‘Trade with China to continue despite Philippine-US ties’

MANILA, Philippines — Trade with China will continue despite the Philippines’ stronger economic ties with the United States, the Department of Trade and Industry (DTI) said, as President Duterte expressed reservation over a condition that he said is being imposed by Washington on its trade partners.

Trade Secretary Ramon Lopez and US Trade Representative Robert Lightizer recently announced that the two countries had resolved issues under their bilateral Trade and Investment Framework Agreement (TIFA).

The two governments agreed, among other things, that enhanced bilateral engagement on trade under the TIFA should include work that yields benefits for agricultural producers, importers, exporters and consumers.

Lopez said the two countries have settled a number of trade and investment issues under the TIFA that would allow the Philippines to enhance its trade relations with the US and take it to the next level.

Duterte, however, expressed concern that a free trade deal with Washington might bar the Philippines from doing business with China, widely perceived as a rival of the US.

“Do you know the implications of the agreement with the United States ngayon? There’s a free trade. You can trade freely, that’s what it means to say, with America,” Duterte said in a speech delivered last Wednesday at Malacañang.

“But you have to sign a sort of a modus vivendi if you do trade (with the US). That’s OK and you can agree on the tariffs. But you cannot do business with China,” he added.

Lopez clarified that the resolution of bilateral issues under the TIFA would not jeopardize the Philippines’ trade relations with China.

“The President is always supportive of any move to enhance our country’s trade relations with any country,” Lopez told The STAR yesterday.

Lopez noted that Duterte had expressed concern that the US may adopt a provision in its recent free trade agreements that prohibits participating countries from entering into a new FTA with non-market economies like China. He admitted that the policy direction may create the perception that the Philippines would be inhibited from trading with non-market economies or from entering into a new free trade deal with other non-market economies.

The trade chief, however, maintained that the recent developments in Philippine-US trade relations would not stop the Southeast Asian country from maintaining economic ties with China.

“Our understanding is that the US’s future trade partner cannot be prohibited from dealing or trading with other non-market economies. Trading will continue. What may be limited is the formation of a new FTA with a non-market economy,” Lopez said.

“But, in case there will be such policy or rule, it will of course be subject to further discussions, and it may apply moving forward. Prospective application. Thus, it  will not cover existing FTA which the US partner may have with a non-market economy,” he added.

Total bilateral trade between Manila and Washington has grown over the decades to about $27 billion in 2016. The Philippines is also a beneficiary of the US Generalized System of Preferences program, with about $1.5 billion of Philippine exports entering the US market duty free every year.

China, meanwhile, was the Philippines’ top bilateral trading partner last year, with Manila’s exports to Beijing increasing by 8.4 percent during the period.