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The less
import-dependent service exports like business process outsourcing (BPOs) tend
to create more local jobs and more local support businesses. Thus, an economy
must aspire to ramp up its exports capability as there is unlimited number of
consumers in the global market.
Philippine
total merchandise exports in 2012 was almost $52 billion, 7.6 percent higher than the
2011 level of $48.3 billion. Export growth in 2012 were fast in Hong Kong, S.
Korea and Thailand, with growth of 28 to 29 percent over their 2011 levels. Exports
to China contracted by 1.2 percent last
year compared to 2011 level. The territorial
dispute with China at the South China Sea or West Philippine Sea may have
contributed to this decline.
Since
joining the World Trade Organization (WTO) in 1995, many things have changed in
the country’s major buyers of merchandise goods. Because of the failure of
multilateral free trade to be fully implemented, countries have turned to
regional and bilateral free trade agreements (FTAs) and this is shown in the
numbers below.
Philippines’ Top 10 Exports Market,
Various Years, in US$ Billion
Source: National Statistics Office, www.census.gov.ph
The US has
been trading more with its neighbors in North America compared with its trade
partnership with the Philippines and other Asian economies. So the share of the
US of the Philippines’ exports has significantly declined from 35 percent in 1995 to only 14.2 percent last year.
The
Europeans have also been trading more with each other through the EU, and the
UK’s share of Philippine exports went down from from 5.3 percent in 1995 to to
being out of the top 10 by 2006 until last year. Netherlands initially had a
rising share of Philippine exports, from 4.6 percent in 1995 to 10 percent in
2006, but was out of the top 10 by 2012.
Asian
markets have been buying more from the Philippines. For instance, Hong Kong’s
share rose from 4.7 percent in 1995, more than doubled to 9.2 percent last year.
Singapore, from 5.7 to 9.3 percent over the same period, and China, from being an
outsider in the top 10 in 1995, to third biggest buyer in 2012.
Japan,Taiwan,
Malaysia, Thailand and Germany were somehow able to retain their average share
from 1995 to 2012, with slight changes in market share in between these years.
A
country’s openness to global commerce or free trade-ness is a very important
policy to improve its economic competitiveness and development. To produce good
quality export products at competitive prices and hence, export more, one must
get various raw materials, intermediate products, capital goods and machineries,
finished consumer goods at competitive prices from as many producers from many
countries whenever possible. And foreign economies that exported to the home
country would tend to become more open to the exports of this home country.
While
regional and bilateral FTAs are better than protectionism and trade paranoia,
there is a better option, and that is unilateral trade liberalization, like
what Hong Kong is doing. Millions of people around the world know that certain
products and services that are not available in their countries at a good price
can be found in Hong Kong. So that small economy is able to attract tens of
millions of visitors, conference attendees and other tourists every year. Its
airlines, hotels, restaurants, malls and shops are benefitting immensely. Hong
Kong is importing goods in thousands of container ships and exporting in
hundreds of millions of shopping bags as the tourists fly back to their home
countries.
A
unilateral trade liberalization policy on top of the Philippines’ membership in
the ASEAN Free Trade Area (AFTA), ASEAN + 3 (China, Japan, S. Korea) FTA and
other multilateral trade deals, is a promising policy that the Philippine
government and businesses should consider.
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See also:
Free Trade 23: FNF on Free Trade Agreements, February 10, 2012
Free Trade 24: Trade and Improving Health Outcome, February 15, 2012
Free Trade 25: Excess Supply or Demand and Trade, June 05, 2012
Free Trade 26: "Buy Local" and Protectionism, June 24, 2012
Free Trade 27: Proposed EU-PH FTA and TRIPS Plus, September 24, 2012
EMHN 7: Free Trade Improves Public Health, February 26, 2013
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