Trade and Industry (DTI) Secretary Alfredo Pascual said the Indo-Pacific Economic Framework for Prosperity (IPEF) supply-chain agreement will help the Philippines in attracting sustainable investments from IPEF partners like the US, and ensure reliability in supplying goods, supply chain transparency, technical cooperation, and economic collaboration.
In an online press conference Wednesday, Nov. 15, Pascual said that the agreement focuses on the supply chains, the second pillar of the IPEF, was formally signed by the Philippines, the US, and other 12 IPEF member countries on Tuesday, Nov. 14, at the sidelines of the Asia-Pacific Economic Cooperation Summit 2023 in San Francisco.
“This pillar will provide us with a number of benefits, but in general, the idea behind the supply chain pillar or pillar 2 is where the partners commit towards resilient, robust, diverse, and well-integrated supply chains through measures that are built on principles of operation, crisis response and mitigation of disruptions and vulnerabilities,” Pascual said.
He shared that the agreement was prompted by the COVID-19 pandemic experience, where disruptions restricted companies' ability to ship goods and factories' production, which was further “complicated by the geopolitical conflicts that involved Ukraine and Russia.”
Pascual said that the agreement serves as “a way of working together to address disruptions brought about by extraordinary events,” adding that the agreement will hopefully provide several benefits.
“This pillar 2 agreement will help mobilize sustainable investments from IPEF partners including the US to the Philippines because it will be viewed as being a reliable partner in terms of [the Philippines] being able to supply goods when contracted or needed,” he said.
Pascual added that the signing of the agreement with partners “sends a positive signal to other IPEF members that the Philippines remains a reliable country for diversification of sources of supply or as an alternative supplier of manufactured goods or services and at the same time do it in a way that upholds labor rights.”
This agreement, he said, will also facilitate investments in critical sectors and would enable technology and knowledge transfers, strengthen the existing supplier base in the Philippines, and develop new suppliers for incoming investments of IPEF-based companies.
Through supply chain transparency, Pascual emphasized that the Philippines will be able to promote high standards and harmonize procedures among the partners.
“This agreement makes available technical cooperation, capacity building, and economic collaboration to increase investments in critical sectors and key goods and related essential services including supply chain logistics,” Pascual said.
“This capacity building is helpful for us as this will enable us to make our logistics more efficient in our country,” he added.
Further, Pascual emphasized that the next step for the country, after signing the agreement, will be focusing on implementation and committing partners, particularly developed countries like the US, to provide collaboration and capacity building.
He said that the US is generally committed – not just to the Philippines – to providing technical assistance for training personnel involved in supply chain and logistics.
Pascual added that the Philippines can also tap other IPEF partners to encourage their private sector companies to consider investments in the country, knowing that the Philippines will adhere to the supply chain agreement framework.
Meanwhile, Pascual said that the implementation will also involve establishing a supply chain council to oversee collaboration on Indo-Pacific supply chain issues, ensuring all parties follow agreed lines.
“The work will center around critical sectors and key goods identified by each partner… Each partner will have to identify the critical goods that are important for their national security -- in our case, for example, food supply, energy supply, etc,” Pascual said.
To address issues, he added that the Philippines will collaborate with its IPEF partners and involve the supply chain council if necessary.
The IPEF, launched by the US, aims to enhance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness in 14 IPEF economies, providing tangible benefits for economic activity and investment.
The US partners with 13 countries including Australia; Brunei Darussalam; Fiji; India; Indonesia; Japan; the Republic of Korea; Malaysia; New Zealand; the Philippines; Singapore; Thailand; and Vietnam.
The four pillars of the Framework—trade, supply chains, the clean economy, and the fair economy—have been the subject of extensive discussions among the IPEF Partners since its debut in May last year.
Pascual said that the IPEF members were able to conclude the discussions on the supply chain pillar in Detroit in May this year.