Trade Negotiation Agenda: AEC [+ APEC, Europe Strategy]
Building a Single Production Base Dr. Ceferino Rodolfo Assistant
Secretary Department of Trade and Industry TECHNOLOGY &
INNOVATION EXPO & ENTREPRENEURSHIP CONFERENCE Cebu, June
2015
Slide 2
Objectives of the Interaction Provide trade-context to the
Conference Validate level of awareness and knowledge about the AEC
Introduce other trade-related initiatives
Slide 3
Outline PH Trade Policy 4C for AEC: PH Game Plan Other
Opportunities: EU GSP+
Slide 4
Diagnostic Questions By 2015: 1.Will ASEAN be like the EU? For
instance, will ASEAN be like a customs union? Will ASEAN have a
single currency? will there be an ASEAN Parliament? an ASEAN
Commission? 2.Will Indonesian coffee producers be able to enter PH
duty-free? 3.Will a Malaysian doctor be able to practice medicine
in PH w/o taking licensure exam?
Slide 5
International Trade Negotiations Advocacy & Communications
One Voice One Network One Team Industry Competitiveness INTEGRATED
INDUSTRY & TRADE STRATEGY
Slide 6
Philippines as a Trading Nation: Top Markets (2013) Non-FTA
Partners FTA Partners Source of basic data: Philippine Statistics
Authority (PSA)
Slide 7
ASEAN and Its Partners 7 ATIGA ACFTA (CHINA) AKFTA (KOREA)
AJCEP (JAPAN) AIFTA (INDIA) AANZFTA (AUS-NZL) Entry Into Force
(EIF) 2005 Market Size (MS) 1.97B Economy Size (ES) US$ 10.6T Total
Trade (TT) US$ 319B EIF 2007 MS 647M ES US$ 3.5T TT US$ 131B EIF
2008 MS 726 M ES US$ 8.3T TT US$ 262B EIF 2010 MS 1.81B ES US$ 4.3T
TT US$ 76B EIF 2010 MS 625M ES US$ 4.0T TT US$ 79B
Slide 8
PH Trade Negotiation Agenda WTO Implementation and monitoring
of current obligations Attend to relevant trade disputes/cases
(either as complainant, respondent or third party) Contribute to
the discussions on the DDA and abide by the consensus; monitor and
implement the Bali Package APEC Maximize capacity building through
economic and technical cooperation Agenda for 2015 hosting
mainstream SMEs in Regional Economic Integration ASEAN Work towards
the substantial compliance of ASEAN Economic Community (AEC) 2015
commitments Implement and review existing ASEAN+1 FTAs Negotiate
the Regional Comprehensive Economic Partnership (RCEP) Bilateral
Maximize current bilateral arrangements while actively pursuing new
partnerships (whether through FTAs or bilateral consultation
mechanisms) with strategic partners
Slide 9
Overview PH & the ASEAN
Slide 10
Source of data: World Economic Outlook October 2013 Database,
International Monetary Fund TradeMap, International Trade Center
ASEAN Economy has great potential Ten member states at varying
levels of economic development Population of 608 million people
Combined income (GDP) of US$ 2.3 trillion Total trade with the
world of US$ 2.4 trillion Total intra-ASEAN trade of US$ 322
billion Track record of attracting investments
Slide 11
Average GDP growth rate of 5.0 % in 2014 and 5.4 % in 2015
Higher than projections for global growth of 3.7 % in 2014 and 3.9
% in 2015 US$ 322 billion intra-ASEAN trade and growing ASEAN is
one of the fastest growing regions in the world
Slide 12
1. The Philippines is now in a strong position for AEC. The
economy is in a break-out mode. Slides from Dr. Ciel Habito, former
NEDA DG
Slide 13
Where Are We Now ? PiTiK Test on the Economy The Essential
Yardsticks (P-T-K): Price Stability (Presyo) Jobs (Trabaho) Incomes
(Kita)
Slide 14
The Economy In 2013-2014 Good News on All 3 Counts Prices: More
stable; inflation averaged only 3.0% in 2013 (Sept 2014: 4.4%)
Jobs: Unemployment rate falls to 6.7%; 1.36 million net new jobs
created Incomes/Output: Among fastest GDP growth (7.2% in 2013) in
SE Asia and Asia
Slide 15
Signs of a Breakout Then (2004-2009) & Now (2010-14)
Source: PSA 1 st Half 2014: 1.36 million
Slide 16
2010-13> 10.6 2013> 11.7 Annual Investment Growth We Have
Bounced Back Gross Domestic Capital Formation Average Annual Growth
Rate (%), 2004-2009 Source: ADB, PSA
Slide 17
Philippine Trade with ASEAN Partners With Thailand Top imports:
Motor vehicles, electronics, petroleum and chemicals Top exports:
Motor vehicle parts, electronics & electricals, and minerals
With Singapore Top imports: Electronics, machinery and petroleum
Top exports: Electronics & electricals, machinery, and
petroleum With Malaysia Top imports: Electronics, petroleum and
chemicals Top exports: Electronics, coconut oil, petroleum
Slide 18
Trade in ASEAN/AEC Features Largely intra-industry in nature
(trade in products within the same industries, e.g. electronics,
vehicles, chemicals) Trade relationships are increasingly
complementary rather than competitive; trade protection can be
