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Remarks by Ambassador Demetrios J. Marantis on Charting a Future Course for a Historic Trade Relationship

Remarks by Ambassador Demetrios J. Marantis
Deputy U.S. Trade Representative

Charting a Future Course for a Historic Trade Relationship

Peninsula Hotel, Manila
February 28, 2012

*As Prepared for Delivery*

"I want to first convey my thanks and appreciation to the Makati Business Club, the Management Association of the Philippines, and the American Chamber of Commerce for the opportunity to meet with you today. And in particular I want to thank Ambassador Jose Cuisia for his efforts in helping to arrange this event. The Philippines is fortunate to have such an effective and admired diplomat in the United States as you do with Ambassador Cuisia.

"I also want to recognize Deputy Chief of Mission Leslie Bassett, whom all of you know, and convey my thanks and praise to Leslie, the Ambassador and the Embassy team for all of their exceptional work in preparing for our consultations this week.

"A well-known Tagalog proverb says, 'a person needs to remember where he came from in order to get where he wants to go.' When considering the future of the trade and economic relationship between our two countries, this saying rings true.

"The United States and the Philippines are firm allies and historic partners, united by a shared history, a common language, and extensive linkages between our peoples. Our abiding friendship has been forged by a history of shared sacrifice and common purpose, and enriched by the presence of more than four million Filipinos and Filipino Americans in the United States, and over 150,000 Americans here in the Philippines. Our soldiers have fought valiantly together in places like Corregidor , Bataan, and Leyte.

"The American Chamber of Commerce in the Philippines symbolizes the depth of our connections – the first U.S. Chamber overseas, established in 1902 and incorporated in 1920, it has been active in promoting American interests and commercial linkages here in the Philippines for more than one hundred years.

"The magnitude of our trading relationship further underscores these close connections. Our two-way trade has grown over the decades, to $22 billion in 2011, comprising $17 billion in goods and $5 billion in services; in 2010, our two-way stock of foreign direct investment was $7 billion. The Philippines also has become a leading beneficiary of our Generalized System of Preferences program, with roughly $1 billion of Philippine goods exports entering the U.S. market duty free every year. The Obama Administration’s goal is to strengthen and improve our trading relationship, not only to enhance our nations’ prosperity, but also as a key part of the President’s broader strategy to increase American engagement in, and focus on, the Asia-Pacific region.

"However, if you compare the trade statistics I just mentioned to what is happening more broadly in the region, you will see a disconcerting trend. In the past five years, our bilateral goods trade has not kept up with our competition in the Asia-Pacific region. In fact, our trade in goods has declined slightly, in both absolute and relative terms. In 2008, the United States was the Philippines’s biggest trading partner. Now, several years after the entry into force of the Japan-Philippines Economic Partnership Agreement, Japan holds that top spot. And as a result of the Philippines’s preferential trade agreements with China and Korea, your trade with those countries is rapidly increasing as well.

"While $22 billion remains a lot of trade, the overall trend is not what we want to see in one of our oldest and closest trade relationships. What we want is simple: we want to regain our place as the Philippines’s number one trading partner – and to stay there for years to come.

"While keeping these trends in mind, my message today is one of optimism – optimism because we now have a golden opportunity to recapture the momentum in our trade relationship, expand the commercial linkages between our two countries, and modernize the underpinnings of our historic engagement so that it better reflects trade and investment in the twenty-first century. Let me share with you why we are so optimistic.

"First, the United States and the Philippines are engaging in dynamic and energized bilateral discussions. Led by my boss, Ambassador Ron Kirk, and Secretary of Trade and Industry Gregory Domingo, our trade officials have met frequently and have held productive talks on new initiatives and avenues of cooperation.

"These efforts are bearing fruit. At last November’s APEC meetings in Hawaii, we signed a customs administration and trade facilitation agreement, demonstrating our shared commitment to ensuring simplified, transparent customs procedures so that trade can flow freely without unexpected and unnecessary delays. Both because of its substance and the momentum it gives our discussions, this agreement is an extremely important step.

"Second, we are assisting the Aquino administration’s efforts to fight corruption and create the right conditions for sustained broad-based economic growth, including through President Aquino’s five-year Development Plan. If done well, implementation of the Development Plan will enhance the economic performance of the Philippines and will make the Philippine economy a more attractive place for trade and investment. As part of these efforts, we applaud the Philippines’s leadership as one of eight founding governments of the Open Government Partnership launched last September in New York.

