The flaky ally

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

The WTO recently finished and released the findings of its 10th trade policy and practice review of the US. The report essentially concluded that the “U.S. trade and investment regimes are among the most open in the world, and have remained so throughout the period under review. Like most other WTO Members, the United States very largely resisted pressures to respond to the global economic recession by tightening restrictions on imports. The restraint shown by the United States helped forestall a worldwide slide into protectionism. Border measures such as tariffs and quantitative restrictions have remained broadly unchanged.”

The findings are actually mostly expected. Present trade policies essentially saw the continuation of the Bush trade policies, with occasional declarations from the Obama administration regarding the need to ensure that trade partners comply with their trading commitments. And it must be remembered that the US is indeed battling the effects of a recession and a potential next one.

So it comes as a bit of a surprise that the ASEAN made a quite public complaint about the US regarding its trade policies. In a statement made at the WTO, ASEAN urged "the United States to undertake substantial tariff reductions across the board in both agriculture and nonagricultural market access negotiations," and to "avoid any form of support [provided by the US Farm Act] that could distort trade, particularly given that the United States is one of the world’s leading agricultural producers, and hence has the potential to effect world prices and international trade."

According to a report by BusinessWorld, ASEAN’s beef hinges on “high US tariffs on garments and crops, trade distorting subsidies favoring American agriculture and ‘frequent recourse’ to antidumping probes.” This is again a bit off considering that the “recourse” by the US to trade remedy proceedings were actually no higher than previous years and definitely not within the peak of its usage in 2007.

Granted, ASEAN “counts the US as its second largest export market in 2009 after the European Union, accounting for nearly a tenth of the region’s $810-billion exports to the world;” with the Philippines likewise considering “the United States a key market, having cornered roughly 16.32% of export sales from January to July this year, official data show.”

But I suspect the real reason for this show of belligerence against the US is to make up for the statement it issued with the latter last 24 September 2010. In that joint statement, ASEAN and the US reaffirmed “the importance of regional peace and stability, maritime security, unimpeded commerce, and freedom of navigation, in accordance with relevant universally agreed principles of international law, including the United Nations Convention on the Law of the Sea (UNCLOS) and other international maritime law, and the peaceful settlement of disputes.”

Of course, one could ask what could possible be wrong with such a logical to the point of mundane statement? Tell that to China. As reported by the Canadian Press, China reacted, again predictably hysterically, that “China claims sovereignty over the entire sea and all the island groups within it and regards any U.S. involvement in the disputes as unwelcome interference. Foreign Ministry spokesman Jiang Yu said the disputes were a matter only for China and the countries directly involved. Countries without claims in the region should stay out, she said. ‘Words or acts that play up tensions in the region and concoct conflicts and provocations in relations between countries in the region are against the common wish of the countries in the region to seek peace and development,’ Jiang said.”

So ASEAN chastises the US to mollify (the constantly hurt feelings of) China. What is disturbing about this is that our president went along with it, considering that he was just recently and generously hosted by the US, even coming home with a check for US$434 million dollars assistance in relation to the Millennium Development Goals. I realize that there is such a thing as real politik but we also have to consider that if the Philippines can’t determine who its friends are and have the spine to stand by them, it betray its lack of character.

So perhaps it’s quite understandable for the US, after having rebuffed Philippine overtures for a bilateral FTA (remember that our government quite rashly and impulsively publicly rejected the US’ prior invitation for it back in 2003), to now act coy regarding our interest in joining the Trans-Pacific Partnership. When we met assistant US Trade Representative for Southeast Asia and the Pacific Barbara Weisel, the message essentially was for the Philippines to think hard if it really wants to join the TPP, with our country expected to undergo "significant legal reforms … strong intellectual property rights system and opening the services sector completely, with very few exceptions."

The point here is that, while flakiness seems to be prized right now among our people, outside our country one pays a price for it.