Benefits from FTAs

Published by rudy Date posted on May 19, 2011
SOMETIME back in one of my previous columns, I wrote about Doing Business in Free Trade Areas, a program spearheaded by the DTI International Trade Group. The program is meant to educate business and raise people’s awareness of FTAs and how to take advantage of the opportunities from our free trade agreements. Studies showed that very few of our businessmen were actually availing themselves of these opportunities. Among many possible reasons for this but one major, major reason for the low level of utilization is the difficulty in complying with all the requirements and procedures. It simply seems not worth the trouble even with a zero tariff incentive. While it may be true that under our trade agreements, tariffs have been reduced or eliminated, exporters still have to deal with non-tariff barriers such as stringent sanitary phyto standards.
In that same article, I suggested that maybe it is not such a bad idea to consult our stakeholders first before our negotiators even think of going to the negotiating table. After all, the exporters and importers know best if such agreements will actually redound to their benefit and to the economy in general.
“One Country, One Voice: Institutionalizing Stakeholder Participation towards a Unified Trade Strategy” is a step in the right direction as it makes it s.o.p. to hold consultations with the various sectors and industries, both government and private, to establish an efficient and effective consultative mechanism. The aim is to enhance and sustain public engagement in trade policy formulation.
On the table is a possible Philippines-EU trade agreement. The consultative sessions will allow stakeholders to recommend issues to be included in the policy studies for the trade agreement. During the same launch, Ambassador Donald Dee, vice chairman of the Philippine Chamber of Commerce and Industry, presented results of a study they commissioned to find out the pros and cons of having a bilateral agreement with the EU. That study revealed that opinion favored establishing bilaterals with the EU considering that it is the biggest single market bloc in the world, among other things. Some issues raised were the time frame/length of the consultations and the importance of the labor sector in the consultations. The need to review existing FTAs was also brought up. It should be good at this point with the JPEPA review underway, if we can present to the public results of implemented agreements to see what benefits our people have got from them, if any. This should be the basis for any agreements to be renewed.
After going through this exercise, we hope that the results will provide some sort of guidance for our negotiators to consider next time they go back to the negotiating table. That way, we can be confident in the thought that our people have been consulted well.
Some companies that have taken advantage of our FTAs:
• ASEAN FTA: RFM Corporation’s processed food and beverage
• Australia-New Zealand FTA: International Wiring Systems in Tarlac for its wiring harness for automobiles
• China ASEAN FTA: Agrinurture in Bulacan for its coconut juice and other processed food
• ASEAN Korea FTA: Cavite-based company KLT Fruits’ juice concentrates
• Japan: Davao’s Primefruits International’s banana chips and nata de coco
For those companies thinking of what products to export covered by FTAs, here are a few:
• To ASEAN: all Philippine export products such as electronics, processed food, and fresh bananas among others except rice, sugar, and few agricultural lines (e.g. meat)
• To Australia-New Zealand: processed food, beverages, minerals, leathergoods, footwear, basketware, fine & costume jewelry, appliances, auto & auto parts, ships & boats,
furniture, women’s undergarments, cotton jackets/dresses
• To China: bananas, copra oil, mineral oils, selenium, industrial fatty alcohol, copper, machinery and mechanical appliances & vehicle parts and accessories
• To Korea: dessicated coconut, sweet biscuits, copra/coconut oil, tobacco, marble tiles & slabs
• To Japan: civet coffee, frozen poultry meat cuts, shrimps & prawns, fresh mangoes, refined coconut oil
DATAWATCH: Recent NSO data showing Philippine export performance
• Philippine exports January – February 2011 amounted to US$7.8 billion or an increase from January-February 2010 exports amounting to US$7.1 billion.
• Philippine exports for February 2011 rose by 8.2 percent (US$3.86 billion) from US$3.5 billion for the same period in 2010.
• Top export products: electronics (US$2 billion); articles of apparel and clothing (US$153 million); and woodcrafts and furniture (US$138 million).
• Top export markets: Japan (17.2 percent share of total exports); United States (16 percent); and China (11.2 percent).
Based on emerging product-market combinations or new business, products that show strong potential are ship-building, tourism services, solar technology, and a number of resource based products such as abaca and coconut among others. Coconuts in fact, has already gone up to second place in ranking in the last quarter reports on merchandise exports displacing garments.
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