RP to ink deals at ASEAN summit

BY JESSICA ANNE D. HERMOSA, Businessworld Reporter, 23 February 2009 

THE PHILIPPINES is set to sign regional agreements that will free up trade and bolster economic integration at the Association of Southeast Asian Nations (ASEAN) summit this week, officials said. 

Experts noted, however, that leaders would have to balance their goals of liberalizing trade with commitments to other partners outside ASEAN and pressures to protect local industries amid the global downturn. 

At least 25 agreements and statements that range from declaring the group’s roadmap until 2015 to brokering cooperation in attaining food and energy security await the signatures of ASEAN leaders and dialogue partners. 

The summit, under the theme "ASEAN Charter for ASEAN Peoples" will be held in Cha Am and Hua Hin in Thailand from February 26 to March 1. 

"Among others, there are three major intra-ASEAN documents [that the Philippines will be signing]: the ASEAN trade in goods agreement (ATIGA), the ASEAN comprehensive investment agreement (AICA) and the seventh round of ASEAN agreement on services," Trade Assistant Secretary Ramon Vicente T. Kabigting said in a telephone interview on Saturday. 

On top of these, the Philippines will also be signing free trade deals between ASEAN and India and another involving ASEAN, Australia and New Zealand, Mr. Kabigting said. 

Under the agreement with Australia and New Zealand, the Philippines will eliminate duties on 95% of its goods by 2013 while the two Pacific economies will do the same to all their goods. 

Philippine exporters of car parts will benefit, Mr. Kabigting said, as it allows them to compete against Thai exporters who have enjoyed an earlier bilateral trade pact with Australia. 

Under the deal with India, meanwhile, the Philippines commits to remove tariffs on 71% of its goods by 2017 in exchange for India’s elimination of tariffs on 94% of their goods. 

"The usual such as rice, sugar and corn [will be on the sensitive list and face slower or no tariff reductions]," Mr. Kabigting said without elaborating. 

Asked to comment, University of Asia and the Pacific economist George M. Manzano said "With the agreements, they can send a message to the world to keep the channels of trade open [and that] if they will be more protectionist, they will suffer more." 

Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr. welcomed the trade pacts as these will open up "big markets". 

"But Australia is a competitor in agriculture. It remains to be seen if the Philippines will benefit from the deal. We might face difficulties," Mr. Ortiz-Luis said in Filipino last week. 

Rene E. Ofreneo, executive director of FairTrade — a coalition of civil groups concerned with trade reforms — said that the government must report to stakeholders how the country will benefit from the deals. 

For the intra-ASEAN agreements, meanwhile, the Philippines will not "incur any new tariff or non-tariff obligations", Mr. Kabigting said. 

These are streamlined and improved versions of earlier pacts and will allow for the easier movement of goods, investments and services in the region. 

"But one major value-added [under the ATIGA] is we make very certain what are everyone’s tariff commitments," Mr. Kabigting said. 

"And there is a provision on modification of concessions for members finding it hard to maintain their commitments in times of economic difficulty. It contemplates other premises for tariff modifications aside from the usual emergency measure and balance of payment concerns. But it is very disciplined and not a wide and open loophole." 

This move is but one of the actions ASEAN is taking to address the continuing global economic downturn. 

"I would expect the major focus of discussions would be the financial challenges we are facing. [President Gloria Macapagcal Arroyo] has already taken the lead to call for the conclusion of the World Trade Organization Doha talks as one of the major strategies," Trade Secretary Peter B. Favila last week said. 

The President, he added, will also be calling for continued progress on talks to create a regional standby fund to help countries experiencing liquidity problems. 

In October last year, the Philippines suggested that a larger portion of the fund — first created under the Chiang Mai Initiative after the 1997 Asian financial crisis — be disbursed when needed while Thailand had proposed to increase the fund to $250 billion from $84 billion. 

The government, however, must not solely focus on this standby fund and the trade deals at the summit, Mr. Ofreneo said. 

"If there is the Chiang Mai Initiative, [what are they doing] to strengthen social and labor integration? ASEAN should not overlook the overarching goal of a sharing and caring community," he said in a telephone interview. "Do not focus on one type of instrument." 

He pointed out that much needed to be done in terms of closing the development gap among ASEAN members and fleshing out human rights and labor rules. 

"The question is, can ASEAN rise to the challenge of revisiting the liberalization mechanism to achieve the one integrated community? There needs to be a radical adjustment when the issue now is how to preserve jobs and make sure the vulnerable in society survive," Mr. Ofreneo said. 

Mr. Kabigting, for his part said: "The President is cognizant of this economic crisis. [The government] is not a purist about liberalization. While it must be pursued, you cannot pursue it unbridled. There must be some precautions taken." 

World Trade Organization Director-General Pascal Lamy has warned against "regionalism [that hurts] multilateralism by bolstering discriminatory interests or by fostering protection behind enlarged closed markets". 

In the foreword of a WTO publication launched over the weekend titled "Multilateralizing Regionalism: Challenges for the Global Trading System", Mr. Lamy called on members to review regional agreements to see if these are likely to allow for wider and more inclusive trade deals in the future. 

For Mr. Favila, however, the ASEAN deals are "complementary with the [ones of the] WTO" and "will not in any way compete with the Doha round". 

Mr. Manzano, for his part, said that while more regional deals may "theoretically" make trade rules difficult to comply with, "we do not know if it will be significantly complicated".