Tuesday, July 23, 2013

The Philippines Is Blowing Another Opportunity

The Trans-Pacific Partnership is a free trade area that is being negotiated among many of the leading more-or-less free economies of the Pacific Rim. It started in 2005 as an agreement among Brunei, Chile, New Zealand, and Singapore. Since 2010, a number of other countries have been negotiating an expanded group, to include Australia, Canada, Malaysia, Mexico, Peru, the US, and Vietnam.

Just this week, Japan announced that they intend to join as well (actually, they have wanted to join for a while, but they just had an election and the Prime Minister won big, so now he feels emboldened to make big moves).
Japan will finally sit down at the table with 11 other nations in Malaysia on Tuesday to negotiate the trade rules for the Trans-Pacific Partnership agreement after years of contentious political wrangling. 
The current TPP participants … have already gone through 17 rounds and aim to reach an agreement by year’s end. Late-comer Japan has only three days left to state its case before round 18, which started July 15, ends on Thursday. 
But Japan, whose GDP accounts for more than a fifth of all 12 TPP nations combined, still has a solid chance to be on the leading edge of drafting new trade and investment rules for the Asia-Pacific region.
As the Japan Times notes, a basic requirement for membership is that economies be open to competition. Japan, for example, wants greater access to other countries for its automobiles, but has long had high tariffs against agricultural imports – they would have to give up their tariffs on rice and beef.

The Philippines badly needs to be in on this, for a couple reasons. Most obviously, they need to be able to trade with these countries, and any time a trading group is set up, those outside the group suffer, as importers in each member country will tend to prefer to buy from exporters in other member countries.

The other reason is that membership would force the Philippines to open itself up to competition, which its horribly inefficient businesses (and their horribly abused customers) desperately need.

And that, of course, will not happen, because the families who own the country will not allow it.  A few months ago, the Trade Secretary admitted that the country “isn’t ready.”
The Philippines is not yet ready to join the international free-trade agreement known as the Trans-Pacific Partnership (TPP), the head of the Trade Department said Wednesday. 
"We can pursue it, but is it wise to lobby for it? Let’s just wait until we’re ready. We’re not going to actively pursue negotiations for us to join. It can be distracting and we have no resources for it," Trade Secretary Gregory L. Domingo told reporters. 
“We’re not yet ready for the TPP. We have to do some more homework first on our environment, labor and investment on the equity side because we have many restrictions,” he added. 
Doesn't sound like he wants in very badly, does it? Those restrictions he mentions will almost certainly never be removed, because doing so would require the approval of the very people who could be hurt by any changes in the economy. The country’s unwillingness to accept foreign competition was demonstrated again this week, when the courts ruled that FedEx is not allowed to operate here.
… the appellate court said international freight forwarding was a public utility. It upheld its earlier ruling declaring FedEx (Federal Express Pacific Inc.), a foreign corporation, disqualified by the Constitution from involvement in public utilities in the Philippines.

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