The writing on the wall finally came to fruition: Donald Trump, who just graced the Oval Office after a surprising win last year, has withdrawn from the Trans-Pacific Partnership.
The economic pact, which was a trade agreement between 12 Pacific-bordered countries, was seen by Trump as a lopsided deal that doesn’t have the best interest of the workers at heart.
In his vow to “Make America great again,” he just left the pool of countries that make up around 40 percent of the world’s economy.
With America ditching the TPP, Trump is looking at bringing back manufacturing and service jobs back in the United States. What will be the effect of this deal in Philippines and how American-made goods will be priced here?
TPP in a nutshell
In 2016, 12 countries whose borders lie on the Pacific Ocean created a pact that will ease trading among members, which include Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile, Peru, and Japan.
Together, they aim to slash tariffs on member-country exports, create economic policies to bolster their economic growth, and regulate local trade that will benefit all countries.
While the endgame of the TPP is to create a market modeled after the European Union—which will require all 12 members to ratify the agreement—it has received flak from Trump and even Hillary Clinton, his rival for the presidency.
According to a report by NBC News, “Whoever got into the White House was likely to ditch the TPP.” Since taxes for imports are down, US companies would rather outsource cheap labor overseas and then ship it back to their country at a reduced cost.
Trump has repeatedly said the TPP was a bad deal for the US since it takes away the jobs from American workers and only benefits large corporations.
“This is all diplomacy. There is no benefit. The idea was rather diplomatic rather than economic,” he told China specialists at the American Enterprise Institute in an interview with NBS News.
American goods becoming more expensive
President Duterte, during his campaign, said the Philippines would not join the TPP despite the eligibility of the country to join the economic collective.
“If we join the TPP, I think we will not qualify. We are not that modern in a sense that we have to catch up with their technology,” he told the Philippine Star in December 2016. “We will no longer have access to generic (medicines). We have a law governing generic so that we can buy cheaper medicines.”
By joining protectionist policies in favor of corporations housed in member countries, the Philippines will not be able to get cheaper medicine in countries such as India and Pakistan.
What President Duterte didn’t mention is that American goods flocking the Philippines will become more expensive than what they are now.
Last year, Business Insider reported that the price of items once they become made in the US again will skyrocket because of the higher manufacturing cost. Some of the items they mentioned are the following:
- iPhones. Currently, the cheapest iPhone 7 in the Philippines is listed at P37,990. If iPhones become assembled in the US instead of China, the cost would rise up by five percent, making the lowest iPhone 7 model priced at almost P40,000.
- Jeans. Most denim products like Levi’s are priced between P2,000 and P3,000 depending on the type of cut featured. If the jeans become officially “made in the USA” with the use of premium denim from North Carolina, each pair wouldd cost P18,000.
Will this affect consumers in the Philippines? Definitely. But with more countries offering quality products at a much lower cost, US brands might bear the brunt of reduced patronization.