Post on 07-Sep-2018
transcript
Shaping Up for the AEC and New Generation Trade Agreements
Cielito F. Habito
Chief of PartyTrade-Related Assistance for Development (TRADE) Project
Forum onAEC Gameplan & Industry Roadmaps Localization
Hotel Roma, Tuguegarao CityMay 12, 2016
Four Observations
1. It’s more about complementation, less of competition.
2. There’s much more to AEC than ASEAN itself.
3. AEC and other agreements have pushed us to do the right things.
4. The Philippines is well-positioned for AEC (and other ‘new-generation’ FTAs)
1. More complementation, less ofcompetitionMore trade happening within the same industries (‘intra-industry trade’)
Dramatic growth of trade in intermediate goods, with the development of cross-
border value chains
Source: Sherry Stephenson (2013)
The Changing Shape of Global Trade
Value chains cross national
boundaries: Boeing jets,
iPhones/iPads are “Made in the World” (not
‘Made in USA’ or ‘Made in China’)
Philippine Trade with ASEAN Partners
With ThailandTop imports: Motor vehicles, electronics, petroleum and chemicalsTop exports: Motor vehicle parts, electronics &electricals, and minerals
With SingaporeTop imports: Electronics, machinery and petroleumTop exports: Electronics & electricals, machinery, and petroleum
With MalaysiaTop imports: Electronics, petroleum and chemicalsTop exports: Electronics, coconut oil, petroleum
Trade in ASEAN/AECFeatures
Largely intra-industry in nature (trade in products within the same industries, e.g. electronics, vehicles, chemicals)
Trade relationships are increasingly complementary rather than competitive; trade protection can be self-penalizing
Opportunities lie in positioning in regional and global value chains (aka production networks)
2. There’s much more to AEC than ASEAN itself.Membership in ASEAN opens access to six other large economies
ASEAN FTAs • ASEAN Free Trade Area (1992)• ASEAN – Korea FTA (2007)• ASEAN – Japan FTA (2008)• ASEAN – Australia+New Zealand FTA (2009)• ASEAN – China FTA (2010)• ASEAN – India FTA (2010)
ASEAN membership also means free access to Australia, China, India, Japan, Korea and New Zealand markets
ASEAN’s combined market = 600 million
ASEAN+6 combined market = 3.45 billion
• With ASEAN-China FTA in 2010, Philippine exports to China rose from $5.7B to $7B by 2013 (23%)
ASEAN + 6: A Far Wider Regional Market
New Generation Trade Agreements
• Regional Comprehensive Economic Partnership (RCEP) - to combine the ASEAN+6 FTAs; negotiations ongoing
• Trans Pacific Partnership (TPP) – 12 members so far, with 4 from ASEAN: Brunei, Malaysia, Singapore & Viet Nam; agreement signed on February 4, 2016
Trans Pacific Partnership: What is it?
An ambitious ‘new generation’, ‘high-standard’ trade agreement
Currently composed of 12 countries on both sides of the Pacific having:
• Combined population of 800 million
• GDP of $28 trillion (40% of global GDP)
• $9 trillion in merchandise trade; $2 trillion trade of services (30% of world trade)
TPP: Who are in it?
• Brunei (2005)
• Chile (2005)
• New Zealand (2005)
• Singapore (2005)
• Peru (2008)
• Australia (2008)
• United States (2008)
• Vietnam (2008)
• Malaysia (2010)
• Canada (2012)
• Mexico (2012)
• Japan (2013)
TPP: Who hope to come in?‘Second Wave’ Countries
• South Korea
• Philippines
• Taiwan
• Thailand
• Colombia
• Indonesia
• India
• Sri Lanka
3. AEC and other agreements are pushing us to do the right things.Membership entails compliance with certain policy commitments
Selected Stories
• My long, long wait for a phone land line
• A night at the movies
• Local cement monopolies
Common thread:
Restrained Competition
‘Right Things’ We’ve Been/We’re Being Led to
DoLegal/Policy Reforms
• Competition (Antitrust) Law - Done
• Customs Modernization & Tariff Act - Done
• Ease foreign investment restrictions - ??
Administrative Reforms
• Streamline customs processes
• Remove unnecessary & duplicating import clearances and permits (e.g., Toblerone)
The Philippine AEC Game Plan
Built on a Four C’s Strategy
• Competitiveness
• Compliance
• Collaboration
• Communication
Toward AEC-Enabled Enterprises
Competitiveness Agenda
PPP Infrastructure Program
Industry Road Maps (BOI)
Clustering Initiatives; Shared Service Facilities; Roving Academy (DTI, DOST)
Financial Inclusion Agenda (BSP)
Competition Law, CMTA (Congress)
Halal Industry Support (DTI, Bangsamoro)
Trade Facilitation Measures (Customs)
Climate Change & Disaster Resilience ++
4. The Philippines is in a strong position for AEC.
Now the strongest economy in ASEAN; PH firms are already AEC-engaged.
How is the Economy Doing?“PiTiK Test”
The Essential Yardsticks (P-T-K):
Price Stability (Presyo)
Jobs (Trabaho)
Incomes (Kita)
The Economy In 2015Good News on All 3 Counts
Prices: Inflation rate down to record low (Oct ’15 – 0.4%; 2015 Ave – 1.4%; Now: 1.1%)
Jobs: Unemployment rate finally breaks 6% barrier, down to 5.8%
Incomes/Output: Q4-2015 GDP growth of 6.3% (full year 2015 – 5.8%) among the fastest in ASEAN and globally
…and quality of growth is improving
Source: NEDA
2.8%
4.5%
6.3%Growing Investment
Contribution
2.8%
4.5%
6.3%Growing Industry
Contribution
Many PH firms are already AEC-engaged
Large: Jollibee, Oishi (Liwayway),
Golden ABC (Penshoppe), ICTSI, URC,
Mama Sita, KLT Fruits, Pointwest,
Splash, many more
Medium: Fountainhead, Manila Catering
Small: Human Nature, Great Women
Micro: Tubigon Loomweavers
Common Thread: Proactive, not Defensive
The Philippines & AEC Expressed concerns and fears are mostly due
to long-standing government failures, not inherent to AEC itself (e.g., weak support for agriculture)
Historically, policy of protection has fostered complacency and inaction
FTAs are pushing us into the long-needed policy reforms (open skies, competition law)
Making the most of AEC and new FTAs is a matter of attitude and mindset, i.e., proactiveness vs. defensiveness