self-penalizing Opportunities lie in regional and global production
networks or value chains
Slide 19
Philippine Trade Deficit with ASEAN 20122011201020092008 PH
Trade Deficit with ASEAN (4,307) (5,601) (3,947) (5,124) (7,543) -
Without oil (2,051) (3,622) (791) (3,404) (4,645) - Without oil
& rice (1,716) (3,265) 594 (2,465) (3,010) - Without oil, rice
& petrochemicals (1,095)(2,658) 1,102 (2,219) (2,705) - Without
oil, rice, petrochemicals & automotives (554)(2,105) 1,808
(1,638) (2,291) In US$ Million Source: NSO (processed by BITR)
Slide 20
20 Slide No. 20 Shift in country- sourcing for Passenger Cars -
maybe trade diversion?
Slide 21
Comply with Commitments Enhance Competitiveness Intensify
Communications Promote Collaboration PH Game Plan - 4Cs for
AEC
Slide 22
Compliance
Slide 23
Based on three communities 2003: ASEAN Leaders resolved to
establish an ASEAN Community by 2020 2007: ASEAN Community target
advanced to 2015 Economic Political- Security Socio- Cultural The
vision of an ASEAN Community Three communities
Slide 24
The ASEAN Community Blueprints (2007 2015) The ASEAN Community
Blueprints (2007 2015)
Slide 25
25 Illustrative Commitments (1) On Free Flow of Goods Eliminate
Tariffs on all products, except... (2010) Implement National Single
Window (2008); creation of ASEAN Single Window (2015) Free Flow of
Services Schedule at least 70% foreign equity participation for all
services sectors (2015) On Financial Services: substantially remove
restriction for Insurance, Banking & Capital Markets (subject
to negotiated pre-agreed flexibilities)
Slide 26
26 Illustrative Commitments (2) Free Flow of Investments
Organize two inbound and outbound investment missions Organize
seminar on investment protection and settlement of disputes Free
Flow of Capital Greater harmonization in capital market standards
Allow greater capital mobility, guided by the following principles:
ensuring capital account liberalisation consistent with member
countries national agenda and readiness of the economy
Slide 27
27 Illustrative Commitments (3) Free Flow of Skilled Labor
Facilitate issuance of visas and employment passes for ASEAN
professionals and skilled labor who are engaged in cross-border
trade or investment related activities (according to prevailing
regulations of the receiving country) Develop core competencies
(concordance of skills and qualifications) for job/occupational
skills required in all services sectors by 2015
Slide 28
AEC Scorecard Phase I-III (2008-13) ASEAN Member State
Implemented Not Implemented Ahead OngoingTotal* Implementation
Rate** Brunei 29748187143486.8% Cambodia 29056177243584.6%
Indonesia 28958187243784.1% Laos 28757167443484.2% Malaysia
30744206944088.1% Myanmar 29451177243485.9% PH 30247197143987.2%
Singapore 30438196943089.5% Thailand 30743206943988.4% Vietnam
30741167343788.7% Source: ASEAN Secretariat
Slide 29
439 total number of measures 234 total priority measures 30
measures are either not delivered or on- going 15 measures can be
implemented with only national-level action, 15 measures require
regional collaboration Where are we now
Slide 30
15 measures require individual-country implementation = 7
measures on trade in services liberalization (AFAS) = 4 measures on
customs and trade facilitation = 2 measures on air transport (MAAS)
= 2 measures on protocols and agreements not ratified Strategy:
Focus on national measures
Slide 31
15 measures may only be considered implemented if all the ten
ASEAN members are able to implement = 10 measures on customs and
trade facilitation (incl. NSW/ASW) = 2 measures on standards and
conformance = 2 measures on investment facilitation = 1 measure on
energy cooperation Strategy: Cooperate in regional initiatives
Slide 32
32 As of 2010, all duties have been eliminated on agricultural
and industrial products Except for: live swine, live chicken, meat
of swine, meat of chicken, manioc (cassava) and sweet potatoes,
maize, rice and sugar Duties maintained at 5% beyond 2015 for (1)
Live swine; (2) Live chicken; (3) Meat of swine; (4) Meat of
chicken, turkeys, ducks, geese and guinea fowls; (5) Manioc
(cassava) and sweet potatoes; and (6) Maize. Rice duty at 40% until
2014; 35% by 2015 Sugar Duty: 18% (2013) ; 10% in 2014; 5% in 2015
Trade in Goods
Slide 33
Free flow of skilled labor exams MovementofSkilledLabor ASEAN
1. 2. 3. 4. 5. 6. 7. Mutual Recognition Engineering Services
Nursing Services Architectural Services Surveyors Medical
Practitioners Dental Practitioners Accountancy Services Tourism
Arrangementsfor: Professionals would still need in other countries.
