Hesitation as good policy

BUSINESSMEN want the Philippine government to act fast, negotiate with the European Union for a bilateral free trade agreement (FTA) and warn that continued pussy-footing will cause our country to miss the opportunities that our Association of Southeast Asian Nations fellow-member-countries have begun to benefit from.

The Philippine Chamber of Commerce and Industry (PCCI) last month repeated its call for a shift from what I call the Aquino administration’s “policy of hesitation” in reaching a Phl-EU FTA.

An FTA—PCCI, as well as Europeans believe—should have followed the initialing in Brussels in June of the text of a proposed Partnership Cooperation Agreement (PCA) between us and EU.

In 2009, the PCCI’s think-tank, U-ACT (or Universal Access to Competitiveness and Trade, did a study on the “Merits to Philippine Business of having a bilateral Philippines-EU Free Trade Agreement.” )

The U-ACT study said some of the sectors likely to benefit from an FTA with EU are the vegetable, oils and fats, textiles/apparel, motor vehicles parts and some of our other manufacturing industries.

The study also said potential beneficiaries are financial services and insurance, chemical products, communication, construction, dwellings, energy and water supply, paper and publishing, leather, machinery and electrical appliances.

PCCI said the business process outsourcing (BPO) sector, in which the Philippines is now the world’s top player overtaking India, would be enhanced by the pact.

PCCI also said the Philippines right now is aggressively pushing in Europe our fishery, seafood and marine products (Mindanao tuna), broilers, agricultural products (Mindanao), fresh fruits (bananas), muscovado, processed fruits (mango, pomelo, banana chips), processed or semi-processed coffee products, chemicals (oleo-chemicals), coco-based products (VCO and beauty by-products, e.g. soap, perfume), natural rubber, biofuel products, mining products, furniture, jewelry, handmade paper, cameras, health and tourism, ICT services, services sector (skilled labor).

But we will lose out to countries that have already signed deals with the EU, like Singapore, and to Vietnam and Indonesia which are now in the advanced stages of finalizing their trade agreements with Europe.

PCCI Vice Chairman and U-ACT Chief Executive Officer (CEO) Donald Dee explained that while the PCA was initialed in June, it is not a trade deal. It is just a step toward the FTA.

Why the hesitation?

Why is the Aquino administration following a “hesitation” policy?

Trade Undersecretary Adrian “Jet” Cristobal, while being appreciative of the EU as a major trading partner of our country, says we still have to prepare for the negotiations and consult with various sectors of the economy.

A great deal of work still must be done, Cristobal says. Many short and long term consequences must be carefully weighed.

What these consequences are were articulated by agriculture and fishery organizations. They, in effect, said Europe’s sophisticated agriculture and fishery products sectors will swamp the Philippines with their quality products while Philippine counterpart products would fail the rigorous EU quality controls.

So their stand is for the government to do something fast about boosting our own food production capabilities before signing an FTA with Europe.

The absence of an FTA and the lack of enthusiasm on the part of our government to have one crafted and signed, distress the EU Office in Manila.

The European Union is not only important to the Philippines as a product-trading partner. It is also a major destination of our OFWs, service-providers whose human skills are the commodities exported by the Philippines to Europe.

It should also not be forgotten that the EU’s common currency, the euro, is the world’s second reserve currency, after the US dollar.

EU countries are also among the most active and important donors of development aid to the Philippines.
Some European aid-givers are focused on Mindanao. That is partly because that island, once peace is assured, promises to be a rich source of resources and products.

The Aquino administration has to quickly decide, as the PCCI recommends, on activating our negotiating panels and working with European counterparts to reach an agreement.

But only, as Cristobal suggests, after our country has marshaled all the weapons it can use to get the best terms.

In the meantime, we have prepared this special report, offering the STRATFOR analysis of what is currently happening in Europe and with euro because Filipinos should be more aware of developments in the EU. –RENE Q. BAS EDITOR IN CHIEF, Manila Times