CURRENT TRADE CONCERNS
Elpidio V. Peria
29 January 2017
The US Agency for International Development (USAID) would have wanted the Philippines to join the Trans-Pacific Partnership (TPP) Agreement it sponsored a conference last March 2016 to analyze what the Philippines would have to do to join the said trade pact and it produced a report that identified certain gaps in Philippine policies that the country would have to address, so it may join the TPP.
All those supposed opportunities that may open with Philippine membership to the TPP is now just that, fanciful thinking, given that the TPP was recently killed by President Trump when he signed an executive order withdrawing the US from the trade pact in one of his first official acts as the US President.
If the USAID is to be believed, its conference report cited a study done by Dr. Clarete in 2014 which shows Philippines’ participation in the TPP will lead to a 42% increase in exports and will increase GDP by up to 59%. Another Filipino economist, Dr. Cororaton, was also cited who released a study showing that TPP membership will increase the Philippines’ exports by US$3 billion by 2024. Non-membership, on the other hand, will divert substantial trade from the Philippines to TPP parties and will adversely impact textile and wearing apparels, petroleum, construction, and services.
A non-economist who may be skeptical with these assumptions and economic models of these academics should just take these numbers with a grain of salt since these same types of neoliberal economists have similarly projected rosy figures when the Philippines was mulling over whether it should join the World Trade Organization and it’s highly doubtful if their rosy numbers actually materialized in the past two decades of Philippine membership to the world trade body.
The Philippines will just have to look elsewhere, maybe take the cue from TPP proponent countries who suggested the TPP may just go ahead without the US, or open it up to China and other countries or the China-led TPP alternative, the Regional Comprehensive Economic Partnership (RCEP).
What may be useful for our purposes is to look again at that conference report that USAID funded for it identified certain gaps in Philippine policies that the Philippines will have to change and given that the Philippines will not have any TPP to join for the immediate term, at least the pressure to change those policies will at least ease up, for now. From a Filipino perspective, there’s nothing wrong with such laws as they are meant to protect Filipinos. Of course, if the Philippines enters into a free trade agreement, the country’s economic managers will have to weigh whether it will be good for the country long-term to give them all up, in exchange for market access for some Philippine-made goods.
Here are some of the policy gaps that the USAID has identified :
1. On investor-state dispute resolution (ISDS)– this is a provision in the TPP which enables an aggrieved investor to sue the Philippines when the investor believes there was no fair and equitable treatment given to their investment. The TPP’s spirit is not to discriminate against a foreign investor, but the Philippines has some non-conforming measures, particularly the Constitution which mandates 40% maximum foreign ownership on exploitation of natural resources and in public utilities, including laws which give preference for Filipino labor, domestic materials, and locally produced goods.
2. On the country’s telecommunications policies – the policy gaps identified would require the amendment of RA 7925 (Public Telecommunications Policy Act) particularly with respect to provisions on interconnection, unbundling, cross subsidization, number portability, and NTC powers; there is also a need to implement provisions in relation to unbundling and number portability and for transparency in relation to interconnection and spectrum assignment. The biggest impediment however to TPP telecommunications compliance is the constitutional restriction on foreign ownership in public utilities.
3. On the country’s intellectual property policies – there are many aspects of the country’s intellectual property laws that were found not compliant with TPP and we will only highlight some of those laws here, particularly:
a) trademark law – the country’s Intellectual Property (IP) Code only applies to registration of visual signs. There is a need to amend the law to accommodate registration of sound marks and scent marks
b) trademark law, particularly geographic indication (usually the protection afforded to champagne, or camembert cheese, products coming from a specific location in a country and are exported to other countries) – IP Code Sec. 4 has no specific provisions for geographic indications (GI) protection. This needs to be amended
c) copyright law – duration of protection – TPP requires lifetime of author plus 70 years after his death, while Philippine law is only limited to lifetime of author plus 50 years after death of author
d) patent law – patentable subject matter – IP Code Sec. 22.1 provides that new uses for a known substance can be patented but not those resulting from “mere discovery”. Ex. Viagra was formulated initially for heart-related illness, not for muscular erectile dysfunction, which is just a “mere discovery”. Thus the discovery of Viagra’s 2nd use (addressing muscular erectile) cannot be patented.
e) Plant variety protection law – the TPP parties are required to grant both patent and sui generis protection to protect plant varieties. The Philippines protects plant varieties under Plant Variety Protection Act. However, the Council of the International Convention for the Protection of New Varieties of Plants (UPOV) requested the Philippines to make amendments to the said Act in order for it to accede to the UPOV/Convention. Philippines has yet to amend its own laws.