to take qualifying
Slide 34
Bilateral actions to ensure access for Filipino exporters
Address unfair trade practices by exporters from other Asean
countries Ensure Neighbors Compliance !
Slide 35
Competitiveness
Slide 36
PH is well-positioned to take advantage of the AEC Government
Programs are in-place; implementation is being fast-tracked
Competitiveness Focus of AEC Gameplan is Competitiveness
Slide 37
Ease of Doing Business -Global Competitiveness Index (WEF): PH
ranks 52 nd (2014), 33 notch improvement since 2010 Industry
Development Program -PPP-based Industry Roadmaps (21 completed; 5
on-going; others to be crafted) -Comprehensive National Industrial
Strategy, will include agriculture and services -Manufacturing
Resurgence Program (Php6.4B, 10 agencies) MSME Development National
and local-level convergence to assist MSMEs Competitiveness
Slide 38
Support for MSMEs SME Roving Academy Shared Service Facilities
Product Development and Design Services Export Pathways Program
RIPPLES Trade Fairs and Exhibitions Industry Clusters (NICCEP)
Slide 39
c Industry Development Strategies Sustain growth in existing
revenue streams (IT-BPO, semicon electronics, infrastructure)
Pursue SME countryside growth (coffee, cocoa, processed food, coco
coir, etc.) Develop new revenue streams (clinical services,
animation, software and game development, etc) Recapture sectors
(apparel, footwear, travel goods, auto & parts, electronic
manufacturing) Revisit backbone sectors(copper downstream,
chemicals, iron and steel, etc)
Slide 40
Industry Roadmaps Completed 2012 (13): automotive, autoparts,
biodiesel, cement, ceramic tiles, chemicals, copper and copper
products, furniture, mass housing, motorcycle, petrochemicals,
rubber products, tool and die 2013 (8): manufacturing, electonics,
IT-BPM, electric vehicle, iron and steel, metalcasting, plastics,
paper On-going: (5): bamboo, coco coir, air cargo logistics,
aerospace, natural health products
Slide 41
NICCEP Industry Clusters NICCEP covers priority industries in
the country chosen after a series of consultations. Luzon -
Milkfish, Dairy, Coffee, Bamboo, Tourism, ICT, Health &
Wellness and Wearables & Homestyles Visayas - Gifts, Decors
& Housewares, Tourism, ICT, and Health & Wellness Mindanao
- Banana, Mango, Coconut, Seaweeds, Wood, Mining, Tourism, ICT,
Rubber, Poultry, Tuna, Oil Palm, and Cacao
Slide 42
With the AEC, PH businesses can... invest in other ASEAN
countries attract investments from other ASEAN firms; or global
firms that are targeting the ASEAN market directly export to other
ASEAN countries indirectly export by being part of the regional
value chain tap the growing domestic market & leverage
economies of scale to be more competitive in ASEAN
Slide 43
Communication
Slide 44
Doing Business in Free Trade Areas (DBFTA) Nationwide advocacy
program since 2010 - 480 sessions - 52,490 participants - 15,204
participating companies Sectors Covered Goods: Food including
coffee and bangus; furniture, jewelry, metalworking, packaging and
paints, among others Services: Cold chain, chemical engineering,
creative industries (design), dermatology, education services,
franchising, guidance counselling, ICT, logistics, optometry,
printing, software development, among others
Slide 45
Success Story: Big Glory Bay Salmon Started with tuna in 2003;
and expanded to salmon in 2009 Imports raw king salmon from New
Zealand (AANZFTA) Exports smoked salmon to: Japan (PJEPA) Thailand
& Singapore (AFTA) South Korea (AKFTA) Australia (AANZFTA) Hong
Kong (possible AHKFTA) US Possible expansion in 2015 to include
other seafood
Slide 46
Collaboration
Slide 47
Active Collaboration at all levels Country-to-Country
Collaboration Public Private Collaboration (including Academe)
Inter-agency coordination (e.g. thru CAEC) Collaboration across PH
Regions
Slide 48
PHL-Indonesia Collaboration Market access for PHL producers and
service providers (e.g. opening of Bitung Port; exclude PHL from
flour import quota regulation) Jointly developing key sectors for
greater global market presence: Coordination of supply chain gaps
(and securing raw materials) for PH industrial users - copper;
carrageenan Investment cooperation for industrial development (e.g.
