Implications of a Philippines-United States FTA on Trade in Goods: An Indicator Approach Using the Sussex Framework

Abstract

The Trans-Pacific Partnership (TPP) is a regional free trade agreement (FTA) initiated by the United States (US) and is presently being negotiated among 12 countries. With the Philippines negotiating at many fronts at the global level--that includes the ASEAN Economic Community and the European Union-Philippines FTA, among others--the invitation to join the TPP is another opportunity worth studying. This study will use an alternative methodology--the Sussex framework--which is a departure from the prevalent use of the computable general equilibrium models to estimate the effects of the TPP on prospective partners. This paper aims to complement existing studies in the field and focuses on analyzing the (i) possible impact on the Philippines-US trade in goods when a Philippines-US FTA happens in the context of the Philippines joining the TPP and the (ii) probable negative effects that could happen to the Philippines-US bilateral trade if the Philippines opts not to be a member of the TPP. To analyze the impact of the TPP on the Philippines-US trade in goods, the study will model the TPP as a collection of bilateral US-TPP countries with FTAs. The relevant indicators generated from the series of bilateral FTAs will then be interpreted in the context of how these would impact on the Philippines as a third, nonpartner country.