US prefers sector-specific trade deal

The Philippines should concentrate on "growing and deepening" sector specific trade and investment relationship with the United States even without a free trade agreement (FTA).

This was the advice of Deputy US Trade Representative Ambassador Karan K. Bhatia during his brief visit to the country yesterday.

Without actually ruling out an FTA, Bhatia reiterated the US position that an FTA involves a "rigorous and comprehensive" process.

Instead, Bhatia suggested sector specific agreements on mining and tourism, but not necessarily on garments.

A preferential agreement on garments, Bhatia said, would be "difficult politically back in the US."

At the same time, Bhatia noted that the Philippines already enjoys a healthy garments trade relationship with the US even after the quota-free regime and the competition with China for the lucrative US garments and textile market.

Philippine garments and textile manufacturers have been warning of a possible loss of the US market following the end of the quota regime.

Philippine garments and textile manufacturers have asked the Department of Trade and Industry (DTI) to initiate bilateral talks with the US for a preferential sectoral agreement.

Bhatia pointed out that the Philippines has to concentrate on developing its regulatory environment as well as "capacity building resources" as a step towards an FTA with the US.

Likewise, Bhatia stressed the need for the government to continue with its fiscal reforms.

Instituting fiscal stability, Bhatia pointed out, is the best way to instill confidence in potential investors.

"Trade and investments tend to flow when there is a sound fiscal policy," Bhatia said.

One stumbling block to an FTA that the Philippines must address, Bhatia cited, is the Philippines’ compliance to intellectual property rights (IPR).

During his visit, Bhatia met with President Arroyo, Finance Secretary Margarito Teves, Trade and Industry Secretary Peter B. Favila and Intellectual Property Office Director-General Adrian Cristobal Jr.

Aside from the IPR issue, Bhatia again emphasized to Favila the US Government’s concern about the permanent reinstatement of investment and tax incentives to US firms located in the Clark Special Economic Zone.

Bhatia also sought Favila’s support in pushing for the successful conclusion of the current Doha round of negotiations in the World Trade Organization (WTO).

The US has already sought the help of private business organizations in the Philippines to identify specific sectors in which the two countries could cooperate more closely.