The Philippines intends to join the Trans Pacific Partnership (TPP), and is already conducting technical consultations with the United States as a preliminary step. This clear declaration was officially made by Secretary Albert Del Rosario.

Del Rosario’s statement came during a round table discussion on “Foreign Policy in an Evolving World” sponsored by the ADR Foundation and facilitated by DLSU Professor Renato De Castro. It was held last July 29 at the Tower Club in Makati.

There have been serious doubts on the willingness of the Philippines to join because of certain serious challenges. However, Secretary Del Rosario stated that while the country may not be part of the first group of countries to join, it will definitely join the second group of interested nations.

The Trans Pacific Partnership is a proposed trade agreement that would be similar to the European Common Market. It seeks to lower or eliminate trade barriers such as tariffs; establish a common framework for intellectual property; enforce standards for labor and environmental laws; and establish an investor-state dispute settlement mechanism.

The TPP hopes “to enhance trade and investment among the TPP partner countries, to promote innovation, economic growth and development, and to support the creation and retention of jobs.”
 The 12 countries participating in the current TPP negotiations are the United States, Japan, Brunei, Chile, Singapore, New Zealand, Australia, Canada, Malaysia, Mexico, Peru and Vietnam. Aside from the Philippines, the other countries that have signified interest in joining the second group of expansion are Colombia, Thailand, Taiwan, South Korea and Indonesia.

The biggest barrier to joining the TPP for most of the countries is the need to change their protectionist trade and investment laws. In fact, the Philippines may have to amend its constitution to allow greater share of foreign investors in certain industries.

In the United States, the strongest objections come from Obama’s own party, the Democrats, and from labor unions. The Obama administration recently introduced a bill for implementing the TPP with minimal debate and no amendments, with the entire process taking no more than 90 days. The bill was passed by narrow votes in the American Senate and House by narrow margins because of strong opposition from Democratic Party legislators. The American labor unions believe that the TPP would increase the outsourcing of more American jobs to Asia  and cause further decline of wages in the USA.

In the Philippines, the TPP is expected to gain a lot of support since it is expected to increase manufacturing jobs and foreign investments. The opposition will likely come from sectors that would like to maintain the present economic policies of restricting foreign investments in certain industries. However, Filipino businessmen have expressed confidence in their ability to compete against multinationals if they start operating in this country.

The Trans Pacific Partnership Agreement also has major geopolitical effects that will ultimately affect the Philippines. The TPP could end up as the most crucial element in America’s policy of “pivoting to Asia.”  This could be the balance to offset China’s goal of becoming the dominant economic force in Asia.

The United States has established political and security alliances with Japan, Taiwan, South Korea, the Philippines and Australia. It is now trying to establish stronger security links with Vietnam.

In the economic aspect, however, China has had the upper hand. American allies have joined the China-led Asian Infrastructure Investment Bank despite the strong objections of the United States. The Chinese “Silk Road” investment project to build infrastructure connecting China with Europe has received strong support from Pakistan and other European countries. Recently, five countries – Brazil, Russia, India, China, South Africa- met in Shanghai to put up a financial institution that could turn out to be another IMF. While it is true that all these initiatives have still to be fully realized, there are concrete evidences of China’s intent to rival American economic power.  The TPP, which is strongly supported in Asia, will make the United States economically relevant in the region again.

China is not expected to join the TPP because of its extreme reluctance to open up its country to more foreign investments and to follow international laws. China will, therefore, be the biggest loser if the TPP is finally realized. There will be diversion of trade and investments from China to countries like Vietnam, Malaysia and, hopefully, to the Philippines once it joins the economic partnership.

The Trans Pacific Partnership Agreement will rival, if not surpass, the European Common Market as an economic powerhouse. There will be problems along the way but the Philippines can and must play a role in the launching of an Asia-Pacific Common Market.

Quo Vadis China?

The recent extreme volatility of the Chinese stock market coupled with the recent slowing down of its economy has been a puzzling enigma to most Chinese observers. There are those who continue to believe that this is only a temporary glitch in China’s continuous march towards becoming the next world superpower. There are also those who surmise that this slowdown is actually part of a grand strategy and the inevitable price of shifting from an investment-led to a consumer-led economy.

Paul Krugman, Nobel Prize Winner for Economics, has a simpler explanation. He says: “The big news here is not about the Chinese economy: it’s about China’s leaders. Forget everything you’ve heard about their brilliance and farsightedness. Judging by their current flailing, they have no clue what they are doing.”

This is the best explanation that I have heard.

Source: http://www.philstar.com/opinion/2015/08/06/1485054/philippines-will-join-tpp