Philippine finance minister Cesar Purisima has told Emerging Markets that he wants his country wants to join the Trans-Pacific Partnership (TPP) as soon as it opens up to new members.
Purisima’s desire to join the trading bloc comes just two days after 12 countries circling the Pacific finally reached an outline agreement to pull down trade barriers and open markets, in what many are calling the most ambitious trade pact seen in over 20 years.
“The Philippines has indicated its interest to be part of TPP when they open up the second round for participants, because once it is implemented we are going to have challenge,” said Purisima.
“If you are not part of TPP you are at a handicap with regard to trade with 40% of the world’s economy. It is already hard to compete, so we do not need another handicap.”
The TPP, first announced in 2008, incorporates 12 countries and represents nearly half of the global economy. The 30-chapter agreement signed on Tuesday will lower or eliminate tariffs on a vast number of goods — 18,000 for US exporters alone — and change the rules of the game on everything from intellectual property rights to labour rules.
Signatories include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam.
BENEFITS BY ASSOCIATION
Although the TPP has been designed with a kind of docking system that will eventually allow new members to enter if they comply with all of the components in the document, it will take many years before the Philippines can expect membership.
However, it could benefit from its fellow members in the 21-economy Asia-Pacific Economic Cooperation (APEC) forum. The 12 TPP nations are all APEC members and the group decided at is annual leaders’ summit last year in Beijing to begin a two-year feasibility study for an eventual Free Trade Area of the Asia Pacific.
The Philippines is also part of negotiations for the Regional Comprehensive Economic Partnership (RCEP) that joins 16 countries, including China and seven TPP members.
The TPP “is bound to unleash some potential, is bound to create some value and is bound to open up more borders,” IMF managing director Christine Lagarde commented at her press briefing on Wednesday. “And bringing 40% of world GDP together on that basis is bound to be beneficial for global growth.”
MERCOSUR HURRY UP
Although the TPP deal will take years to implement, it could be just the catalyst needed to restart a global push by the Mercosur trade group joining Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela. The first option would be finishing a long-stalled agreement with the European Union (EU).
“Mercosur does not want to be left in the cold,” said Carlos Fernández Valdovinos, the governor of Paraguay’s central bank. “When there are new agreements, you do not want to be the last one announcing free trade agreements.”
He said that Mercosur was now fully committed to reach an agreement with the European Union, with offers due to be exchanged before the end of the year.