The Trans-Pacific Partnership as a presidential campaign issue

was my Trade Tripper column in the 30-31 October 2015 issue of BusinessWorld:

Just to continue the point made in my previous article on the Trans-Pacific Partnership (TPP; “Should The Philippines Join The TPP?” Oct. 16), what is to be emphasized -- ironically, despite the title -- is not whether the Philippines should indeed join (we should, clearly) but the conditions in which the Philippines does so.

On the former, online publication The Establishment Post (“The TPP Impact On ASEAN,” Oct. 12) has this to say: “The TPP’s impact is just as significant for the ASEAN (Association of Southeast Asian Nations) countries not in the agreement. Indonesia, Thailand and the Philippines in particular will feel the competitive disadvantages for their exports (Myanmar, Cambodia and Laos still being able to use Generalized Scheme of Preferences [GSP] privileges). This will definitely put more pressure on the countries to complete the Regional Comprehensive Economic Partnership (RCEP) talks, which in turn will mean convincing India and Indonesia to be more flexible on their bargaining positions. The three large ASEAN countries might also try to reinvigorate their FTA (Free Trade Agreement) talks with the EU (European Union). Strengthening the AEC in the post-2015 era will also become more important.”

The matter, really therefore, is not “should we?” but “how?”

And as I previously noted: yes, the TPP covers almost 40% of the global economy. And indeed it affects not only tariffs but also services, investment rules, patents (including, quite ominously for many, over pharmaceuticals), agriculture, the environment, and government procurement. But of the 12 TPP members, the Philippines already has free trade relationships with seven: aside from the World Trade Organization (WTO), there is ASEAN Common Effective Preferential Tariff, ASEAN-Australia and New Zealand, ASEAN-Japan, Philippines-Japan Economic Partnership Agreement, and the (unfortunately expired but with possibility of renewal) GSP relationship with the US.

And, then, there is the Asia-Pacific Economic Cooperation (APEC).

While not an FTA, it does constitute a coverage that the TPP can only dream of. Unlike the TPP’s 12-country membership covering only 11% of the world’s population, APEC’s 21-country membership constitutes more than half of the total global population. And while everyone is agog at TPP’s being 40% of the world gross domestic product (GDP), APEC has 54%.

And this can be emphasized more when an FTA of the Asia-Pacific does become a reality.

The same thing goes for the RCEP, which has a 16-country membership, constituting (like APEC) also half of the world’s population. While its GDP coverage is scoffed at for being a mere 29%, nevertheless, one has to remember that FTAs are about trade and not GDP. In which case, the TPP’s 13% of world trade is not much of an advantage over RCEP’s 12%.

And speaking geographically, which is still an important factor in international trade, the RCEP does have India and China. And quite significant as well is the fact that TPP’s countries are not growing as fast as RCEP ones.

So there is time for the Philippines to be deliberate and more calculating about our entry into the TPP. The TPP members themselves will give us that. Canada voting a lukewarm Justin Trudeau into its premiership is one, another is the US’ quite divided hostile political environment.

As Foreign Affairs magazine (“Free Trade and the TPP,” Oct. 7) describes it: “When, after five years of talks, an agreement was finally announced on October 5, neither a single Republican leader in Congress, nor any broad business federation could be found to support it. Republican support for the TPP is indispensable since most congressional Democrats oppose it and former Secretary of State Hillary Clinton has just come out against it.

Consequently, ratification is both a question of when and if. Without ardent efforts by GOP leaders to move some of their reticent rank-and-file, the TPP cannot be ratified. Legally, Congress cannot even vote until the February primary season at the earliest and, in an election year, ratification will be an uphill climb even under the best circumstances.”

And the reason for all this wariness is something that the Wall Street Journal incisively explains (“TPP is Surprising Vote of Confidence in Globalization,” Oct. 21), of which our present political and bureaucratic leaders are strangely unconcerned about but definitely should -- the possible danger that the TPP might pose to our national sovereignty:

“‘Behind the border’ barriers are politically more sensitive than tariffs because they affect domestic policies, from human rights to how much public health systems pay for drugs. Classical arguments for free trade are also less relevant: a country that grants foreign drug companies longer patent protection is raising prices for its own consumers, and more restrictive labor laws erode its competitive advantage of cheap labor. Yet these sorts of rules are the conditions the US and other advanced countries insist on if developing countries are to have access to their markets. This is why TPP’s significance lies not in its economic impact -- modest for most signatories -- but how it restricts its members’ domestic sovereignty.”

Hence, why I repeat: the TPP (and WTO, APEC, RCEP) is not as simple as ABC.