West should fortify economic relations

OTHER Western powers, particularly the United States, should follow the European Union's lead in bolstering economic partnerships with the Philippines rather than focusing largely on security cooperation. During her visit last week, European Commission President Ursula von der Leyen said negotiations on a free trade agreement (FTA) will resume soon. She also gave assurances on the certification of Filipino seafarers working on European vessels and witnessed the signing of an agreement for the EU to help the Philippines transition to a green economy.

European Commission President Ursula von der Leyen speaks at a business event in Fairmont Hotel, in Makati on July 31, 2023. ELOISA LOPEZ / POOL / AFP

Geopolitical issues were also mentioned during the first visit of a European Commission president to the Philippines. Mrs. Ursula von der Leyen said in a press conference, “The European Union has been very supportive of a free and open Indo-Pacific, because an Indo-Pacific free of the threats of coercion is key to all our stability, to our peace and to the prosperity of our peoples.”

That may have been intended for China, which has been embroiled in territorial disputes with several Southeast Asian countries including the Philippines. In April, Mrs. von der Leyen visited China, where she mentioned “de-risking” relations with that Asian superpower to avoid problems that Europe had experienced when ties with Russia deteriorated after the invasion of Ukraine.

In fairness, China blames the US and its allies for stoking the already tense situation in the South China Sea. Beijing has also criticized the Philippines for renewing security cooperation with the US that gives it access to more military bases in the country.

Meanwhile, the Marcos government continues to walk a fine line in preserving a foreign policy of being a friend to all and an enemy to no one. But no one should begrudge the Philippines for wanting to develop its capabilities to defend itself against threats to its national interests.

More competition

As others have said, the American way of helping its allies in the Indo-Pacific should have more of an economic slant. The world seems better off if superpower competition meant fostering relations in trade and investments, instead of having states locked in an arms race. Interlocking economic interests are still a potent tool that can minimize the threat of regional conflict.

While the US has pledged to help the Philippines on the economic front, it does not seem willing to go as far as the EU or even China. The US has ruled out the possibility of negotiating an FTA with the Philippines despite the special relationship between Filipinos and Americans.

Regretfully, the Philippines has been unsuccessful in lobbying for the renewal of its participation in the US Generalized System of Preferences (GSP). That trading scheme, which expired in 2020, allowed some 5,000 Philippine goods to enter the US market without import duties.

In contrast, the EU has renewed its GSP Plus privileges for the Philippines while a trade agreement is negotiated. That FTA may become necessary if the Philippines becomes an upper-income country, which will disqualify it from Europe's GSP program. That trading scheme is typically given to lower-income countries that need a helping hand.

China aims to expand trade with the Philippines and others in the region through RCEP, which created the world's largest free trade area.

RCEP is the Regional Comprehensive Economic Partnership agreement, which the Philippines recently ratified.

As such, the US needs to step up its game, so to speak. It should not be complacent, even if it is this country's third-largest trading partner and is already a major source1 of foreign direct investments. Economic bilateral relations can be even better, in spite of growing competition to do business with the Philippines.

Instead of a traditional FTA, the US is working on a multilateral agreement, the Indo-Pacific Economic Framework for Prosperity, with the Philippines and other countries. But that initiative was launched only in May 2023. Getting that deal done, which is not certain, will take time. Meanwhile, the US should renew this country's GSP status just like what the EU did.

Despite its fast-growing economy, the Philippines needs that added boost. More trade enhances its reliability as a partner for global peace and prosperity.