“Philippine Trade Surprise” by Malcolm Cook

2018/15, 22 February 2018

The Trump administration’s seemingly forlorn push for bilateral trade deals in East Asia has received some unexpected support from the Duterte administration in the Philippines. On Monday, Philippines Socioeconomic Planning Secretary Ernesto Pernia emphasized the importance for the Philippines of elevating its current Trade and Investment Framework Agreement with the US to a full free trade agreement. The next day, Philippine Trade Secretary Ramon Lopez stated that both sides are conducting their individual studies on a bilateral free trade agreement and suggested that negotiations could start within two years.

There are two reasons why this Philippine push for a free trade agreement with the world’s largest and most advanced economy is a surprise. First, the Philippines currently only has one active bilateral free trade agreement (with Japan, the Philippines’ largest export market) as well as being a member of the ASEAN-based free trade agreements. Second, early in his term in a speech in Beijing, President Duterte announced his personal separation from the United States and has repeatedly criticized the influence of the US in the Philippines. Philippine trade officials clarified that Duterte’s “separation from the US” comments meant that their efforts would be focussed on strengthening trade ties with Asia and reducing the Philippines’ historic dependence on “the West”. A bilateral free trade agreement with the US would seem to achieve neither of these goals.

This Philippine push for a free trade agreement with the US reinforces the economically liberal and technocratic approach of the Duterte administration. It also should act as a corrective to blanket assumptions that the Duterte administration is “anti-American” and that Philippine-US relations are in a purely negative trajectory. The US is the largest source of foreign direct investment and remittances to the Philippines and the second largest export market. The Duterte administration realizes this reality and is acting on it. The Philippines could become the second Southeast Asian country after Singapore to have a free trade deal with the US.

Dr Malcolm Cook is Senior Fellow at ISEAS-Yusof Ishak Institute.
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