Sunday, April 20, 2014

TPP and the Asean Economic Integration by Erick San Juan

 TPP and the Asean Economic Integration by Erick San Juan

Experts believe that the meeting of trade ministers from the countries participating in negotiations on Trans-Pacific Partnership (TPP) ended in Singapore last February 25, 2014 has not given results.  Kuala Lumpur is convinced that the task of this trade agreement to reach a conclusion in 2014 is impossible. The main reason for the ‘failure’ of the Singapore round of negotiations was the reluctance of the US to make concessions with its negotiating partners.

Tariff lines are not fully harmonized and Malaysians cannot make concessions on important issues such as state procurement, activities of state corporations, intellectual property rights, environmental protection and human resources. They therefore expect Washington to propose constructive initiatives to resolve the situation, however, the US administration does not put forward any suggestions. Kuala Lumpur without parliamentary debate, the approval of the business community and public understanding would not sign an agreement on TPP no matter how insistent President Obama’s pressure is.

Complexity of the situation is exacerbated by the fact that Washington was unable to reach a compromise with its closest Asian ally - Japan. According to analysts, Tokyo is not inclined to designate a time frame for reaching a final agreement, thereby makes it clear that the Japanese are not going to rush the process in the absence of concessions from the US.

The ministerial meeting ended in Singapore, according to experts indicated that negotiations on TPP are steps away from the impasse. The key moment to the assessment of the interim results of negotiations will be a meeting of the countries’ trade ministers during APEC Summit in the Chinese City of Qingdao. In the absence of a breakthrough, negotiators on TPP agreement will have to take many months break due to a shift of emphasis and attention of the Americans on their domestic politics in the light of the November elections in the US Congress.

Looking back, in October 2010, as BusinessWorld reports - Assistant US Trade Representative Barbara Weisel has welcomed the Philippines interest on joining the TPP, but has warned that doing so will involve 'significant legal reforms', including a strong IP - intellectual property rights system and the near-total opening up of the services sector.

Ms. Weisel said she understood that opening up the Philippines’ service sector, which accounts for more than half of the domestic economy, would require changes in legislation and even amendments to the 1987 Constitution, which limits or bars foreign ownership in sectors such as utilities, transportation, media, education, and the practice of professions.

The Aquino administration will have to generate "consensus domestically," she said.

Back then, National Economic and Development Authority (NEDA) -- the lead agency for negotiating service sector liberalization -- said Philippine participation in TPP talks would take time because of constitutional restrictions.

Former NEDA Deputy Director-General Augusto B. Santos saw then that amending the 1987 Constitution is not going to be that easy, therefore the country cannot even negotiate such deal as the TPP ahead of a charter change.

Remember that PNoy himself said several times already, every time the talk of changing the constitution comes up, that he is not interested and that there are other problems far more important than changing the charter of the land.

But here, and now, PNoy’s Finance Secretary Cesar Purisima, said that - a US-backed Pacific free trade pact could cause resentment in Southeast Asia as it would leave some nations in the region better positioned to access America's market than others. So he proposed inviting all 10 members of the Association of Southeast Asian Nations to join the Trans-Pacific Partnership, even if most of them can't for now meet the conditions for joining.(businessmirror)

ASEAN is itself striving to reduce trade barriers among its members, but only four of them are in TPP. They are Brunei, Malaysia, Singapore and Vietnam. Those outside TPP are Cambodia, Indonesia, Laos, Myanmar, the Philippines and Thailand.

``If there's a lag between the joining of the others in a high-quality agreement such as TPP, there can be resentment especially as we continue to integrate,'' Purisima told the Center for Strategic and International Studies think tank. (Manila Bulletin 4/12/2014)

The bottomline here is that the Finance secretary himself wanted a “constitutional or legislative changes needed for coming into TPP if exclusion from the pact was hurting businesses and jobs.” Whether we like it or not.

It is very clear that what PNoy is not saying (or wanting), like amending the constitution, one member of his official family is saying. Is this part and parcel of what Uncle Sam wanted aside from the so-called military modernization?

It always boils down to economics because in order to materialize US pivot to Asia( one of US President Barack Obama's agenda in his visit to Asia this week) the economy should be one of the important pillars. And to think, China is not included, mmmmm, just a coincidence?

Is economic integration possible without China in the picture?  Just asking....


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