Thursday, September 3, 2015

Will the Philippines bandwagon on the US led Trans-Pacific Partnership?

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By Chester B Cabalza

Blogger's Notes:

Commentary of an Academic 
(Copyright @ 2015 by Chester B Cabalza. All Rights Reserved).

The alliance of the Philippines with the United States is cemented not only militarily but also economically. This robust economic relationship, apparently seen on how the Philippines gives support to the grand plan of the lone superpower in the world in crafting a “Trans-Pacific Partnership” or TPP, is undeniable and unprecedented, despite the country’s non-membership in the newest US-led economic agreement.  

It is however noted that the TPP is a multinational trade agreement proposed by the Philippines’ oldest ally. But in contextualizing the current economic global landscape, China is rising as well as the “other superpower” and stands tall as the second largest economy worldwide after the US.

China recently proposed for the creation of the Asian Infrastructure Investment Bank (AIIB) to relive the ‘Maritime Silk Road’ and counter Japan’s Asian Development Bank (ADB) and the United States’ World Bank (WB) and International Monetary Fund (IMF). This is in time when member-states of the Association of Southeast Asian Nations (ASEAN) are on the verge of economic regional integration this year.

The game-changing economic landscape are pushing major global powers to boost its financial assets and trading clout, thereby, creating transnational and multinational financial institutions robed under trans-border agreements that would increase their economic influence worldwide.

Definitely, there are two faces of the Trans-Pacific Partnership Agreement (TPPA). On the positive note, the United States through the TPPA, is guiding member economies to higher standards of production by either reducing or eliminating tariffs. On the other hand, it would bring menace to the restrictive intellectual property (IP) laws across the globe and rewriting international rules on its enforcement, according to activist Rick Esguerra.

It is deemed that in the intellectual property issue, there found leaked draft texts of the agreement showing extensive ramifications for users of freedom of speech, right to privacy and due process, and hindering peoples’ right to innovate.

Given the binary oppositions of opportunities and challenges that the TPPA may inject on our economic policies, this will give us a leverage to rethink our negotiating membership in the said agreement, as it would require the Philippines to implement domestic reforms in trade and industry, realign our objectives in international trade, increase external demand for domestic products and labor, and renew our economic engagement with the United States.   

Deal or No Deal

The Philippines has remained the darling of investments today by continuously positioning itself as the economic leader in Southeast Asia. This perceptible notion is evident in the country’s economic environment propounded by a relatively good business climate and sturdy government fiscal expenditures, solidifying several market fundamentals.

These, however, are good signs of economic recovery inspired by the Philippines’ continuous rating upgrade from reputable global credit rating organizations, affirming the current administration’s structural reforms demonstrated by the significant economic reforms by improving transparency and accountability in line with the goal of promoting economic growth and poverty reduction.

It should be noted that the past GPH-US economic relations have declined over the years after the Americans withdrew its largest bases in the Philippines. As a result of the changing conditions in the world market and increasing regional integration and global competition, trade agreements have become part of any economic and development strategies of every nation-state.

Filipino economist Erlinda Medalla thinks that like many other countries, the Philippines was characterized in the past by a heavily protectionist trade regime. Starting in the 1980s, it embarked on unilateral trade liberalization reforms, even before joining the World Trade Organization (WTO). It has been a firm supporter of the WTO principles, and continues to place primary importance on multilateralism.

Therefore, there is a need for the Philippines to renew its bilateral economic relations with the United States by engaging in a pluralistic approach. On this case, since the TPP is a multilateral agreement, twelve nations have already signified interests, including the US, Japan, Australia, Peru, Malaysia, Vietnam, New Zealand, Chile, Singapore, Canada, Mexico, and Brunei Darussalam, in which the Philippines may opt to bandwagon, weighing strategic preferential treatment from the agreement.

To have a holistic view of the newest US-led trans-regional trade agreement, it should be viewed that the Asia-Pacific, in which the Philippines is strategically located in the most important region, is experiencing very vibrant vignettes, and it is in the unique position of moving the global economy forward and bringing regional relations to a whole new level of cooperation and peace.

According to Monica Liempo, the potential for strategic and economic collaboration within the region is enormous, thus, realizing these opportunities and seizing the moment to usher in the age of Trans-Pacific peace and prosperity is a must. 

Then what would be the benefits, in case the Philippines specifically and Asia generally, would bandwagon on this lucrative agreement with the United Sates as the original signatory? 

In the purview of economic security, this is a way for the United States’ commitment to Asia as part of its “pivot” or rebalancing act to the most populous and important continent on earth; a way to strengthen US ties with Japan; stronger and closer ties between the US and alliances, such as Australia, New Zealand, and Singapore; and lastly, this is a desire to see US continued presence in the region fully committed in its policing role in the regional security and apparently a shift to strengthening its economic ties in the region through the TPPA.  

