" import and export procedures and compliance with US rules for exporters.

Without saying whether the Philippines could meet the standard, Mr. Aquino emphasized that there was usually "no turning back" on these commitments.

He nonetheless acknowledged that an FTA with the US was not yet on the horizon.

The US delegation appeared to be "slowing down" on making any further commitment ahead of presidential elections scheduled in November, Mr. Aquino said.

But the Philippines is still hopeful the US will eventually agree to negotiate, he added. In fact, the Philippine Institute of Development Studies has been commissioned to prepare a cost-benefit analysis of an economic partnership agreement with the US.

Among various sectors in the economy, agriculture will most likely be reluctant to pursue an FTA with the US, Mr. Aquino said.

It was the US that brought up the idea of an FTA with each member-country of the Association of Southeast Asian Nations (ASEAN). President George W. Bush himself launched Washington’s "Enterprise for ASEAN Initiative" in a side meeting with ASEAN leaders at the Asia-Pacific Economic Cooperation summit two years ago in Los Cabos, Mexico.

Singapore already has an FTA with the US, while Thailand is close to signing one. The Philippines, meanwhile is still hammering out what will be its first-ever bilateral economic partnership agreement with Japan.

Mr. Aquino also said US trade officials seemed concerned that the Arroyo administration was trying to accomplish a lot of things in coming up with a 10-point agenda that called for new taxes and a balanced budget in six years.

But the Trade undersecretary said he got the point across in emphasizing that the numerous goals set by the President only signified her firm commitment to turn around the economy.

"They seemed impressed with the amount of work the government has put on itself," Mr. Aquino said.

Other topics discussed during the trade meeting were the need for Filipino exporters’ to comply with US rules, biotechnology issues, garments trade, and intellectual property rights.

Mr. Aquino said it was unlikely the Philippines would be deleted from the US’ Special 301 Watchlist of intellectual property rights violators until the next review cycle.

US trade officials nonetheless recognized the "tremendous effort [undertaken by the Philippines] in improving its intellectual property record," he said.

Still, the US government wants a "close to the ideal situation" where pirated CDs and DVDs will be rare.

Mr. Aquino, however, pointed out that the Philippines could not be accused of mass producing US intellectual property such as music, film, and computer software since most of the counterfeits come from neighboring Asian countries.

Mr. Aquino headed the Philippine panel that met with the USTR delegation, composed of Barbara Weisel, deputy assistant US trade representative; USTR officer David Katz; and David Bisbee, head of the Philippine desk at the US Commerce department.

The US is the Philippines’ largest trading partner, with two-way trade amounting to $14.51 billion last year.

The US is the top destination of Philippine exports and is also the country’s second import source. In 2003, 19.91% of total exports were absorbed by the US market, while 19.73% of total Philippine imports were supplied by the US, Trade department data showed.

Major Philippine exports to the US include semiconductor devices, such as transistors; portable digital automatic data processing machines; storage units; finished electrical and electronic machinery; and women’s wear.

Top imports from the US are comprised of parts of electronic integrated circuits; dice of any material for the manufacture of semiconductor devices; wheat and meslin, unmilled; oil cake and other residues of soya beans; and parts and accessories of computers.

The US has historically been the Philippines’ largest foreign investor. In 2002, an estimated $3.3 billion in American investments accounted for 22% of the country’s total foreign direct investment.

Washington has been distancing itself from Manila of late following the pullout from Iraq of a largely symbolic 51-man Filipino humanitarian contingent in exchange for the life of overseas Filipino worker Angelo dela Cruz, whom Iraqi militants had threatened to behead.

US State department spokesman Richard A. Boucher categorically said last week that the Philippines was no longer part of the "Coalition of the Willing" of countries that supported the unilateral decision of the US to attack Iraq.

 source: US lukewarm to trade pact with RP