THERE are a couple of assumptions maintained by business and economic minds in this country that need to be reconsidered and, at least for the time being, discarded in favor of a safer plan B.
The first is that the Philippines will be able at some point to join the Trans-Pacific Partnership (TPP) trade agreement. The second is that the European Union will still exist in two or three years’ time. Both of those assumptions are in all likelihood false.
If it’s any consolation, there is nothing the Philippines could do to impact these two near-inevitabilities. The only fault the country ever displayed with respect to the TPP is not moving sooner (or really, not moving at all) to fix the deal-breakers that kept the Philippines from being invited to the TPP party during the negotiating rounds.
Now that the pact has moved on to the ratification stage, it is too late; no new TPP partners will be taken on until the agreement is ratified and actually goes into effect—which is supposed to happen by sometime next year—and the chances of its being ratified in all 12 of the participating economies are slim.
The TPP has virtually no chance of being approved by the US Senate; under the various scenarios that the elections could produce, there is none that favors passage, at least not in 2017, and not without some significant changes that could very well force a renegotiation of the original agreement. There are also indications that ratification is in for a rough ride in New Zealand, and possibly also in Canada, as the fascination with Prime Minister Justin Trudeau evolves into a realization that he is definitely not his father.
The failure of the TPP in the US—either outright rejection, or even just delay or alteration of the agreement—will probably kill it. The pact could go on without the US, but its selling point for many of the economies that are part of it or who would like to be was the promise of greater access to US markets; that is why, even though it didn’t start with the US (Singapore was the original mover of the initiative), everyone involved has accepted the pretense that it is “US-led.” With America out of the picture, the deal is suddenly going to look a whole lot less attractive to others, especially those in Latin America who would be making some unpopular trade-offs in order to benefit from it.
The second misplaced assumption is that the European Union has any chance of remaining intact. For the past seven or eight years since the global financial crisis, the glaring inequity between the EU’s greater and lesser members has been painfully obvious, and with the refugee crisis—which is really just the first real calamity the EU has had to face—the tenuous bonds holding it together are beginning to snap.
Even so, the EU could probably find a way to outlast the refugee problem and hold itself together, if it were not for the UK’s deciding to face the issue of dropping out of the union.
|Right now public sentiment ahead of the vote, which is scheduled for June 23, on whether to stay in the EU or not seems to be leaning slightly in favor of remaining, but what no one seems to understand, or at least is not discussing, is that the fact that Britain is even having a referendum is probably a fatal blow to the EU.
If the UK votes to leave, it will start a parade of other nations toward the exit; it would probably also hasten the breakup of the UK itself, as Scotland favors remaining in the EU, and almost certainly would launch another secession initiative. If the UK remains in the EU, it would encourage other members to seek concessions from Brussels in order to stay, weakening the uniformity that makes the EU what it is; the breakup would simply be delayed, but not prevented.
The impact of the dissolution of the EU would not necessarily be completely negative for the Philippines, but it would increase the complexity of the country’s trade and political relations, and delay progress. In the short term, it would be a blow against the country’s FDI intake, such as it is, and could create some problems for OFW employment.
Forget the TPP; it probably won’t make it anyway, and even if it does, the Philippines has a great deal of work to do in the areas of investment liberalization and labor regulation before it can meet the standards set by the existing agreement—whatever an altered TPP, if that is the eventual outcome, might present, those things won’t change. As far as the EU is concerned, there is not much the Philippines can do beyond working to form relationships with individual states; efforts toward that, however, are not likely to be wasted no matter what happens.