By Beatriz Marie D. Cruz, Reporter
A POTENTIAL Donald J. Trump presidency poses risks to global growth, as increased protectionism could weaken global trade, Philippine Finance Secretary Ralph G. Recto said on Wednesday.
“We are concerned that there will be a setback on multilateralism, particularly in trade as well,” he told a news briefing of the Intergovernmental Group of Twenty Four (G-24) Board of Governors in Washington, D.C. late on Tuesday Manila time, his office said in a statement.
“We know that the driver of global growth is more trade. So, that is a concern.”
Republican nominee Mr. Trump, who is seeking a second presidency, has pushed stronger trade restrictions, including slapping 60% or higher tariffs on all Chinese goods and a 10% universal tariff, Reuters reported.
In its latest World Economic Outlook, the International Monetary Fund (IMF) projects global growth to remain “stable yet underwhelming” at 3.2% this year and next year.
“In the Philippines, we count on our relationship with the United States to do maybe more outshoring to the Philippines, and hopefully that will be done also with other members of the G-24,” Mr. Recto said.
The United States was the top destination of Philippine products in August, with a total export value of $1.22 billion (P70.7 billion).
The Philippine government is also hinging on its defense and security partnerships with the US to lessen the impacts of Mr. Trump’s protectionist policies. “We have a Mutual Defense Treaty. We are hoping to leverage that relationship so that we do not get affected much,” Mr. Recto told the briefing.
Under the 73-year-old defense pact, Washington and Manila are bound to defend each other in case of an armed attack on its forces, public vessels or aircraft.
Mr. Recto said many US companies are interested to invest in the Philippines, which bodes well for the two countries’ decades-long relationship.
The Philippines and US in April inked several military and trade deals with Japan, including the creation of a Luzon Economic Corridor.
“Manila is hoping that Washington under Trump will continue its ironclad commitments with the strong bilateral relationship,” Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said in a Facebook Messenger chat.
The US’ continued support in the form of defense and investments would help bolster the Philippines’ capacity to defend itself, he added.
Hansley A. Juliano, a political science professor at the Ateneo de Manila University, said a potential Trump presidency is a “reverse back to the 2016 wind-down of American engagement in Asia.”
“This is unfortunate, considering the many developments towards building a wider alliance to protect Philippine interests within the West Philippine Sea and Asia-Pacific, region,” he said in a Viber message, referring to areas of the South China within the country’s exclusive economic zone.
If Mr. Trump wins, the Philippines should strengthen its relationships with other partners like South Korea, Japan and Australia, and reassess Southeast Asian countries’ stand on South China Sea tensions, Mr. Juliano said.
G-24 Secretariat Director Iyabo Masha noted that the World Trade Organization (WTO) should level trade negotiations amid growing protectionism in many countries.
“What we are calling on is for the WTO to become the center of trade discussions, trade negotiations, and for the World Bank and the IMF to rise up to a much more multilaterally engaged organization that will be able to at least influence the kind of policies that countries take one way or the other,” she told the briefing.
The group also called on the IMF and World Bank to increase support and quicken reforms especially for developing countries amid geopolitical tensions that could fan rising commodity prices and keep interest rates elevated.
“One thing is clear — any slowdown in the global economy due to these new economic realities is bound to hit developing countries the hardest,” said Mr. Recto, who also serves as the chairman of the G-24 Board of Governors.
“Thus, we continue to call for a more agile and strong-willed IMF and World Bank,” he said. “We need heightened development cooperation, scaleup support and innovative solutions as we now begin the headwinds to foster peace, stability and prosperity for all.”
To better support member countries, the board called on the IMF to create a new mechanism to support countries with sound fundamentals during liquidity crises, Mr. Recto said.
The World Bank should establish “more ambitious” goals for its concessional and nonconcessional financing. The group also sought changes to the sovereign debt resolution framework to deliver debt relief to vulnerable economies.
Mr. Recto also called on the Washington-based multilateral lender to reduce its borrowing costs to better support developing economies.