The United States and more competitive economies are pushing for the Trans-Pacific Partnership. China, for its part, is endorsing the creation of the Free Trade Areas of the Asia Pacific. Both schemes espouse free trade in the Pacific Rim. Is the Philippines ready for it?
The country is in no rush to participate in the TPP and is likely to be even less enthusiastic over the China-backed free trade initiative. Champions of the TPP, which counts 12 Asia-Pacific economies as partners, are warning that the Philippines risks being left out from the benefits of closer economic cooperation.
The government, however, is listening more to words of caution from those who say the country is not ready for free trade, especially when rules may be skewed to favor strong economies. These bigger economies also maintain protectionist policies in certain sectors particularly agriculture.
A valid question is whether the Philippines will ever be ready for the stiff competition in a free trade environment, especially when the tiny segment of the population that controls power and wealth thrives on monopolies, oligopolies and weak regulation.
Yesterday President Aquino wooed foreign investors upon his arrival in Beijing for the annual summit of the Asia-Pacific Economic Cooperation forum. The Philippines can tout several advantages, including the quality of its labor force and the abundance of natural resources for raw materials.
More competitive neighbors, on the other hand, can boast of lower power costs, better infrastructure, the rule of law and sanctity of contracts and promised business incentives. These days port congestion has been added to investors’ woes. And while President Aquino, by personal example, is showing that he means business in fighting graft, several of his officials and political allies have been implicated in corruption scandals. Grease money also continues to oil the wheels of the bureaucracy.
The administration has made progress in several areas but much remains to be done. National competitiveness and survival depend on reforms. Once these are in place, there is no reason to be wary of free trade.