PHL fails in 6 TPP metrics

Washington has identified six key areas where the Philippines needs policy adjustments to make it to the US-led Trans-Pacific Partnership (TPP), a by-invitation-only trade bloc currently composed of 12 countries.

These are competition policy; telecommunications sector; rules of origin; investment protection, specifically the investor-state dispute settlement; intellectual property; and scheduling of modalities for trade in services liberalization.

This is according to the United States Agency for International Development’s (USAID) “Philippines TPP Readiness Assessment Project,” part of Washington’s Trade-Related Assistance for Development (TRADE) project with Manila.

According to the paper presented by the USAID, these six areas were chosen to assess the Philippines’s “TPP readiness.”

The study noted that the requirements that the TPP demands in these areas are either not yet covered by the Philippines’s lone bilateral free-trade agreement (FTA)—the Philippines-Japan Economic Partnership Agreement—or the country’s regional FTAs via the Asean; or are still ambiguous.

The assessment compares the Philippines’s existing trade and investment laws and regulatory framework with those of the requirements of the TPP, essentially outlining the areas where reforms should be undertaken.

Trade Secretary Adrian S. Cristobal Jr. earlier told the BusinessMirror that the government is now reviewing independent studies on the TPP to determine if joining the bloc would benefit or harm the Philippine economy. It has also launched public consultations with the different industries and stakeholders. A decision, he said, would be made within two years if the country would pursue its bid to join the TPP.

Legislation on telecommunications, for example, will require changes as the TPP—in a specific chapter—demands that the members will get to access and use each other’s public telecommunications services, “at a reasonable price and on nondiscriminatory terms.”

However, as oft-cited by advocacy groups in the Philippines, the classification of the telecommunications sector as a public utility under the Commonwealth Act of 146 (CA 146) subjects it to the 60-40 foreign-ownership rule.

Another sticking point noted in the paper is that the TPP expects members not to restrict or put conditions on access and use of public telecommunication networks and services (PTNS), with few exceptions.

But, as PTNS are considered public utility, even if they are owned and operated by private companies in the Philippines, the CA 146 contains provisions that may serve as loopholes that telecom providers can use to restrict access.

Other issues noted in the paper are the changes in interconnection, unbundling of network elements and powers of the National Telecommunications Commission.

On government procurement, the Philippines has Republic Act 9184 of 2003, or the Government Reform Procurement Act, which states that preference can be given to domestically produced goods, also inconsistent with TPP requirements.

For intellectual property-rights protection, the Philippines’s rules are in the Intellectual Property (IP) Code, which was passed in compliance with the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS).

According to the USAID assessment, the IP code may have to be changed to expand its coverage, as the TPP’s commitments are much broader than what the TRIPS mandates.

“There is no express protection of certification marks and geographic indications [types of intellectual property] in the IP Code, and the Code does not afford the required protection to unregistered well-known marks,” the study states, noting the IP Code’s shortcomings.

The TPP also requires criminal penalties for aiding and abetting trademark infringement, a provision not provided for in the IP Code.

The passing of the competition policy, however, has been noted to be in compliance with the TPP agreement. But this will be ascertained in the Philippine Competition Act’s enforcement.

Dr. Cielito Habito, chief of party of the USAID’s TRADE project, underlined the importance of TPP, stating that the bloc represents 30 percent of world trade.

In the context of bilateral trade with the Philippines, half of the country’s exports go to TPP members, particularly since the US and Japan are among the 12 current members. Also, 41 percent of the country’s total foreign trade is with these 12 members.

“The TPP will provide comprehensive market access, elimination of all tariff and nontariff barriers, and increase cross-border trade,” he noted during his opening remarks.

According to Habito, the country’s foreign direct investment inflow from the 12 TPP members has been moderate thus far. Of the $6.2-billion record FDI in 2014, the TPP members accounted for only $1.4 billion. “There may be room for expansion [of FDI] if we have a more open relationship with these economies through the TPP,” he said. –Catherine Pillas, Businessmirror