RP urged to consider trade pacts with other developing countries

THE PHILIPPINES should seek trade pacts with other developing countries to take advantage its peers’ growing markets, a trade expert yesterday said.

Engagement with alternative markets is worthwhile as specialization will eventually shift trade from competing to complementary, and also as the recovery of crisis-hit richer countries has been slower.

“Import growth in developing countries is considered higher now,” said Rajesh Aggarwal, business trade policy section chief of the International Trade Center, at a seminar organized by local think tank Universal Access to Competitiveness and Trade (U-ACT).

Mr. Aggarwal noted that only six of the top 25 markets for developing countries were rich economies.

“And while developed countries are still extremely important, new growth is coming from new players,” he added, noting further that emerging economies now account for nearly 40% of global trade or double of its share two decades ago.

As such, the business sector would do well to prod government to improve Southeast Asian integration as most of the trade among developing countries currently occur within regions, Mr. Aggarwal said.

“Regional integration is one strategy to improve South-South trade. There needs to be freer movement of goods, services, people and capital and borders should disapper,” he said.

Trade pacts with developing countries outside the region such as those in Latin America, Middle East and Africa are also desirable, Mr. Aggarwal said.

“There should be a conscious effort to search for new markets. And do not be shy about the lack of complementarities,” he said, referring to how developing countries may find themselves export the same competing products at first.

“With production fragmentation, further complementaries will emerge.”

Sought for comment, U-ACT Chairman Donald G. Dee noted at the sidelines of the event that traditional markets like the US were still important and lucrative.

The US accounted for 16% of total Philippine export sales from January to July 2010, official data show. This is one percentage point lower, however, than its 2009 share. China and Hong Kong, meanwhile, has overtaken the US as the Philippines’ top trading partner as nearly 18% of Philippine exports were shipped off to the two economies.

Mr. Dee conceded that links with Southeast Asia should also be improved especially in terms of shipping and port infrastructure. –JESSICA ANNE D. HERMOSA, Senior Reporter, Manila Times