RP lagging behind neighbors in use of FTAs

THE government needs to do better in informing the private sector on how they will utilize the free-trade agreements (FTAs) the Philippines has entered into after a study of the Asian Development Bank (ADB) showed that the country is lagging behind its trading partners in taking advantage of these FTAs, the Philippine Chamber of Commerce and Industry (PCCI) said.

“If we want to fully maximize the gains and benefits of these agreements, all we need is to have a coherent and proactive strategy that will involve the private sector, specifically in mounting information and advocacy campaigns that will showcase the benefits of these FTAs,” Donald Dee, vice chairman of PCCI, said.

The Philippines, he said, has entered into an FTA with Australia, New
Zealand, China, Korea and Japan on a regional basis, as well as a bilateral deal with Japan, or the Japan-Philippine Economic Partnership Agreement.

These FTAs, Dee said, will benefit a wide range of agriculture and industrial sectors—including electronics, garments, automotive, transportation parts and equipments, among others.

Also, the liberalization of the services sector and the various investments provisions contained in these FTAs are also expected to boost Philippine competitiveness, he said.

The sad thing, however, is they are not being fully utilized by Filipino businesses.

According to an ADB study conducted in 2007 and 2008, the Philippines’ FTA utilization rate was only 28 percent, way behind China, which posted the highest utilization among Asian countries at 45 percent. Countries like Japan, Thailand, Malaysia and China are the major users of FTAs, the study added.

The PCCI said the government should undertake a massive program to enhance the utilization of the country’s FTAs, particularly in the area of information, which was the main reason for the low rating of the Philippines in the use of preferential arrangements and concessions under the FTAs.

“Businesses will immensely benefit from these FTAs but we have to make sure that they are not left behind in terms of information and how they can utilize them to their advantage. These FTAs would be useless if no one is using them,” Dr. Francis Chua, PCCI president, said.

The need to come up with extensive information drive on how to maximize these FTAs are expected to be part of the PCCI’s policy recommendations contained in a 10-point agenda that will be presented to President Aquino at the culmination of the 36th Philippine Business Conference and Expo on Friday at the Manila Hotel.

PCCI, the largest business group in the country, will also ask the government to work with the private sector in reexamining the country’s export strategy and expand value-chain activities to increase and sustain the country’s export margin.

“The thrusts of our export development plan, congruent to the overall premise of economic growth, can be mainstreamed by enhancing the competitive advantage of the country’s export products and services. This entails the identification of critical operational and policy impediments to the expansion of the domestic production base in the global value chain, interfaced with the opportunities offered to us by the regional trade regime under the Asean and the bilateral trade agreements that the government negotiates,” Dee said.

“Export diversification would be an important policy shift that should be considered to reorient the country’s export plan toward higher value-added activities where sectoral mapping can be undertaken. This will identify the country’s potential export winners, and match the same with the needed infrastructure and logistical support, technical skills and education of human capital supporting the stages of production processes,” Sergio Ortiz-Luis, PCCI chairman and Philippine Exporters Confederation president, said. –Max V. de Leon / Reporter, Businessmirror