palm oil, shipbuilding, geothermal, steel, cacao & chocolate
production, BIMP-EAGA projects)
Slide 49
Example of SME Integration in the Global Value Chain: Coffee
Convergence Program: from beans to cup to cafes DA: coffee seeds
& varieties DTI: Shared Service Facilities for coffee
cooperatives DOST: equipment fabrication / packaging TESDA: Barista
training DPWH: farm-to-market roads Local Government:
infrastructure & cross-cutting support (e.g. promo) Major
market for PH coffee beans: Singapore, Malaysia, Indonesia, China,
Japan, Korea, and US. But specialty coffee for local cafes is a
viable option.
Slide 50
Convergence for Coffee
Slide 51
Example: Engineered Bamboo Convergence Programs DA bamboo
plantations DTI / DOST Shared Service Facilities & technology
for manufacturing and processing engineered bamboo planks DPWH
farm-to-market roads Local Government infrastructure & cross-
cutting support (e.g. promo); initially spur demand through
government procurement mechanisms Markets for articles of bamboo
(basketwork/ furniture): US, Japan, EU, Australia, Singapore,
Brunei, Malaysia Collaboration across Regions e.g. CAR and Central
Visayas
Slide 52
Example: FabLab in XXX (leveraging technology for SME growth)
BFB 3.2 3D Printer (Desktop 3D Printer) Roland Versa CAMM VS-640
(Print & Cut Machine)
Slide 53
Slide 54
Arduino Micro-controllers at the Fablab
Slide 55
Laser cutting machine & pre-fab housing
Slide 56
Upcycling plastic materials
Slide 57
Program Convergence DTI - NICCEP & SSF DOLE - Integrated
Livelihood Program DOST - SET-UP DSWD / DOT / DPWH - ONE STEP TESDA
DA LGUs
Slide 58
Institutional mechanisms to promote collaboration Inter-agency
Committee on the ASEAN Economic Community (CAEC) Private Sector
ASEAN Business Advisory Council (ABAC), business chambers, Labor,
academe and Civil Society organizations Synergies with Industry
Development Council (IDC), Export Development Council (EDC),
National Competitiveness Council (NCC), MSME Development Council
(MSMED Council) --- and their local counterparts e.g. Regional
& Provincial Development Councils
Slide 59
59 Preferential Trading Area Lower trade barriers among members
Free Trade Area All trade barriers in Goods & Services removed
among members but each retain own barriers with the Rest of the
World (ROW) Customs Union Free trade among members and adopt common
external trade policies Common Market Customs union status plus
free movement of labor & capital Economic Union Common market
status plus harmonization of fiscal & monetary policies
Slide 60
60 Economic Partnership Agreement (EPA) Conventional areas of
goods and services; plus other areas such as investments,
government procurement, competition, intellectual property, etc.
AEC is an FTA-plus arrangement Free Trade Area -All trade barriers
in Goods & Services removed among members but each retain own
barriers with ROW Free Trade Area -All trade barriers in Goods
& Services removed among members but each retain own barriers
with ROW
Slide 61
Other Trade Policy initiatives: APEC Hosting, EU GSP+ Other
Trade Policy initiatives: APEC Hosting, EU GSP+
Slide 62
AEC is just one of the Market Access initiatives of PH Govt. 1)
Europe EU EU GSP+ application Scoping negotiations EFTA Joint
Declaration of intention to forge close cooperation Formal
negotiations 2) Asia RCEP negotiations PJEPA General Review AEC -
ensure market access 3) US through TPP Bilateral technical
consultations with the existing members
-------------------------------------- Bilateral cooperation
Slide 63
What is the DTI priority during PH APEC hosting? In closing, we
cannot overstate the importance of getting SME support for further
global trade liberalization. SMEs are the most in opposing trade
because they cannot feel the positive effects of FTAs owing to
rules and processes that are too cumbersome for small businesses.
