A new era begins
Donald Trump and Rodrigo Duterte have some traits in common. Both are bold, outspoken, and don’t take criticism lightly. However, the two leaders of US and the Philippines have to contend with the political differences which have occurred between the two close allies. In the previous article of this series, we had explored these differences.
Though the US has turned a blind eye to the anti-US rhetoric of Duterte, it has expressed its displeasure by not renewing aid under its poverty reduction program.
With the Trump administration in office now, the Philippines may have more than financial and/or military aid to lose.
The outsourcing industry is under pressure
Philippines’ outsourcing industry has been under speculative pressure due to Donald Trump’s views on trade ties. By issuing an executive order on pulling out of the TPP (Trans Pacific Partnership), Trump has already fired the warning salvo. Though the order does not impact the Philippines as it was not part of the 12-nation pact, it does lay out Trump’s intentions to follow through on his campaign promise regarding scaling back outsourcing practices of U.S. firms.
This has the business process outsourcing industry in the Philippines concerned. According to reporting by the Associated Press, revenues from the outsourcing sector forms a sizable 10% of Philippines GDP (gross domestic product). Further, exports to the US form 4% of the GDP while remittances from the country account for 3% of economic output.
The Financial Times reported that the industry employs 1.1 million people directly and about 70% of its revenue comes from the U.S.
Trump’s protectionist views on trade and Duterte’s desire to move away from the US could strain the political and economic cooperation between the nations further.
Thaw in political relationship?
Duterte has detested American presence in the country. However, it seems that his intention of separating from the US will remain limited to just an intention.
Philippine Defense Minister Delfin Lorenzana informed on January 26 that the President will allow the US to expand and upgrade at least three of the five military bases in which US troops are present. This upgrade is part of the Enhanced Defense Co-operation Agreement (or EDCA), signed in 2014.
This flies in the face of Duterte’s comments on U.S. troops, whom he had wanted to leave the country within two years.
However, even after this decision to carry on with pre-existing pacts, Duterte’s decision to find friends closer to home remains intact.
In the next article, let’s look at the reasons why the Philippines may be cozying up to China.