is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
Amid all the social issues tersely debated not
only in the Philippines but all over the world, international trade goes
on, albeit not too much in the spotlight but of great importance
nevertheless. It’s fair to say that a lot of the decisions the
Philippines will take (particularly in the elections for 2013), as well
as the decision that the United States will make this November, will
significantly impact the economy of our country for a decade to come.
That the upcoming November presidential election in the US is a
significant trade-related matter for the Philippines is without doubt.
The difference between the candidates is stark. Jagdish Baghwati,
writing for Handelsblatt, considers US President Barack Obama
being "under siege from the labor unions who were hostile to trade, was
resolutely opposed to closing the Doha Round unless numerous concessions
were made to appease its business lobbies." Accordingly, as concluded
by Dr. Baghwati, the Obama administration "killed Doha… it was killed by
President Obama who had ironically been awarded the Nobel Peace Prize
by Norway in the expectation that he would promote multilateralism and
turn his back on US unilateralism!"
On the other hand, Republican candidate Mitt Romney seems more welcoming
of trade (at least for the US and for its favored trading partners). As
Washington based trade lawyer Andrea Ewert wrote, the theme of a
possible Romney administration on the area of trade is to: "1. Expand
market access for US businesses through trade agreements; and 2.
Confront China." Accordingly, "Romney promises to pursue new trade
agreements with nations committed to free enterprise and open markets,
and to create a Reagan Economic Zone." As far as China is concerned,
"Mitt Romney promises to: (i) impose targeted tariffs or economic
sanctions; and (ii) designate China a currency manipulator and impose
countervailing duties, i.e., increased duties imposed by an importing
country to compensate for subsidies given to producers or exporters of
the exporting country."
In the meantime, Russia and Vanuatu recently joined the World Trade
Organization, raising the WTO’s membership to 157. The entry of the two
countries is important, both for quantifiable and symbolic reasons. As
WTO Director-General Pascal Lamy puts it: "Both accessions show that
joining the WTO remains high on the countries’ agendas since trade can
bring a predictable and stable basis for economic growth. This is
especially important as the world goes through troubled times and
continues to suffer from one of the worst global economic crisis in
memory. Joining the WTO is a sign of confidence in the organization and
in what it can deliver for its members."
By its accession agreement package, Russian agreed to fully implement
"all WTO provisions, with recourse to very few transitional periods. On
average, the Russian Federation will apply a final bound tariff for 7.8%
for goods and has made specific commitments on 11 services sectors." As
far as tariff ceilings are concerned, Russia’s "final legally binding
tariff ceiling for the Russian Federation will be 7.8% compared with a
2011 average of 10% for all products: The average tariff ceiling for
agriculture products will be 10.8%, lower than the current average of
13.2% The ceiling average for manufactured goods will be 7.3% vs. the
9.5% average today on manufactured imports."
Vanuatu, on the other hand (see WTO.org), intends to "fully apply all
WTO provisions and did not require recourse to any transitional period
except on intellectual property and on the publication of trade
information. Vanuatu will apply an average final bound rate of 39.7% and
has made specific commitments on 10 services sectors. The services
sector has been growing and now accounts for three-quarters of Vanuatu’s
GDP."
The entry of Russia is significant for Philippine businesses. As Kemal Dervis of the Brookings Institution states in Finance & Development,
"the world economy is going through a major structural shift, with
emerging markets rapidly catching up to advanced economies." This is
supported by Santiago Cueto of International Business Law Advisors:
"According to the United States’ Export.gov division, nearly 96% of
consumers live outside the US. Moreover, two-thirds of the world’s
purchasing power is in foreign countries." Furthermore, citing the
International Monetary Fund, there are "as many as 150 emerging
international markets nearing economic expansion. Other countries such
as Brazil, Russia, India, China, South Africa are seeing tremendous
growth." The logical conclusion, according to Mr. Cueto, is that "small
businesses looking to increase sales and profit, reduce dependence on
the domestic market and stabilize seasonal fluctuations should consider
exporting."
There’s indeed a lot of uncertainty in the global economy. But there are
definite areas of opportunity for Philippine businesses to take full
advantage of, which can result in greater revenues for the country,
better jobs, better education, better standard of living for Filipinos.
That is, if only we can shift our focus on the things that matter rather
than wasting time arguing about the gutter that is the RH Bill.