SMEs must feel they can benefit from FTAs. Thus, it is incumbent
for us in APEC to provide a platform for SMEs to benefit more from
FTAs. Sec. Gregory L. Domingo, APEC Ministerial Meeting, 8 Nov
2014, Beijing
Slide 64
MSME Agenda Needs of the Micro & Small may be different
from the Medium-sized firms Global Value Chains most relevant for
the Medium-sized firms Micro and Small as direct exporters MSMEs
front and center of APEC Agenda MSMEs account for more than 90% of
total establishments in APEC region Not a by-the-way in the
regional integration, but should be the focus
Slide 65
Ministers Responsible for Trade APEC Action Agenda for Global
SMEs (including artisanal) 1.Simplify and streamline ROO procedures
and documentary requirements 2.Timely and accurate information on
tariffs, trade procedures and requirements (APEC TR) 3.Widen base
of Authorized Economic Operators (AEO) and trusted trader programs
(TTP) to include SMEs 4.Widen options on financing for SMEs
5.Expand SME internationalization through ICT and e- commerce
6.Strengthen institutional support for SMEs. Adopt a common goal by
November 2015.
Slide 66
EU GSP+ Offers zero duties to products from countries which
implement 27 international conventions on human rights, labour
rights and sustainable development Comparison of tariff lines
between General GSP and GSP+ GSP Instrument
TOTALAgriFishTextilesOthers General GSP6,2098662931,1253,925 -Zero
duty2,44238102,403 -Non-zero duty3,7678282921,1251,522 GSP+ (zero
duty) 6,2749182931,1253,938
Slide 67
GSP+ presents unique opportunity GSP+ will eliminate duties on
61% of PH products eligible under the General GSP PH can grab
market share from GSP- graduated/non-GSP+ eligible countries
Malaysia already graduated from GSP; China, Indonesia, Thailand and
Vietnam are not eligible for GSP+.
Slide 68
GSP+ potential benefits GSP+ could increase PH exports to EU by
611.8 M, representing around 11.96% expansion over 2012 Philippine
exports to the EU worth 5,114 M Product sectors with the highest
projected increases: animal or vegetable fats and oils (231.2 M)
prepared foodstuffs (151.2 M) textiles and garments (79.7 M)
footwear, headwear, umbrellas (28.5 M) chemical products (17.1 M).
The projected increase in exports could translate to 267,587
additional jobs in both the agriculture and manufacturing
sector
Slide 69
Maximizing EU GSP+ Benefits 1.Maximize utilization by current
exporters 2. Capture Investment-driven trade opportunities
Investors from countries whose products are currently facing
definitive anti-dumping duties in the EU Investors from ASEAN (GSP
graduates: Thailand and Malaysia; and non GSP+ eligible: Vietnam
and Indonesia)
Slide 70
Example of Products facing definitive EU anti- dumping duties
ProductTariff Rates MFNAnti- Dumping (China) GSP+ Bikes (complete)
14%48.5%0% Solar Panels2.7%44.7%0% Chamois Leather 2.5%58.9%0%
Slide 71
Summary
Slide 72
Comply with Commitments Enhance Competitiveness the most
important issue, w/ or w/o AEC Intensify Communications Promote
Collaboration 4Cs for AEC: PH Gameplan
Slide 73
PH is well-positioned in the ASEAN No surprises in January 2016
ASEAN is the most dynamic sub-region in the most dynamic region
(Asia) in the World PH is among the fastest growing countries in
the ASEAN. PH, Indonesia and Vietnam already account for more than
60% of ASEANs population. PH has youngest workforce with 23.3 y.o.
median age, second to Lao PDR Consistent upward trajectory of PH in
terms of score and global competitiveness ranking
Slide 74
Trade Negotiation Agenda: AEC [+ APEC, Europe Strategy]
Building a Single Production Base Dr. Ceferino Rodolfo Assistant
Secretary Department of Trade and Industry TECHNOLOGY &
INNOVATION EXPO & ENTREPRENEURSHIP CONFERENCE Cebu, June
2015