The Department of Trade and Industry (DTI) has recognized the need for amendments in the economic provisions of the Constitution to allow the country to reap the benefits presented by developments in the global trade and investment setting, particularly the ambitious Trans-Pacific Partnership (TPP) agreement.
A report prepared by the DTI noted: “Per DTI, the Philippines need not amend its Constitution immediately, as flexibilities are allowed in the TPP. However, at a certain point, the Philippines may have to amend selected economic provisions of the Constitution.”
The comments of the trade department were contained in the talking points discussed with United States Secretary of Commerce Penny Pritzker. It was also based on the inputs of the trade office for the state visit of United States President Barack Obama in mid-April.
In a section commenting on the TPP, the report noted that of the total 2,212 tariff lines of Philippine exports to the US in 2012, about 677 lines, or 30.6 percent, were given duty-free access, while 1, 535 lines, or 69.4 percent, still had positive tariffs, citing data from the Tariff Commission.
Moreover, the DTI said joining the TPP would improve the country’s competitive position “to become a regional hub for growth, investment and exports to the US and key Asian markets.”
However, the trade office similarly anticipates that the TPP will likely require a broad and demanding set of commitments from the Philippines, such as liberalizing restrictions on foreign-equity ownership and government procurement, and adopting zero tariffs for all products with sensitivities to agriculture and industrial products.
Given the stringent requirements, the trade office concedes that economic provisions may have to be amended for the Philippines to join the TPP in the future. But currently, the country will take advantage of the flexibility allowed in the said partnership.
Notably, the report said considering the opportunities and challenges that the TPP presents, the Philippines is “seriously studying” the feasibility of joining the TPP, and is eyeing to hold bilateral technical consultations with TPP countries, including the US. The TPP is a plurilateral trade agreement being negotiated by 11 countries, namely the US, Australia, Brunei Darussalam, Japan, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, Canada and Mexico.
The TPP countries have a combined gross domestic product (GDP) of $28 trillion, or 40 percent, of world GDP, trade in goods at around $9 trillion and $2 trillion in trade in services.
The US-led TPP has been described as “ambitious” as it covers what is considered nontraditional sections outside of tariff-reduction areas such as competition, e-commerce, government procurement, intellectual property, financial services and investment, among others.
Despite the interest of the trade and finance departments, the main hurdles blocking the country’s entry to the TPP are constitutional limitations on foreign ownership of land and foreign participation in certain sectors.
US Commerce Secretary Penny Pritzker said during her visit last week that TPP is a central economic priority of the Obama administration as the opening of markets across the Asia-Pacific region will lead to job generation, as well as regulatory coherence for countries involved in the partnership.
According to a research report by the Makati Business Club last year, the opportunity loss that the Philippines may incur if it does not pursue entry into the TPP is estimated at $ 500 billion in GDP in 2025. –Catherine N. Pillas, Businessmirror
(With VG Cabuag)
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