Ahead of the curve

I’ve heard some quarters express frustration with our government for its perceived lack of a sense of urgency in responding to the tariffs slapped on the Philippines by the United States. Over the weekend, officials said members of the Cabinet would convene on this topic on Monday even as other countries had responded with offers to negotiate with the United States within days of Donald J. Trump’s Rose Garden announcement.

Tariff mania has replaced the all-too-brief sigh of relief on the part of Manila after the American defense secretary’s visit, which put to rest concerns that Washington’s interest in and commitment to Philippine defense might be waning. Initial reports in the foreign media made mention of investors in the most tariff-hit countries (Vietnam and Thailand to name a couple) expressing interest in the Philippines, which, next to Singapore (which received the basic 10-percent tariff), had the next lowest in the region at 17 percent (reporters reviewing White House issuances, though, noticed what was announced is lower than what’s on paper: the “discounted” tariff on the Philippines it seems is actually 18 percent, though no one can explain why this is so).

The news was actually quite interesting, if only readers could get past the bureaucratese of Filipino officials. The new tariffs on the Philippines actually included interesting exemptions: for copper ore and concentrates and integrated circuits (what we laypeople know as chips): while the White House’s fact sheet also said reciprocal tariffs wouldn’t apply to semiconductors, pharmaceuticals, gold, and “certain minerals that are not available in the US.” The exemptions on chips and integrated circuits alone should be big news, but for some reason, aren’t.

The real question is whether, even with the current tariff regime, we, as a nation, are capable of taking advantage of the kneecapping of our neighbors. Practically on every front, in terms of labor rules, overall red tape (both national and local, mind you, and the particular zest some local government units have been accused of having for extorting fees on new enterprises), power costs, and logistics, we’re profoundly uncompetitive. Can this change in a matter of months?

We’d already missed out on the first wave of investments when companies concerned with rising costs and political risk decamped from China and set up shops in Vietnam, Thailand, and Malaysia. We could have done better when Japan explored using investment diplomacy to foster closer security ties with our region. What some have uncharitably described as our lawyer-infested commercial (and political) culture will make any nimble adaptation to the rapidly changing global economy, a tough act.

The thing is our policymakers may actually have been ahead of the curve. Two months ago, Philippine Ambassador to the US Jose Manuel Romualdez said in a media briefing that the Philippines had a “good chance” of reaching a “sectoral” free-trade agreement with the Americans after initial efforts during the Biden administration fell through. In recent days, other officials have also mentioned this possibility which means the country has been pursuing it. But again, all the bureaucratese means people have to wade through technical talk without hearing what they want to hear: we have a plan; it’s a plan that understands the new environment the world finds itself with regards to Uncle Sam; it’s a plan we’re equipped to successfully achieve.

Personally, I’d have wanted to hear more, and in more positive terms, about the exemptions granted to the Philippines. While things like an exemption for copper may be less the gift it seems to be (in a global economic downturn, consumption of copper is expected to dip), an exemption is an exemption: it’s a sign we can count on some goodwill. It would also be good to hear more about agriculture officials saying that our coconut industry, such as it is, stands to benefit from having lower tariffs than say, the Thais.

But I do think something is to be said for being quiet at this point considering that the countries most vocal about making a counteroffer to Washington are doing so not only because they are the hardest hit by the new tariffs, but that their being hard-hit reveals they are on a kind of enemies’ list, which we aren’t. So why act like we are? This may be the time for quiet, behind-the-scenes negotiations to maintain our exemptions and possibly expand them, if the government here at home can muster a political consensus to offer the Americans what they would like—a lowering of our tariffs. But good luck doing this, while Congress is not in session and in the middle of a make-or-break midterm election campaign.