NEDA chief Balisacan aspires for Philippine-US FTA under Trump 2.0


The Philippines' chief economist is looking forward to benefits in case talks for a free-trade agreement (FTA) between the Philippines and the United States can be kickstarted when Donald J. Trump returns to the White House early next year.

"Of course, we should" was Socioeconomic Planning Secretary Arsenio M. Balisacan's reply to Manila Bulletin when asked if Manila and Washington should also pursue a bilateral FTA.

"That's our thrust -- to expand our relations," Balisacan added, pointing out that the Philippines, Japan and the US are now part of a trilateral alliance aiming to jointly develop the Luzon Economic Corridor.

"If that [Luzon Economic Corridor] materializes, it will be good. Hopefully, the Trump administration will continue that," Balisacan, who heads the state planning agency National Economic and Development Authority (NEDA), said on the sidelines of the Philippine Economic Society's (PES) 62nd Annual Meeting and Conference last Nov. 8.

The Luzon Economic Corridor will connect Clark and Subic—former US military bases turned freeport zones -- to Batangas and Manila in a bid to lure more high-impact investments, especially infrastructure, into the Philippines.

Balisacan said this up-and-coming economic corridor could complement efforts for an FTA with the US, which may initially zoom into specific sectors instead of a broad and encompassing trade deal.

Referring to the maiden trilateral summit last April, Balisacan noted that "in the first meeting, that was the thrust -- let's start with something very specific."

For the Philippine side, Balisacan said a trade and investment deal with the US taking advantage of the latter's Creating Helpful Incentives to Produce Semiconductors and Science Law or so-called CHIPS Act would be ideal to diversify as well as prioritize the domestic electronics and semiconductors sector. Electronic products account for more than half of the Philippines' goods exports.

While electronics is a "legacy" Philippine industry that's expected to attract interest among American investors, Balisacan stressed that local players also needed to ramp-up investments on more modern equipment as well as manufacturing facilities and plants that cater to the new generation of chip technologies.

Ultimately, reinvigorated Philippine-US economic ties via trade and investments are hoped to also bolster high-quality employment here, the NEDA chief said.

During a briefing organized by the Washington-based think tank Center for Strategic and International Studies (CSIS) in Mandaluyong City last week, Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) president Danilo C. Lachica lamented that Philippine exporters have been losing some opportunities in the US due to the absence of an FTA.

"There's such a thing called TAA [Trade Agreements Act], and this is more on the EMS [electronics manufacturing services] side. When companies want to export to the United States and they're not TAA compliant, then they can't export to the US," Lachica explained.

As such, a Philippine-US FTA would benefit the electronics industry, he said.

For American lobby groups like CSIS and the US-Philippine Society (USPS), the Philippines, given the lack of an FTA with the US, may find itself on the radar screen for a potential deal.

"If there is any country in Southeast Asia within the possibility of a bilateral trade agreement that we envision, it is the Philippines," said Gregory B. Poling, senior fellow and director at CSIS's Southeast Asia program and Asia maritime transparency initiative.

However, Poling sees only a "limited" trade deal likely between the Philippines and the US, similar to what the latter is in talks with Indonesia, which is focusing on critical minerals.

Erin L. Murphy, Asia program senior fellow at CSIS, said the Philippines may also leverage its educated and skilled workforce that it could supply to the US, especially in the semiconductors sector.

To recall, Manila and Tokyo's bilateral FTA under the Japan-Philippines Economic Partnership Agreement (JPEPA) has a labor movement provision, which allows Japanese language-proficient Filipino caregivers and nurses to work in Japan.

But Murphy said Trump would likely look into US-Philippine bilateral trade numbers to see if his country sells more goods than it buys, as he prefers surpluses over deficits with trading partners.

The latest Philippine Statistics Authority (PSA) data showed that the Philippines sold $9.18-billion worth of products to the US—its top export destination, accounting for 16.5 percent of total—as of end-September 2024, while imports from America were a lower $6.14 billion during the first nine months of this year.

The Philippines bought from China over one-fourth of all the merchandise goods it imported from January to September, while only 6.5 percent came from the US, which ranked as sixth-biggest import source, PSA data showed.

While cumulative nine-month Philippine exports to the US grew 7.8 percent year-on-year, imports shrank 2.5 percent.

If ever trade becomes an issue under the Trump 2.0 administration, Murphy suggested that "Marcos can actually appeal to Trump."

Referring to President Ferdinand R. Marcos Jr., Murphy said "he is charismatic as well, and can talk about the rich history" that the Philippines shares with the US when he engages with Trump.

"It's trying to get ahead of what the economics will play. I'm not saying that the Philippines should go into a trade deficit with the US, because that is not good for the Philippines. But just recognizing where this goes and you have to really play personality politics on a lot of this," according to Murphy.

Hank Hendrickson, executive director at the Washington-based USPS, noted that during the previous Trump administration from 2017 to 2021, there was a "clear" preference for bilateral FTAs than multilateral deals like the Trans-Pacific Partnership (TPP), from which the US had withdrawn.

"If I were on the Philippine side, and President Trump comes out on top, then you would want to be prepared—look at what [an] ideal FTA would look like, and then figure out ways to engage" and then negotiate with the US, Hendrickson said.

The USPS is co-chaired by tycoon Jaime Augusto Zobel de Ayala, and includes in its board other movers and shakers of Filipino big business such as former co-chair Manuel V. Pangilinan, Enrique K. Razon Jr., ambassador-at-large Jose Eduardo B. Antonio, Marianne B. Hontiveros, Doris Magsaysay-Ho, as well as ex-Bangko Sentral ng Pilipinas (BSP) governor Amando M. Tetangco Jr., among others.

For Hendrickson, high-ranking Filipino government officials should maintain the pace of their official visits and top-level discussions with their US counterparts, especially for trade and investment missions.

As Manila Bulletin had reported back in September, a high-level business delegation led by US Undersecretary of Commerce for international trade Marisa Lago is currently here in the country for the ongoing Innovative Technologies for Urban Infrastructure Development Mission to the Philippines and Indonesia.

Since the US across several recent administrations—just like the first Trump presidency and even the current Biden administration—has been turning anti-trade and protectionist with a recurring rhetoric to bring jobs back home, Hendrickson said he is not too optimistic that an FTA with the Philippines would likely happen.

"But if you don't raise it [a Philippine-US FTA], then certainly that wouldn't happen, right?" Hendrickson pointed out.

Last October, a number of agricultural producers in the US highlighted the need of an FTA with the Philippines to jack up their exports, hence lobbied before the Office of the United States Trade Representative (USTR) as it worked on its 2025 National Trade Estimate (NTE) Report on Foreign Trade Barriers.

Hendrickson said the growing Philippine economy alongside its large and expanding population would benefit American exporters.

"US agricultural producers would be better able to compete for market access for dairy products, grains and other products. And an FTA would level the playing field with exporters from other countries that already benefit from free-trade arrangements with the Philippines," Hendrickson added.

At present, the Philippines has bilateral FTAs with Japan and South Korea as well as is part of the Association of Southeast Asian Nations' (ASEAN) regional FTAs with Australia, China, India, Japan, New Zealand and South Korea—now covered by the wider Regional Comprehensive Economic Partnership (RCEP).

Hendrickson also cited recent reports that the Philippines is eyeing FTAs with the European Union (EU) and the United Arab Emirates (UAE).