What's Happening in the Philippine Free Trade Agreements?

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4Americas, on the other hand, is a preferentialtrade agreement. Thus, its scope of activity remainslargely limited to trade and investmentalthough it has been used as a forum for discussingand implementing standards for laborand the environment (Choi and Caporaso2002). Efforts are currently being pursued towardthe formation of the Free Trade Agreementof the Americas (FTAAs) which would rivalthat of the EU’s economic union. Meanwhile,although East Asia lags far behind interms of institutionalization, the main focus ofRTA activity has shifted away from Europe inthe last two years toward Asia Pacific, specificallythe East Asian region.Shift to regional/bilateral FTAapproachCountries traditionally favoring most favorednation (MFN) liberalization are increasinglybeing drawn into RTAs. They now see FTAs ascomplementary to the WTO process. Moreover,issues that usually take time or have a “deadlock”before the multilateral negotiations arebrought by them in the RTA forum, as seenbelow in the examples of Japan and the UnitedStates.Japan. Japan has abandoned its “single track”approach to multilateral WTO. Among the reasonsare: (1) its growing disenchantment withthe GATT/WTO; 5 (2) China’s threat to replaceJapan as the primary driving force for economicgrowth and integration in the region; and (3)It was in the late 1990s when the region saw movesto institutionalize free trade agreements throughbilateral FTAs and other initiatives. Now, there is anincreasing trend toward an East Asian economicintegration. East Asian regionalism appears to becharacterized and stimulated more by dynamicdevelopments in markets rather than by formalpolitical institutions...the need for a domestic structural reform catalyst.Japan’s FTA initiatives consist of a dual ortwo-track approach that is negotiating withASEAN as a whole and bilaterally with individualmember countries.USA. On October 26, 2002, President GeorgeBush announced United States’ trade initiativewith the ASEAN called the Enterprise for ASEANInitiative (EAI). Under the EIA, the US and individualASEAN countries will jointly determineif and when they are ready to launchfree trade agreement (FTA) negotiations. Forthe United States, FTA has become an importantelement of its trade policy, a strategyknown as “competitive liberalization.” Thisstrategy is designed to simultaneously push tradeliberalization forward on the bilateral, regionaland multilateral fronts. It is meant to spur tradenegotiations by liberalizing trade with countrieswilling to join FTAs, and to pressure othercountries to negotiate multilaterally. 6East Asia FTA formationIt was in the late 1990s when the region sawmoves to institutionalize free trade agreementsthrough bilateral FTAs and other initiatives.Now, there is an increasing trend toward anEast Asian economic integration. East Asian regionalismappears to be characterized andstimulated more by dynamic developments inmarkets rather than by formal political institutions,i.e., the convergence of the East Asianmarket 7 is actually happening even prior to theformal integration phase (Krumm and Kharas2003). Nonetheless, a need for a formal FTA is______________5This is due to the breakdown of the WTO ministerial talksin Seattle in December 1999 and the dissatisfaction withthe implementation of rules specifically on anti-dumpingby some WTO members.6US Congressional Research Service (2003) available atwww.crs.gov.7An example is the international production sharing schemewhich resulted in a remarkable increase and concentrationof intraregional trade.PN 2005-05PolicyNotes
increasingly being felt owing to still fragmentedmarkets within the region characterized by diversityof cultures, and economic and politicalstructures.Consequently, there is also a plethora of proposalsfor both bilateral and regional arrangementsin the region. As such, it is not unlikelythat an East Asia-wide FTA 8 would be achievedsooner or later. This is also inevitable owing tothe growing sentiment that trade liberalizationwithin the ambit of the WTO and APEC hasnot been making substantial progress. In addition,China’s succession to the WTO, the successfulintegration of the European regionthrough the European Community (EC); andthe impending FTAAs, had shaped the growingsentiment for the need to create a “strategicalliance,” if only to enable the Asian regionto face the current global trading movement.______________8The concept of a broad East Asian FTA was discussed atthe December 2000 ASEAN Plus Three summit to includeChina, Japan and South Korea. The framework for the EastAsia FTA finds its basis from the “Joint Statement on East AsiaCooperation” (Manila 1999). The Statement declared thatthe future issues of concern for ASEAN+3 would includeeconomic, monetary and financial, social and human development,scientific and technological development, cultureand information, development cooperation, and politicaland security issues. Since then, several ministerial levelmeetings and two working groups have been organized. Inthe ASEAN+3 summit, short- term measures like the formationof the East Asia Forum and East Asia Business Counciland long-term measures like the formation of the East AsiaFree Trade Area and evolution of ASEAN+3 summit to EastAsian summit were introduced. The process of the East Asianregionalism has been progressing along two tracks, onebeing financial cooperation and the other toward an Asianeconomic community (Young 2004).Developments of FTAs involvingthe PhilippinesAs early as the 1980s and in the face of growingregional integration and global competition,the Philippines’ strategy had shifted froma protectionist regime to a relatively openeconomy. In the pursuit of regional cooperation,it was a party to the establishment of theAsia Pacific Economic Cooperation (APEC) in1989 as well as the creation of the ASEAN FreeTrade Area (AFTA) in 1992. The failure, however,of the two successive rounds in the WTOas well as the rise of Asian bilateralism hadprompted the Philippines to jump into the“bandwagon” of forging FTAs. The Philippinesthen started engaging in formal FTA negotiations,both bilaterally, with Japan for an economicpartnership agreement, and interregionally,for the establishment of the ASEAN-China, ASEAN-Japan and ASEAN-India FTAs.Other prospective FTAs involving the Philippinesare the US-ASEAN, ASEAN-Korea and theASEAN-Australia-New Zealand Closer EconomicRelations (aside from other bilateralengagements) arrangements.Ongoing bilateral FTA negotiationsOn December 4, 2002, Japan’s Prime MinisterJunichiro Koizumi and the Philippines’President Gloria Macapagal-Arroyo held ameeting in Tokyo during the latter’s visit to Japanand discussed the establishment of a Japan-PhilippinesEconomic Partnership (JPEP).Based on the agreement on the basic frameworkfor negotiations in February 2004, theeconomic partnership agreement (EPA) concludedits 5 th round of negotiations last November.Negotiations were targeted for conclusionby the end of 2004 and implementationof the EPA is expected in 2005. The envisionedJPEPA has two main objectives—liberalizationand facilitation, and economic partnershipenhancement as shown in Table 1.Progress in the ASEAN economicintegrationWithin the ASEAN, the overall improvementof the region’s investment environment as wellas strong regional growth and integration hadbrought attention to two things: the realizationof an ASEAN Economic Community (by2020) and the pursuit of economic ties with5PolicyNotesPN 2005-05
Page 6 and 7: 6Table 1. Scope of the Japan-Philip
Page 8: 8For further information, please co

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