RP not ruling out pact with Taiwan

(BusinessWorld, 6 August 2010):

The Philippines is not ruling out talks for a free trade pact with Taiwan even as the country only recognizes the government in Beijing under a one-China policy, a Trade official yesterday said.

Stronger ties with the territory, which already accounts for a large part of the Philippines’ export sales and foreign direct investment, would be ideal especially as Singapore itself is looking at forging a deal with Taiwan, Trade Assistant Secretary Ramon Vicente T. Kabigting said.

"Certainly there is a one-China policy but we have always recognized that Taiwan is among our top trade partners and investors," Mr. Kabigting told reporters in a chance interview.

Taiwan -- regarded by China as a breakaway province -- was the Philippines’ 13th largest source of net foreign direct investments in 2009, accounting for $1.34 million according to central bank data.

The island was likewise the Philippines’ 13th largest export market last year, accounting for $1.324 billion or 3.5% of total export sales.

Mr. Kabigting further noted that Singapore had announced it was exploring possibilities for a trade pact with Taiwan, which last June signed the Economic Cooperation Framework Agreement with China.

"Developments like that can only make it easier for us to consider similar possibilities," Mr. Kabigting said.

"It makes compelling economic sense to have closer ties with Taiwan."

The National Economic and Development Authority (NEDA) under the previous administration previously announced that the government was studying the forging of a trade deal with Taiwan in an effort to keep up with China.

Otherwise Taiwanese companies, lured by the newly minted trade pact between Taipei and Beijing, could move investments into China, the NEDA said, threatening investments based here and also the jobs of Filipino workers employed in Taiwanese factories.

The Taipei Economic and Cultural Office, Taiwan’s representative arm in the Philippines, said it would be approaching the new administration to discuss the matter.

Sought for comment, Ateneo international economics law professor Jeremy I. Gatdula yesterday said the Philippines was free to enter into a trade deal with Taiwan despite the one-China policy

"Taiwan is a sovereign [sic. it should be 'separate' - jemy] customs territory under the World Trade Organization so there’s no reason why, legally speaking, [the Philippines can’t forge a trade pact]," Mr. Gatdula said in a telephone interview.

"China should be considered a reasonable country."

The Philippine Institute for Development Studies -- a government think tank -- is already studying the matter, its president Josef T. Yap yesterday said.

"We are in the process of initiating background studies on this issue," Mr. Yap said in an e-mail.