The view from Manila is crystal clear: The United States has lost Asia

THURSDAY, MARCH 09, 2017
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The view from Manila is crystal clear: The United States has lost Asia

US President Donald Trump has handed Asia to China.

In an almost unbelievable act of stupidity, he withdrew from the Trans Pacific Partnership (TPP) agreement that was designed to bring Asia and the Pacific closer to the United States in terms of trade and investment, and handed Asia to China through Beijing’s “competitive” Regional Comprehensive Economic Partnership (RCEP). The move accelerates China’s plan to become the No 1 economy in the world. One wonders if the Trump administration –short on experience – has any grasp on the hard realities of foreign and trade relations.
The RCEP includes the 10 Asean member-states plus China, Japan, South Korea, India, Australia and New Zealand. It is a market of 3.5 billion people which comprises 47 per cent of the world’s population and is worth $22.5 trillion, or 30 per cent of the world’s economy. It does not include the United States.
The relatively open borders between these countries will lead to their even more rapid development and prosperity as each takes advantage of its expertise to expand in other countries. The United States won’t be part of it, leading inevitably to America becoming a less competitive and attractive market.
The RCEP was conceived in 2012 with a five-year deadline for completion. (The TPP remains unfinished seven years after negotiations began in 2010.) The RCEP will cover trade in goods and services, investment, economic and technical cooperation, intellectual property rights, competition policy, dispute settlement, and other issues. More than a dozen negotiations have been held since its initial launch. At present, RCEP members are approaching a consensus on all the complex issues, including in the services sector – which initially held back negotiations. The deal is reportedly on track for finalisation this year.
Philippine Finance Secretary Carlos Dominguez said his government is more open to the RCEP than the TPP as the former is in line with Manila’s goal of pursuing stronger connections in Asia backed by its chairmanship of Asean this year. Benefits from the RCEP for the Philippines were outlined in a study published last August by the Philippine Institute for Development Studies. 
It forecast the construction sector would benefit most, due to higher inflows of foreign direct investments, while the transportation and machinery sector would improve along with the increase in the construction sector. Most importantly, the agriculture sector – on which millions of Filipinos depend – will improve in general, with the exception of the uncompetitive rice sector. Also set to benefit from the relaxation of immigration rules are hardworking and skilled Filipinos, who will be in demand throughout the region.
Elsewhere Japan will eventually be forced by its dwindling number of younger citizens to recognise the need to relax its immigration rules. 
Social Weather Stations predicts poverty incidence in the Philippines will be cut by nearly a quarter by 2023, with roughly 15 million extra jobs created by the RCEP. Textiles will suffer once again (as it did in the early 1980s), although the garment-making sector may grow. Electronics equipment may also initially suffer, but later recover. All in all, the RCEP is forecast to raise the Philippines’ GDP by 10-15 per cent.
Meanwhile, the Philippines is also moving into a free-trade agreement with the European Union to cover most aspects of trade and investment. The EU is the Philippines’ fourth largest trading partner, and the Philippines is its sixth largest trading partner. The FTA covers some 500 million people with a joint GDP of $18.5 trillion. 
These two agreements will bind the Philippines closer to Asia and also to Europe. It will help solidify the higher levels of growth that the Philippines has recently been achieving – now not far from 7 per cent.
Trump’s America is the loser.

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