IBON Features | COMMENTARY | US officials have described the region as crucial to its economic and strategic interests, and which will yield huge returns in US investments
IBON Features — Philippine officials say US President Barack Obama’s visit to the Philippines, the final leg in a series that includes Japan, South Korea and Malaysia, intends to deepen and strengthen US-Philippine bilateral ties. The Obama visit is part of US efforts to increase its comprehensive engagement with countries in the Asia Pacific region. He and President Aquino are set to tackle economic and security cooperation, including the modernization of the two countries’ defense alliance as well as efforts to expand economic ties and spark economic growth through the Partnership for Growth (PfG).
The Philippines has been relying on its relationship with the US amid its recent territorial row with the Chinese government. Analysts have expressed that the scenario of an actual military conflict between China and the Philippines is possibly only being stoked, as they note US efforts to strengthen its own ties with China. Regardless of any US-Philippines defense pact, critics have stated that there is no guarantee the US will fight side by side with the Philippines should the dispute with China intensify.
While China’s growing economic and military power in Asia Pacific poses a threat on US economic and military influence in the region on one hand, the latter’s prolonged economic crisis and weak recovery, on the other hand, is the compelling reason behind the US pivot to Asia Pacific. In her essay America’s Pacific Century, US Secretary of State Hilary Clinton described the region is central to US economic and strategic interests; and that it will yield the biggest returns in US investments, whether economically, politically or diplomatically. In its greater involvement in Asia Pacific affairs, it is apparent that the US aims to strengthen its domination in the region and to maximize opportunities for trade and investment.
US, global economic crisis
Along with other developed countries, the US is experiencing a prolonged economic crisis that is described as worse than the Great Depression. From 2008-2012, average real gross domestic product (GDP) growth in fast-developing Brazil, Russia, India and China (BRIC) was higher than that of US, Germany, France, UK, Japan and Italy.
In a span of one and a half decades, US economic growth rate has performed weakly, starting at 4.1% in 2000, falling steeply the next year, peaking only at 3.8% in 2004, plunging to a low -2.8% in 2009 and reaching 2.8% in 2012. It averaged at a lower 1.9% in 2013. Some of these figures are comparable to the sub-three percent-level growth rates that began in 1929. From the 1980s to 2012, US GDP growth remained almost constantly below China and the rest of Asia Pacific’s accelerating growth.
US unemployment is increasing at 4.62% in 2007 to 7.35% in 2013. The number of US citizens in poverty in 2011 at 46.2 million or the 15% poverty rate would be the US’ worst case of poverty since 1959. This period also counts eight instances of recession or consecutive years of continued slowdown in economic activity. The share of workers’ wages in the economy has likewise fallen from 48% in the late 1970s to barely 43% in 2012, while, for the same period, corporate profits rose from more than 7% to 11%. The US is also faced with the worst income inequality ever in a century.
Meanwhile, the percentage share of US GDP in the global economy fell from the 1990s to 2012 as opposed to that of China, which increased in the same period. Reaching US$1.4 trillion in 2011, China’s merchandise exports have also outpaced that of the US and Germany. From forming just 1.8% of the global total of merchandise exports in 1990, China’s global share of merchandise exports grew to 11.5% in 2012.
While gradually resorting to protect its own economy through greater regulation of trade with other countries, the US has strategized entrenching its hegemony in Asia Pacific for the region’s remarkable place in global economy and geopolitics.
US Asia Pacific offensive
Control of the Asia Pacific region is economically important to the US. The region is home to two of the three largest economies in the world aside from the US: China and Japan. The three largest populations in the world can also be found in Asia Pacific, counting 2.2 billion people in China, India and Indonesia. The world’s busiest trade corridors would also be in Asia Pacific, namely: 33% of bulk cargo and 66% of all oil shipments passing through nine of the world’s 10 largest ports in the region including those in Shanghai, HongKong, Singapore and Busan.
The region accounts for 30% of global GDP. Almost one-third of total US exports went to Asia Pacific countries from 1990-2012. US direct investments in the region amount to US$651 billion. US debt to China and Japan, as of January 2014, amount to US$1.27 trillion and US$1.2 trillion, respectively. Through the Asia Pacific Economic Cooperation (APEC), the US is able to course its economic agenda to 21 member countries covering 40% of the world’s population, 56% of global GDP, 44% of global trade and 60% of total US trade.
Military, diplomatic and economic strategies are all in place for US offensive in the region. Its military strategy spans forces disposition and logistics agreements, military pacts, joint exercises, disaster response, troop deployments and bases installations, ensuring US presence while invoking greater security ties and shared security interests with Asia Pacific countries. It engages the region diplomatically through multilateral institutions such as the APEC, the East Asia Summit and the Association of South East Asian Nations with promises of contributing to good governance and championing democracy. Economically, the International Monetary Fund and the World Bank continue as US conduits for development mostly through conditional loans and aid.
Through regional free trade deals such as the Trans-Pacific Partnership (TPP) with Asia Pacific countries, the US continues to expand its market opportunities by encouraging economies to open up more to accommodate its business interests. Meanwhile, its Partnership for Growth with the Philippines has identified areas in Philippine policy that need to be loosened-up in order to allow greater US participation in the economy, such as the economic provisions of the Philippine Constitution that limit foreign equity in key sectors and industries. Through former US Ambassador to the Philippines Harry Thomas, the US has also recommended the removal of such restrictions in order for the Philippines to be accepted into the TPP. The Arangkada Philippines 2010 put together by foreign chambers of commerce recommends the same for Philippine economic development.
Obama’s visit also intends to deepen the economic clout of the US over its former colony by pushing for a more favorable trade and investment regime for American firms in the country. This shall continue the more than a century of US dominance over the local economy at the expense of its own domestic industries and national development.
With a combined Php930.73 billion, US companies accounted for 30% of the total gross revenues, pegged at P3.14 trillion, of all foreign firms in the Top 1000 list in 2013. Japanese firms followed with 26% or Php807.74 billion. There were only 64 US-based corporations that landed in the Top 1000 compared to more than a hundred Japanese companies, further highlighting the dominant position of US capitalists. In terms of gross revenues, the five largest US-based companies operating in the Philippines are Texas Instruments, Chevron, Philip Morris, Coca Cola, and SunPower. Together they account for 51% of the gross revenues generated by American firms in the Top 1000.
The operation of US and other foreign companies demonstrates how and why the economy remains backward and underdeveloped. Their role in export-oriented, import-dependent assembly of low value-added manufactures and in the exploration, development and utilization of strategic natural resources remains significant.
Philippine experience shows that despite pronounced objectives championing shared security interests, democracy, development and economic opportunities, partnership with the US – along with the continued adherence to failed neoliberal economic policies – has yielded unequal benefits.
People of the world have time and again asserted independence and the will to determine their own political development and economic agenda, as well as the capacity to forge ties with other nations on the basis of mutual respect, cooperation and benefit. In engaging with the US and other countries, the Philippines – or any nation—should ensure first and foremost its sovereign will to nurture and nourish its own people and the country’s human and natural wealth by strengthening its local economic backbone and making these its primary sources of development. IBON Features