"Under this Partnership, the Aquino administration committed to a global initiative for more transparent, effective, and accountable governance. These steps are important in light of the clear, direct, and positive correlation between improved governance and transparency, and the creation of a better environment for economic growth and job creation.

"The United States supports these policies through President Obama’s new paradigm of development assistance. As many of you know, the Philippines is one of only four countries – and the only country in Asia – in the Partnership for Growth program, or PFG. The PFG prioritizes economic growth in countries committed to good governance. Under the PFG, our two governments have agreed on a statement of principles and a five-year program of activities that prioritizes key objectives of the Aquino administration’s Development Plan, including measures aimed at fostering a more open and competitive business environment, strengthening laws and regulations, and supporting fiscal stability through improved expenditure and revenue management.

"Third, we are working with the Philippines to confront challenges we face in our bilateral relations. For example, we support the new and potentially significant efforts being taken by the Philippines to improve the protection and enforcement of intellectual property rights. In the past, a substandard IPR environment has been a competitive drag on the Philippine economy and an important reason why your economic performance has lagged that of other countries. Widespread piracy and counterfeiting, and weaknesses in enforcement, including the slow process of prosecuting IPR cases in the Philippine court system, have been issues of longstanding concern to U.S. and Filipino stakeholders. While the challenges are significant, we applaud efforts underway to improve the situation, including the Supreme Court’s recent issuance of new rules to improve the handling of IPR cases in the court system. This is an important step in the right direction.

"We are also very interested in the copyright legislation currently before the Philippine Senate and scheduled for its final reading next month. After more than a decade in process, passage of this important legislation would send a strong signal that the Philippines is motivated to improve its IPR environment and join a growing number of countries in the region which are taking steps to nurture creativity and innovation in the twenty-first century.

"In addition, we have high hopes that through our bilateral engagement, we will resolve some of the other irritants in our relationship, including serious issues affecting our meat trade that I hope to discuss tomorrow with Secretary Alcala. During this trip I will also continue with government officials the discussion Secretary Baldoz and I had in Washington last month on efforts the Aquino government is making to address long standing concerns about the protection of worker rights, including addressing violence against labor leaders.

"So, I arrive this week in Manila with great optimism about the future direction of our trade relationship, and I look forward to my discussions with Secretary Domingo, Secretary Purisima, Secretary Alcala, and others. Beyond these ongoing efforts, we have a shared interest in elevating our engagement, and a common desire to shape initiatives that will help grow our trade and investment in the twenty-first century. Now, it is up to us to take advantage of the tremendous opportunity that this moment presents.

"Some of you may know that, before coming to Manila, I traveled to other parts of Southeast Asia for discussions on the Trans-Pacific Partnership, or TPP. I would like to take a moment to bring you up to date on TPP – a flagship trade initiative of the Obama Administration and the key platform for future U.S. economic engagement in the Asia-Pacific region.

"Through the TPP, we are negotiating with Australia, Brunei, Malaysia, New Zealand, Singapore, Vietnam, Chile, and Peru, to create a high-standard, broad-based regional trade agreement that addresses new and emerging trade issues in a way that harnesses for our exporters the competitive strengths of the Asia-Pacific region. Over the past 18 months, we have made real and tangible progress. In fact, at the APEC meetings last November in Honolulu, President Obama and the other TPP Leaders announced the broad outlines of an agreement and directed our negotiating teams to redouble their efforts to complete this agreement as soon as possible.

"The TPP countries have a shared goal -- to include additional countries beyond the current nine partners in order eventually to incorporate a region that represents more than half of global output and more than forty percent of world trade. Japan, Mexico, and Canada have already expressed interest in joining the TPP. At the appropriate time, TPP partners will decide by consensus to expand the agreement to new members.

"The Philippines is not currently participating in TPP, but I know that business leaders and government officials in the Philippines – like some other countries in the region – are looking at TPP with great interest.

"As your government continues to consider the prospect of pursuing potential membership in the TPP, we want to be helpful. We have made that clear, publicly and privately. We are willing to provide our views on the kinds of commitments and policy reforms that likely would be required of the Philippines to join. Where we are able, we are willing to engage on joint initiatives that create important building blocks toward potential membership, like our recent trade facilitation agreement. In addition, we will also consider how the Partnership for Growth can assist the Philippine government with supportive policy reforms.

"The notion that we must remember where we came from in order to get where we want to go seems as true for countries as it is for people. Let’s remember and value our rich, shared history as we work together to find our best path forward."