Retail’s Worry: As Philippine Trade Ramps Up

More than eighty percent of eligible voters turned out for the Philippines Presidential Election, and it looks a landslide victory for Ferdinand (Bongbong) Marcos Jr.

While they are finishing the vote count, several media critics are already trying to punch holes in Bongbong’s stunning landslide victory. Some have pointed to the excesses of his father’s regime (of 36 years ago), while others have targeted his 92-year-old mother (Imelda). Some allege a closer friendship to China, but few have spent time examining the erosion of Philippine love for America – an important analysis for a former USA colony – where the average citizens really do love America.

In bygone days, Capitol Hill pushed for closer ties with Manila but, sadly, the former pro-Philippine hawks have long since vacated the building. With Bongbong now on the rise, the U.S. Government is taking a fresh look at ways to improve the relationship. As everyone knows – retail inflation and supply chain are important issues here at home, but there is pressure to lessen retail sourcing exposure to China, and specifically to find alternate locations to obtain retail product. Could the Philippines be an answer to the problem?

While the search progresses, and Philippine trade justification becomes more of an option, China tariffs continue their daily toll on the American economy. In addition, the Uyghur Forced Labor Prevention Act (UFLPA) (targeted against China) enters into effect next month, The UFLPA includes a dangerous clause (rebuttable presumption) that warns retailers about deliveries from complex supply chains – shipments that must be “clean” of forced labor – or the importer will be deemed guilty until proven innocent The problem is that government can’t answer the basic question that “if companies can’t make it all in America, and China is being watched so closely – where should product be sourced?”

Looking at empty store shelves right now, it remains pretty obvious that America is currently incapable of supplying our consumptive needs. In that light, the not-so-startling revelation is that the Philippines is a logical partner, and the Biden Administration should lead the way towards a trade agreement with a new Philippine government. The trade logic settles in, but policy wonks wonder if Bongbong’s former English education included a poem by Elizabeth Barrett Browning that included the line: “How do I love thee? Let me count the ways.” Students of Philippine history scratch their heads and wonder why the media is trying to brand Bongbong as an outlier, when anyone can simply revisit Ms. Browning’s poem and understand that much of the Philippine history with the United States has been fraught with emotions and erosion of the love that we profess to have.

History tells us that the Japanese took over the Philippines in 1942 when it was still an American colony. The Japanese were ousted by the Americans in 1945 and full independence was granted to the nation by 1946. Following 48 years of American colonial governance and control, it has often been tough love ever since.

When World War 11 was concluded, the U.S. Congress passed the G.I. Bill of Rights that provided financial benefits to those served in defense of the United States. It was documented that Filipino’s fought side-by-side with American troops, but when the G.I. Bill passed, it included soldiers from sixty-six different countries and, amazingly, Filipinos were excluded. If the Veterans groups were not being helpful to the Philippines, the U.S. Navy wasn’t far behind. Filipinos were proudly serving – but they were restricted to being Stewards until 1971 when the Navy finally realized the error and rescinded the decree.

Another distinguished group was the Philippine Scouts – which was formed in 1901 as a military unit, lasting until the end of World War 11. It was an honor to be a Scout because they were considered to be a full United States Military organization under the command of commissioned U.S. military officers. When the war was over, Congress passed the “Recission Act” which denied previously promised Veteran Benefits to the Scouts. It wasn’t until 1990 that Congress offered naturalization to the Veterans, and in 2003 health benefits were finally extended to WW11 Filipino-American veterans.

When it came to trade agreements, the U.S. Congress passed the Bell Trade Act in 1946 and there was serious Philippine objection to the “Parity Amendment” which gave U.S. citizens equal rights to Filipinos for certain commercial transactions. The Bell Act was replaced by the Laurel-Langley Act which ran from 1955 to 1974. There has been absolutely NO new trade agreement between the United States and the Philippines since the Laurel-Langley Act expired 47 years ago.

The Philippines fell out of favor as a retail sourcing country when China ascended to the World Trade Organization by 2008. During that period – just in the garment assembly sector alone – more than 500,000 Filipinos lost their jobs. Today, many now feel the industry could easily be resurrected under a Marcos administration – especially if the USA would finally consider a much-discussed Free Trade Agreement between the two nations.

With regard to trade history, when the Korean War broke out, more than 7,400 Filipino’s fought alongside U.S. troops during the war. South Korea received a USA Free Trade Agreement in 2007 (called – KORUS). Korea was included as a new trading partner; the Philippines was not even mentioned.

When World War 11 broke out, more than 250,000 Filipino’s fought alongside U.S. troops during the war. As the Trans-Pacific-Partnership (TPP) was negotiated during the Obama Administration, Japan was scheduled to be included; the Philippines was not.

When the Vietnam War was fought, more than 10,400 Filipino were sent to assist in medical and civilian activities. As the Trans-Pacific-Partnership (TPP) was negotiated during the Obama Administration, Vietnam was scheduled to be included; the Philippines was not.

China, for their part, did include the Philippines in their latest trade negotiation called the Regional Comprehensive Economic Partnership (RCEP) but, for now, the Philippines Senate is still in the process of deciding whether to join (or not). Philippine President Duterte wanted to “Build, Build, Build” the country’s infrastructure, and the Chinese were eager to help with financial aid from their “Belt and Road” initiative. Many of the newly minted Philippine infrastructure projects have been slowly started and some may never reach completion, but the intent was there and the Philippines was willing accept China’s helping hand.

On the flip side of the potential infrastructure loans, the thornier issue is about the on-going claim for maritime control in the South China Seas between the Philippines and China. In 2013 the Philippines filed a suit in over “maritime entitlements” claimed by China with the Permanent Court of Arbitration in The Hague. In 2016 The Hague Tribunal ruled in favor of the Philippines on all 15 submissions: “The tribunal concluded that there was no legal basis for China to claim historic rights to resources within the sea areas falling within the nine-dash line.” China, for their part, did not accept the ruling.

It’s easy to understand why there isn’t a hard or fast answer as to what is right or wrong with the United States / Philippines relationship, and media critics should approach it fairly. The bottom line that America can help the new Administration or, if not, China probably will. The hope for a Marcos Administration will be for stability, prosperity, and a better relationship with the United States.

A long delayed Free Trade Agreement between the two countries would certainly be a good place to start – as it would benefit both countries.

The poem continues to ring true: “How do I love thee? Let me count the ways.”