Intermediate goods dominate global trade

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PH has ‘competitive edge’ in East Asia

The freedom the Philippines enjoys in doing international trade through various free trade agreements is providing local and foreign trade players more complementation than competition.

Countries engaged in international trade complement each other through exchange of intermediate goods and final goods – a reality that improves the regional value chain, Trade and Industry (DTI) Secretary Adrian Cristobal Jr. said during a trade policy forum on Wednesday.

Cielito Habito, former director general of the National Economic and Development Authority (NEDA), said that more than two thirds of Philippine goods are intermediate goods for manufacturing final products.


“International trade now is more complementation than competition. It is because of the forming regional value chains. Before, intermediate goods were just a minority. Final goods were mostly traded. But now, 70 percent or two thirds are intermediate goods,” Habito said.

The Philippines mostly ships parts to manufacture certain final products that will be imported back to the country like motorcycle, bicycle and cars, the former Cabinet official noted.

Habito cited the recently passed Philippine Competition Law or Republic Act 10667, which was a long standing bill in Congress since 1987.

“It is a good thing it was finally passed. We are for so long the only Asean country without competition law. With the Asean Economic Community, this agreement finally got us to pass it,” he said.

For his part, Cristobal noted the country is now focused on taking advantage of the East Asian market, given the Philippines’ “competitive advantage” in East Asia.

“East Asian growth area – we are focusing on that. We have to take advantage of that. The Philippines has the competitive advantage because the products that we produce and trade in that area are sought after,” Cristobal said.

“We are in a better position there to compete. That’s what we’re trying to look at,” he added.

According to the DTI, the Philippines has these trade deals to bank on: Philippines-Japan Economic Partnership Agreement, ASEAN Free Trade Agreement, ASEAN-Australia-New Zealand Free Trade Agreement, ASEAN-Australia-New Zealand Free Trade Agreement, ASEAN-India Free Trade Agreement, ASEAN-India Free Trade Agreement, and ASEAN-India Free Trade Agreement.

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