Review FTA policy before entering new ones, govt urged

Before entering FTAs, the Philippine government first needs to adopt a new framework that protects and asserts the country’s sovereign right to pursue national and democratic economic development

The government’s current strategy of actively seeking free trade agreements (FTAs) to obtain market access and increase foreign investments is reckless and places the country at a disadvantage, said research group IBON. Lessons can be drawn from major underdeveloped countries such as Indonesia, India, and South Africa that are amending or terminating foreign-biased economic agreements.

During a press conference last week, the Department of Trade and Industry (DTI) reiterated government plans to further pursue and clinch FTAs.  The DTI said that the government is studying the Trans-Pacific Partnership (TPP) agreement and holding technical consultations with some TPP member countries to prepare for eventual membership. Formal talks for a European Union-Philippines (EU-PH) FTA are also underway. The Philippines already has FTAs with Japan, the Association of Southeast Asian Nations (ASEAN), and under the World Trade Organization (WTO).

IBON said that the government’s framework in these deals is rapid and comprehensive liberalization and stronger rights for foreign investors at the expense of government regulation in the public interest.

This “globalization” framework is however outdated and proven unable to deliver broad-based and sustainable economic progress, added the group. It noted that nearly four decades of trade and investment liberalization has weakened local agriculture and Filipino industry, limited job creation, repressed incomes, and worsened poverty.

According to IBON, the country’s FTAs also excessively restrict the country’s policy space. They legally prevent economic development policies of domestic support and protection, and hinder regulation of foreign investment to promote public welfare. In contrast, said the group, other underdeveloped country governments have already taken steps to rectify their international trade and investment agreements.

The research group noted that Indonesia formally notified over 20 treaty partners – including the Netherlands, France, Italy and China – that it will unilaterally end its bilateral treaties with them. South Africa also gave notices of termination of investment deals with the Netherlands, Germany and Switzerland. In Latin America, Ecuador, Venezuela and Bolivia have exited treaties. India just released its new Draft Model for Bilateral Investment Treaties asserting greater regulation over foreign investments.

Foreign trade and investment cannot be assumed to automatically promote economic development, IBON stressed. It said that before entering into new FTAs, the Philippine government first needs to adopt a new framework that protects and asserts the country’s sovereign right to pursue national and democratic economic development.

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