Economic sovereignty at risk with looming E.U. free trade deal

May 25, 2011

by superadmin

Filipinos have witnessed their livelihood and social welfare deteriorate from decades of free trade

Trade officials will reportedly begin consultations among stakeholders for the proposed bilateral free-trade agreement (FTA) with the European Union (EU), but research group IBON urged government not to abandon the country’s right to implement key development policy in favor of EU interests.

The group warned that as recovery from the global financial crisis remains fragile, the EU’s drive to liberalize global trade and investment and deregulate economic activities is intensifying, especially amid its increasingly problematic agricultural, industrial, services and financial sectors.

An FTA with the EU, the group said, will further open up the Philippine economy, restrict economic sovereignty and drastically reduce policy space and flexibility. The FTA will be particularly damaging for its World Trade Organization-plus measures such as greater trade liberalization in agriculture and industry, introduction of stronger intellectual property rights (IPR) protections, and expansion into the Philippines’ services and investments. Only the EU will benefit from this and in effect, will be passing on the burden of adjusting to its crisis to the Philippines, IBON said.

In fact, a report commissioned by the European Commission in 2009 noted that the Philippines will see a “decline of the cereals and grains (mainly rice) sectors” and “reduced real income levels in rural areas” from an FTA deal. The same report also observed how “increased trade and growth benefited only parts of society, widening the gap between poor and rich”.

At the same time, it will be distressing for the country if the EU itself implements overt or concealed protectionist policies while the Philippines is forced to rapidly liberalize and strengthen investor protections. These will be all to the detriment of urgent Philippine development priorities and needs, said IBON. Filipinos have witnessed their livelihood and social welfare deteriorate from decades of free trade, and it is time that government reconsider failed and reckless trade and investment liberalization so that it can begin working for genuine development, the research group said.

The Philippine government led by the Department of Trade and Industry is preparing to enter into formal talks for a bilateral trade deal with EU after concluding the Partnership Cooperation Agreement (PCA) in 2010. The PCA, which sets the framework and principles for an FTA, is said to be signed soon after EU countries approve the agreement.