Last Friday, before leaving for the 19th Leaders’ Summit of the Asia-Pacific Economic Cooperation forum in Honolulu, Philippine President Benigno Aquino III said that the meeting would help solve the problems of the Philippines. He mentioned in particular economic growth, job creation, regulatory reforms, competitiveness and protection from the turbulence that has swept the European Union.
Well, indeed he may be getting some ideas on how to solve the problems of the country from the strategies, proposals and other information that he will gather at the APEC summit.
The biggest proposal presented at the Apec meeting is the Trans-Pacific Partnership, a framework for a vast trade agreement spanning the Pacific which could develop into the world’s biggest free trade zone and dwarf the European Union.
Already 12 nations, including Japan, the world’s third largest economy ― and, only on Monday, Canada and Mexico ― have become members of the TPP. That’s a big boost to an economic organisation that could serve as a counterpoise to China, a developing economic giant that could overtake the United States as the world’s biggest economy and completely dominate economic affairs in the Pacific.
As of now, the TPP trade bloc includes Japan, Chile, New Zealand, Brunei and Singapore, and possibly later, the United States, Australia, Malaysia, Vietnam and Peru.
The Philippines, if it has not yet done so, should join the free trade bloc. Indonesian President Susilo Bambang Yudhono has said that the TPP could be the Asian pillar in the global economy. If the TPP could help develop economic equilibrium in Asia-Pacific and East Asia, the participation of the United States could be a mainstay that would ensure that the region would grow economically.
One problem in the formation of the TPP is the reluctance of China to join it. It has described the plan as “over-ambitious” and Chinese President Hu Jintao has said that Beijing has to “play by the rules” in international trade and the protection of intellectual property. China has also differed with the United States on rules about trade by state-owned enterprises.
Some quarters have remained optimistic that while China has some objections, it will ultimately join the TPP. For instance, Peter Petri, an expert of the East-West Center think tank, said, “it’s very important for China to join eventually, and China has left that possibility open.”
Opposition also comes from farm groups in the United States and Japan which have expressed alarm that they would be swamped by global competition. These fears, which are not entirely groundless, will have to be addressed if the TPP is to attract more nations and get off to a good start.
The TPP, by promoting free trade, could spur global economic growth. With Europe moving toward recession, a fast-growing Asia-Pacific region could be an engine for faster global economic growth.
Forecasts of the International Monetary Fund have said that Asia is expected to grow 8 per cent next year, about four times faster than the United States. In the narrower, local perspective, Philippine membership in the TPP could help it cope with the major problems of spurring economic growth, creating jobs, instituting regulatory reforms and promoting competitiveness.
With a stronger economy, the Philippines could protect itself more effectively from the turbulence that is rocking the United States and the European Union.
