Malacañang says US-China trade war to have ‘some effect’ on Philippines

Possible free trade agreement discussions not needed to be ‘fast-tracked’

The Trump administration imposed its first wave of tariffs against China less than a week ago after confirming that the U.S. would start collecting tariffs on $34 billion worth of Chinese goods.  Another $16 billion worth of tariffs are expected to follow.

Describing the U.S.’ move as “typical trade bullying,” China hit back by imposing $34 billion in retaliatory tariffs on American products like soybeans and cars.

In the Philippines, Malacañang said on Monday, July 9, that it expects the trade war between the U.S. and China to effect the country to some extent, but did not provide specifics.

“I know that both DTI (Department of Trade and Industry) and DOF (Department of Finance) are studying the matter very thoroughly, identifying where we are vulnerable given the kind of export products that we have, assessing if some of our biggest exports to both the U.S. and China will be affected.  Take note that the tariff will be for goods originating from China and the United States,” said Presidential spokesperson Harry Roque.

“Now, there are some products that we export to China which in turn are further re-exported to China.  So in that sense there will be some effect on us but we are of course studying and preparing for eventualities,” he added.

Both China and the U.S. are among the Philippines’ top trading partners, with the Philippines being a big contributor in the Chinese supply chain.

Roque spoke more on discussions between the U.S. and the Philippines regarding a possible free trade agreement (FTA).   He said continuing discussions would not be “fast tracked” as a result of the trade war.

“I don’t think it’s really a directive of fast-track.  It’s just that its something that has always been there.  It’s something that we demanded,” said Roque.

“In fact, early on, if the U.S. was offering it to countries like Vietnam which at some point was their enemy, why wouldn’t they offer the same to us given that we have always been their friend,” he added.  “It’s not a knee-jerk reaction to the trade war.”

U.S. officials met with officials in the Philippines last May to discuss further bilateral economic cooperation between the two countries, including the possibility of pursuing an FTA.

Of future meetings, Roque said the Philippines further hopes to be in a “position of equality”, and not “just a be a market for U.S. goods.”

He said the Philippines hopes to also be able to export its goods to the U.S.

Roque further reminded that the discussions were not yet explicitly of a free trade deal, but of its possibility.

“I know that there’s a possibility that there will be a free trade agreement, but I don’t know the details yet,” said Roque.

The Philippines has previously acknowledged opportunities under the existing Trade and Investment Framework Agreement (TIFA), and the Generalized System of Preferences (GSP).

As previously reported, under the GSP, the country currently benefits preferential duty-free entry to the U.S.  In 2017, GSP exports accounted for 17 percent of Philippine exports to the U.S., which valued at $1.492 billion.  Tires, electronics, sugar, and fruit and vegetable juices, were among the lead exports.

The latest GSP renewal was also made to be effective three years in place of an annual review.  It also extended duty-free treatment to travel goods including suitcases, handbags, backpacks, attaché cases, and similar cases and bags.  DTI also said it hoped to add footwear to the list.

U.S. President Donald Trump first proposed tariffs against China last March as a fix to what he said were unfair trading practices.  Tariffs were also imposed against Canada, the European Union, and Mexico in June. The countries have also issued their own retaliatory tariffs. (Rae Ann Varona / AJPress)

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