Phl ‘caught in the middle’ of US-China trade dispute

CEBU, Philippines — The trade tensions between the world's two largest economies, China and the US, have further escalated and they're raising trade concerns.

Given that the two nations are important trade partners of the Philippines, is the prevailing global trade war to benefit the Philippines or not?

Fred Escalona, executive director at the Philippine Exporters Confederation in Cebu, believes the country "will be caught in the middle of the dispute."

China and the US have levied billions of dollars in additional tariffs on each other amid the rise in trade protectionism.

"Initially we will be experience a dip in exports as uncertainty will prevail due to the chaotic impact of global trade," the export official told The FREEMAN yesterday.

Looking at the medium term, Escalona sees a more positive picture.

"In the medium term we may benefit from cheaper imports of steel from China which could support the Build, Build, Build program of the government," the Philexport official said.

Steel is among the country’s key imports from China which are affected by higher US tariffs, including electronic products, iron and steel, mineral fuels and lubricants, and industrial machinery and equipment.

If supply surplus of these products prevails in China, the Philippines could possibly buy these products at lower prices from China, trade analysts have said.

"Since we play a neutral role in global trade we could be the source of high value exports such as electronics to both China and the US," Escalona said.

"This is why we espouse competitiveness as our other neighbors are also sourcing candidates for both protagonists," the export official further pointed out.

An April Bloomberg report quoted a study by Malaysia-based RHB Bank Bhd that cited the Philippines as the most at risk in Southeast Asia from the worsening trade conflict between China and the U.S.

About 16.9 percent of the Philippines’ shipments abroad are part of China’s value chain; goods that serve as inputs to China’s exports, according to RHB. That compares with 11.4 percent for Malaysia and just 2.2 percent for Vietnam. (FREEMAN)