Revisiting the TPP

WITH the recent signing of the Trans-Pacific Partnership (TPP) trade agreement, the possibility of the Philippines joining the 12 nations that are currently part of the pact has again become a mildly popular topic of conversation. Opinions are mixed – as they are in the countries that must now individually ratify the agreement – as to whether or not it’s actually a good idea.

In its editorial yesterday, BusinessMirror thumbed down the idea of the Philippines acceding to the TPP, an opinion that might surprise some readers, as the paper otherwise takes a largely pro-trade position when it comes to policy questions. I happen to think the BM called it right, generally, although I am probably a little more optimistic than that paper’s handsome and talented editorial minds seem to be about the ability of Philippine business to adapt to take some advantage of the situation the country’s (hypothetical) TPP inclusion would create.

The interest of the Philippines in joining the TPP is nothing new, although the discussion was dormant for some time before the APEC summit last November, which put the issue back in the spotlight. It first came to the attention of the general public a little more than three years ago, on the occasion of President B.S. Aquino 3rd’s otherwise forgettable appearance at the World Economic Forum meeting in Davos, Switzerland in January 2013. What I observed at the time (in the Jan. 29, 2013 issue of The Manila Times) is interesting to revisit now in light of the current discussion of the TPP:

“In what had to feel like an indictment of his reverence for his mother’s deeply-flawed 1987 Constitution and his own consistent ‘no charter change’ position, a group of visiting US business leaders in a meeting earlier this month [January 2013] apparently told Aquino point-blank that unless restrictive investment provisions of the Constitution were amended, there was virtually no chance the Philippines would be invited to join the ongoing talks aimed at creating the Trans-Pacific Partnership (TPP) Trade Agreement….

“Until now, there seems to have been a significant difference in opinion about the Philippines’ joining the TPP between the Department of Trade & Industry and Malacañang. In an interview in mid-September 2011, Trade Secretary Gregory Domingo expressed an interest in having the country join the talks, but acknowledged that considerable institutional reforms would have to be undertaken in order for the Philippines to qualify to be invited by the existing TPP group. During President Aquino’s official visit to the US just a week later, Domingo reportedly buttonholed US Trade Representative Ron Kirk, and asked for the USTR’s assistance in assessing what the Philippines would need to do to be included in the TPP discussions.

“But as recently as this past October, President Aquino himself informed a forum of the Foreign Correspondents of the Philippines that he was ‘in no hurry’ to pursue the TPP, expressing uncertainty whether it would benefit the country. That only seemed to change this past week with the input of the visiting Americans, when Aquino ‘expressed optimism regarding the country’s TPP entry’ (according to DTI’s Domingo, quoted by BusinessWorld Online) and assured the businessmen that the suggestion to amend the Constitution’s economic provisions ‘would be studied carefully’ (according to Ambassador Cuisia, quoted by Interaksyon.com) . . . .

“The two main obstacles to the Philippines’ joining the TPP negotiations are the constitutionally-enshrined restrictive provisions on foreign investment and a labor code not sufficiently aligned with the International Labor Organization’s (ILO) 1998 Declaration on Fundamental Principles and Rights at Work, which was an early inclusion in the TPP framework.

The five ILO principles are freedom of association, the elimination of all forms of compulsory or forced labor, the effective recognition of the right to collective bargaining, the effective abolition of child labor, and the elimination of discrimination in employment and occupations. The latter three principles are where the Philippines is said to be deficient with respect to being invited to the TPP negotiations. To a lesser extent, lagging progress in institutional reforms relating to intellectual property protections, combating the spread of counterfeit goods, reducing smuggling, and contract enforcement have also dampened the country’s prospects.”

From three years ago, when the foregoing was written, until now, the Aquino Administration has moved from being sort of moderately interested in joining the TPP to telling anyone who will listen that joining the TPP is something that will happen at a time more or less of the government’s choosing. Yet nothing that prevented the 12-nation TPP group from inviting the Philippines in the first place has actually changed: The restrictive economic provisions of the Constitution remain, and appear likely to stay in place for at least the next three or four years, and with respect to improving the labor environment—strengthening collective bargaining, making at least sincere and visible efforts to reduce child labor, and eliminating discrimination—the Philippines’ record has certainly not improved at all, and may actually be worse in some ways.

The economic risks of the TPP and the potential market pitfalls the sweeping trade pact presents, the problems BusinessMirror highlighted, are legitimate concerns, but the Philippine economy—or to be more precise, the political framework within which this economy operates—has not evolved enough to worry about those issues yet; there are still fundamental structural flaws to be addressed, but no real sign that anyone is actually interested in tackling them. In any event, the point is moot for now; until the trade agreement is either ratified or rejected by the governments of the individual countries involved, no other countries will be invited to take part in it.

ben.kritz@manilatimes.net.