Philippines Inc. hopes Biden to usher shift in key Manila deals
MANILA, Philippines — Hopes are high within the local business community that a new and liberal Biden administration in the US would prompt a dramatic shift toward sealing critical foreign agreements between the Philippines and its oldest ally.
On one hand, business groups are optimistic the Democrat taking helm of the White House starting January 20, 2021 would convince Duterte government to permanently drop efforts to cut military ties between Washington and Manila. On the other, a multilateral trade project could gain traction, while an old funding source may also be reopened.
“The business relations should see slow but steady improvement. (US President Donald) Trump’s policy of ‘America First’ wasn’t a good message for our international partners,” Ebb Hinchcliffe, executive director of American Chamber of Commerce in the Philippines, said in a Viber message.
Easily, Biden's presidency is seen triggering a US decision to rejoin the Trans-Pacific Partnership, now known as the Comprehensive and Progressive Agreement for TPP, an Obama-era trade deal that will lower tariff and non-tariff barriers in countries like Singapore, Japan and Australia. A decision to that end, if it materializes, bolster chances of Philippines joining the pact.
“Hopefully, under a Biden administration we will see back in Trans-Pacific Partnership and hopefully the Philippines will apply and join the TPP,” Hinchcliffe said.
George Barcelon, president emeritus of Philippine Chamber of Commerce and Industry, an industry group, shared Hinchcliffe’s optimism. “From what I gathered, he (Biden) will restart TPP and that is good for ASEAN countries,” he said in a phone interview.
Data showed the Philippines stands to win from the pact. For the first 9 months, the US is the country’s third largest export destination and fourth import source. Total trade reached $1.51 billion in September alone, just behind Japan and China.
But the work ahead for TPP revival can be difficult and tedious. The US is inevitably starting from scratch after Donald Trump completely dropped off the agreement. Under President Rodrigo Duterte, the Philippines had also rejected TPP while the chief executive was attacking Barack Obama, and heavily pivoting to the China-led Regional Comprehensive Economic Partnership.
“Biden will likely change the tone, but it’s not clear how much he can and will change the policies or the trend that Trump triggered,” Coco Alcuaz, executive director of Makati Business Club, an industry group, said in an online exchange.
“There may not be much change on a bilateral level until and unless the US revives TPP,” he added. The trade department has so far not issued a statement on the matter.
VFA, Millennium Challenge
Beyond TPP, one avenue where a quick change is likely would be on the two countries’ security alliance. Last year, Duterte, provoked by Washington’s visa cancellation of Senator Ronald de la Rosa, a key ally, nearly came on the brink of ending the Visiting Forces Agreement (VFA) that governs bilateral military engagements. Trump was okay with it.
But came June, when the process of VFA abrogation was already underway, Duterte backtracked and asked for a 6-month postponement on the process to leave VFA. That essentially suspended the 180-day countdown to ending the long-standing alliance. The suspension would expire next month, unless otherwise extended or dropped by Philippines.
“Trump said it was fine for us to leave since it will also save them money but this time with Biden, I believe he would listen to his generals and the military just like how Duterte did,” Barcelon said.
In a statement, Francis Lim, president of Management Association of the Philippines, another industry group, was likewise positive Biden’s US would “strengthen global cooperation, peace and stability.”
A new US federal government also opens up opportunity to renew aid applications to Millennium Challenge Corp., although prospects of an approval are unlikely to improve under Biden. In 2017, economic managers held off from renewing a 5-year grant with MCC worth $433.9 million after the agency flagged the Philippines for human rights concerns that partly determine aid qualifications.
Finance Secretary Carlos Dominguez III did not reply to request for comment, but finance department sources said officials have not discussed applying before MCC amid fund raising initiatives for coronavirus response.
“The team of Biden is more sensitive to human rights issue,” Barcelon said.
Whether or not these agreements would gain some traction under Biden remains unclear. But Alcuaz, for his part, is trying to look at the broader picture.
“Biden’s democratic and inclusive outlook may slow the anti-democratic wave around the world. That’s a chances that Democrats around the world should leverage to promote more just political and economic policies, which have never been more essential than now,” he said.
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