LAST MONTH the Duterte administration ordered the removal of “non-tariff barriers to agri imports.” This was done in response to rising prices and steep inflation.
Some of these problems have died down a bit but the problem remains and such concerns are, unfortunately, not out of the ordinary. What many Filipinos may not know is that the Philippines has had a negative trade balance for several decades, which is to say we import more than we produce export. A report from tradingeconomics.com reads:
“Imports to the Philippines increased 11 percent year-on-year to USD 9.68 billion in August of 2018, following a 31.6 percent surge in July… Imports in Philippines averaged 1936501.54 USD Thousand from 1957 until 2018, reaching an all-time high of 9676980 USD Thousand in August of 2018 and a record low of 37084.30 USD Thousand in February of 1963.”
Now, being a net importing country is not necessarily a bad thing. Sometimes, it’s better to be the customer than the shop keeper or producer. When economic problems come up, net importers have two options. They can either reduce their consumption (which is admittedly painful) or they can switch to alternatives.
In contrast, net exporting countries are forced to either find new consumers for their exports, retool their economies for domestic consumption or suffer problems in economic growth. These are the problems faced by export-reliant economies, like Japan, Germany, China and South Korea. Large portions of their economies are reliant on global trade.
However, being a net importer is not necessarily a good thing either. Recent spikes in food and commodity prices are proof of this. Furthermore, we are also reliant on oil imports for our energy needs, not to mention more advanced equipment to sustain modern living. We may be able to address some of these problems through increased development and investment, but the returns won’t be available for a long time.
The important point in all this is that the Philippines is plugged into the world economy. Maybe we are not as reliant on it as other countries, but if the global order fell apart tomorrow, we will face a lot of problems.
Now, the reason why I’m writing all this is because the global order is changing before our very eyes, and with it, the global economy. For example, we currently import most of our oil from the Middle East. In the future, we may end up importing some of it from the US, which is now the largest oil producer in the world. Similarly, as the trade war between the US and China escalates, we have the opportunity to export more agricultural products to the PRC, and certain types of manufactured goods to the US. There are also new opportunities in Eastern Europe, which is fast becoming the most dynamic part of the continent.
We could also build new economic ties with India and there are opportunities in Russia as well. If Latin America can fix its problems, and capitalize on its renewable energy assets, we can rebuild old ties.
The point to remember here is that the Philippines is a country that is reliant on trade – always have been and always will be. The big and difficult challenge now is defining our economic role in the new world order.
During Spanish times, our country acted as a trade hub for goods travelling between Asia and the Americas. In the post-war and cold-war order, our country became a net importer of goods and services. What will be our role in the new and developing world order? Only time will tell. (jdr456@gmail.com/PN)
