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RP set to ratify free-trade pact with Australia, New Zealand

Ma. Stella F. Arnaldo / Special to the BusinessMirror
Sunday, 21 June 2009 21:30
THE Philippine government is preparing to ratify the free-trade agreement it signed as a member of the Association of Southeast Asian Nations (Asean), with the governments of Australia and New Zealand.

This developed as the New Zealand ambassador to Manila encouraged the Philippine government to approve the agreement immediately to help boost the region’s economies amid the global recession. “The [free-trade] agreement was signed in February [2009]. It needs to be ratified by the member-countries. The lowering of tariffs will benefit [the region’s] consumers and companies,” said Ambassador Andrew Matheson in an interview with select reporters.

For his part, Department of Foreign Affairs spokesman Eduardo Malay told the BusinessMirror: “The DFA is currently expediting the preparation of the ratification papers for the Asean-Australia-New Zealand FTA [AANZFTA].”

The AANZFTA was signed by 10 Asean governments (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and those of Australia and New Zealand, and is expected to come into force by July 1, 2009, “provided that New Zealand, Australia, and at least four Asean countries have notified completion of their respective internal requirements to bring the FTA into force by that date,” according to the FTA’s web site. “If the required countries have not given notification by that date, the FTA will enter into force 60 days after the date on which the last of the required countries has given notification.”

The FTA envisions a regional common market by 2015, and marks the first time that Australia and New Zealand have been involved jointly in negotiating an FTA with third countries. It was also the first time Asean embarked on comprehensive FTA negotiations covering all sectors, including goods, services, investment and intellectual property, simultaneously.

Matheson recognizes that the Philippines is “committed to trade liberation,” and “approving this AANZFTA, in this time of real global crisis, is an important signal from these countries that improving trade, is a solution to the recession, not protectionism.”

The ambassador added: “I am confident that the Philippines will move expeditiously to approve the AANZFTA.”

NZ-Asean trade rising

According to NZ government data, the country’s exports to Asean countries increased 121 percent since 2000 to around NZ$4.6 billion (P139.72 billion) for the year ending 2008. During the same period, imports from Asean expanded 244 percent to almost NZ$7.6 billion (P230.43 billion) in 2008.

NZ has a trade surplus with the Philippines, owing to the former’s size and population, said NZ Trade Commissioner Ramoncito Bernales. “It is a small market of 4.2 million people,” he stressed. Data from the NZ government showed the country exported NZ$712.83 million (P21.62 billion) worth of goods to the Philippines as of fiscal year June 2008, up 22 percent from the previous year’s NZ$583.64 million (P17.7 billion). The largest bulk, or 76 percent of NZ’s exports to the Philippines are dairy and dairy products—milk powder, buttermilk, cheese, butter, fresh milk and cream—at NZ$541.03 (P16.4 billion).

On the other hand, NZ imported from the Philippines NZ$225.37 million (P6.83 billion) in goods and services, up 35 percent from the FY June 2009 level of NZ$167.07 million (P5.07 billion). New Zealand primarily buys refined oil (46 percent of total purchases) and bananas (21 percent) from the Philippines.

While not part of the official AANZFTA negotiations, the Philippines also entered into an arrangement with the NZ government to allow limited temporary employment entry into New Zealand for Filipino nurses, farm managers and engineers. The nurses, specifically, may work in New Zealand for up to three months while seeking to meet registration requirements.

New Zealand had also agreed to start Working Holiday Scheme negotiations with the Philippines, which would allow Filipino travelers to work for a limited time in NZ firms while vacationing there.

Meanwhile, Bernales spoke of the growing interest of New Zealand companies in the Philippines especially in the information and communication technologies sector. “NZ companies like Datacom are putting up BPOs (business process outsourcing), GFG is offering software applications, etc.”

Datacom is the largest, locally owned, full service information-technology company in New Zealand, while GFG Group is a leading supplier of consumer electronics payment software and card-payment solutions in the world.

He said many NZ companies also keen on the health and wellness sector in the Philippines.

Data from the Bangko Sentral ng Pilipinas show the largest direct investments in the Philippines from New Zealand were made in year 2000, amounting to US$380,000. Since then, no significant investments from NZ were recorded by the BSP until the first quarter of 2009.

Under the terms of the AANZFTA, investors from other countries will be accorded the same investment rights of the host country’s citizens.

The NZ government said it currently allocates some NZ$4 million (P124 million) in official development aid annually to the Philippines, targeted at the development of sustainable rural livelihoods, primarily ecotourism and coastal management for local communities, and provision of post-graduate scholarships.

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