With the 12 member-states of the Trans-Pacific Partnership (TPP) trade group finally clinching a deal in October after five years of negotiations, the Philippine government is all the more excited to join in.
Department of Trade and Industry Undersecretary Adrian Cristobal Jr. described the recently concluded trade agreement as “a timely and welcome development for the Philippines,” which had signified interest to join in 2010.
“The Philippines has indicated very clearly that we would like to join the TPP and would want to start discussions for our entry, once it opens its doors to new members,” Cristobal said.
“But,” he stressed, “before we enter formal discussions for membership in the TPP, we will carefully review the final and full text of the agreement, evaluate its impact on the economy, and consult thoroughly with our various stakeholders.”
Cristobal said joining the TPP is a significant component of the country’s international trade strategy (ITS), which the government, according to him, has been implementing for the past four years.
“Joining the TPP will provide more opportunities to further strengthen our foothold on the global market, with our local enterprises, workers and consumers benefiting from bigger markets and increased foreign investments,” he added.
The 12 countries comprising the TPP have a combined population of 800 million and are projected to account for 40 percent of the world’s gross domestic product and 30 percent of world trade.
The TPP is an expansion of the Trans-Pacific Strategic Economic Partnership Agreement or P4 signed by Brunei, Chile, New Zealand, and Singapore in 2005. In 2008, eight more countries—Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam, and the US—joined in to discuss a broader agreement, bringing the total number of member-states to 12 and changing the pact’s name to TPP.
But the discussions had hit snags throughout the past five years, with concerns on intellectual property rights, government procurement, and investor-state dispute settlements as among the kinks that had to be ironed out.
Cristobal said Philippines must be ready to face such challenges when it enters negotiations with the group.
“With the final text of the agreement made available, we can have a more definite evaluation of the impact of being a TPP member,” he said.
But even before the TPP had finally reached an agreement this month, the Philippines had already been in technical consultations with six of the 12 TPP member nations, according to Cristobal.
These countries were Malaysia, US, New Zealand, Australia, Mexico, and Canada. Cristobal said discussions would begin soon with Japan, Peru, Chile, Singapore, Brunei, and Vietnam.
“We also asked the TPP members regarding their policy on admitting new members,” related Cristobal, “and they said that TPP agreement has to be concluded first. From all indications, the 12 TPP members have been supportive of our desire to join.”
To become part of the TPP, the Philippines will need an endorsement from the 12 parties of the trade agreement.
According to Cristobal, the Philippines continues to aggressively pursue alternative tacks to obtain market access for the country’s products.
“This is consistent with our international trade strategy of forging free trade agreements and obtaining market access for our products and services,” he said. “For our European strategy, the Philippines obtained access to the European market through the EU Generalized System of Preferences plus (GSP+) in December 2014. We have also commenced formal talks for a PH-EU FTA, while negotiations are ongoing with the European Free Trade Area (EFTA).”
Cristobal emphasized that even while the country is not yet a member of the TPP, Philippine products already enjoy favorable market access to the US.
About 70 percent of Philippine exports enter the US market duty free, through zero tariffs under the Most Favored Nation (MFN) status or through the Generalized System of Preferences (GSP).
Cristobal explained that the Philippines is aware of the possible high-level commitments that the deal would require.
Among the concerns are the country’s constitutional limits to foreign investments and practice of profession, which might not fit with the requirements of TPP membership, Cristobal said.
The TPP is a landmark agreement that eliminates or reduces tariffs, lowers the cost of trade, and sets new and high standards for global trade while addressing next-generation issues.
The agreement is also envisioned to promote economic growth, create jobs, raise living standards, reduce poverty, promote good governance, and enhance labor and environmental protections among its member countries.
TPP’s trade pact includes provisions to lower barriers to trade in services, and remove foreign investment barriers, in addition to lowering tariffs on traded goods.
It also has provisions setting common minimum standards on labor markets and environmental protection, as well as international dispute resolution regimes.
While the Philippines remains interested in joining the TPP, achieving membership will likely take time since the terms of the agreement must now be ratified by member-state legislatures before taking effect.
Other countries that have expressed interest in joining the second batch of new members are: South Korea, Taiwan, Colombia, and Indonesia.