Singaporean legalist Ravindran thinks that on the regional context, seven (7) probable negotiating members that are also members of the Regional Comprehensive Economic Partnerships (RCEP) economies are in TPP negotiations. Four (4) more RCEP economies including Indonesia, the Philippines, South Korea, and Thailand are potentials in the ‘second tranche’ of the TPP.

He deems that these countries are attracted to TPP participation because of the benefits from TPP-inspired regulatory reforms and deeper liberalization, as well as fear of trade diversion from non-participation. Some would argue that TPP has always been declared open to potential new members while some TPP architects have put forward the prospect of building eventual free trade agreements from the foundations of the TPP. 

Thus, the Asia-Pacific Economic Cooperation (APEC) economies could gradually join the TPP when it is already prepared as a process analogous to the WTO accession. TPP negotiations are on parallel tracks towards the ASEAN and APEC visions of economic integration leading towards broader free trade agreements.

What’s stopping others?

With a ‘new age’ regionalism which appears to be a viable option and possible support to waning multilateralism, any further erosion of the multilateral trading system could dissolve their complementary interface.

There are doubts about the eventual form of the mega-blocs currently under negotiation – particularly the US-led TPP involving the United States and the other Asia-Pacific countries. There is also a brewing United States-European Union (US-EU) Transatlantic Trade and Investment Partnership (TTIP) that would definitely affect the global economic and political landscape, according to Medalla. 

In this sense, the United States’ concoction of the TPP and TTIP compact could become as a ‘free-trade charades’ whose goal is “managed trade regime – managed to serve the special interests that have long dominated trade policy in the West,” as opined by Joseph Stiglitz.

Ibon International reports that the TPP aims to achieve smooth economic integration in the Asia-Pacific region through intensified trade liberalization. Grounded on the rebalancing strategy of the United States in the Asia-Pacific, the US will utilize the TPPA to counter China’s expanding influence.

One major contending issue in TPP, intently contained in a chapter on intellectual property covers copyright, trademarks, and patents. Based from the leaked information from the ‘May 2014 draft of the TPP Intellectual Property Chapter [PDF]’, the US negotiators are pushing for the adoption of copyright measures far from restrictive than currently required international treaties, including the controversial ‘Anti-Counterfeiting Trade Agreement (ACTA)’.

From the document of Secret TPP Treaty: Intellectual Property Chapter working document for all 12 nations with negotiating positions based from WikiLeaks released last 16 October 2014, it described that the revised version of the confidential draft treaty chapter from the intellectual property group of the TPP talks, negotiated in secret by delegations from each of these 12 countries, who together account for 40 percent of the global Gross Domestic Product (GDP). 

The chapter covers agreements of facilitations, restrictions and enforcement of regulations of copyright, trademark, patent, pharmaceuticals, counterfeit and piracy issues between the signatories of the agreement. The document was produced and distributed after the 20th Round of Negotiations at Ho Chi Minh in Vietnam.

Based from the report of Electronic Frontier Foundation (EFF), the leaked US IP chapter includes many detailed requirements that are more restrictive than current international standards that would require significant changes to other countries’ copyright laws. These entail obligations for member-countries to: (1) place greater liability on internet intermediaries, (2) escalate protection for digital locks, (3) create new threats for journalists and whistleblowers; (4) extend copyright terms; (4) enact a “three-step-test” language that puts restrictions on fair use; and, (5) adopt criminal sanctions.Given the loopholes on the intellectual property, in effect countries joining the TPPA will have to surrender big chunk of their national sovereignty to the trade pact’s imperialist masterminds, according to Ibon International.  

Wider participation

The rapid transformations on the global economic landscapes are fast and deterritorializing. Inclusive growth must be felt by creating new rules of engagements by crafting transnational and multinational agreements. 

The TPP, despite legal flaws should be considered seriously by the Philippines to beat its economic momentum and renew its economic interest and ties with the United States. In a larger scale, we are weaving efforts of reconciliation of our APEC commitments with much faster movement it may acquire in greater regional significance. In TPP, the RCEP member countries alone are the most dynamic countries with high growth potential in the region.

In the end, appropriate laws must be protected that are aligned to the objectives of the TPPA to affirm existing rights and obligations of potential member-countries. Notwithstanding that there are severe and chronic issues ahead its implementation on the intellectual property rights and pharmaceutical products and medical devices which must be given emphasis and weight based from the intent and spirit of the well-crafted international agreements and treatises.

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