Philippines urged to ensure economic gains from US Indo-Pacific program

By Kyle Aristophere T. Atienza, Reporter

THE PHILIPPINES should ensure that its growing security partnership with the United States is complemented by efforts to boost their ties on the economic front, security analysts said after Washington’s Indo-Pacific strategy marked its second anniversary.

The Southeast Asian nation, in particular, needs to check on the promises of the Indo-Pacific Economic Framework (IPEF), through which the US seeks to establish a network of “trusted” Asian partners to reduce reliance on China, said Joshua Bernard B. Espeña, who teaches international relations at the Polytechnic University of the Philippines (PUP).

“We need to see more of Washington’s economic initiative via IPEF taking root in ensuring de-risked supply chains to develop the region,” he said in a Facebook Messenger chat. “Geoeconomics is too critical to be left out.”

In a Feb. 9 statement, the US National Security Council (NSC) said the execution of the Indo-Pacific Strategy since its launch in 2022 has made “our country and the Indo-Pacific region more secure and more prosperous.”

“All of this strengthens the United States’ position in the Indo-Pacific, and advances our interests in and vision for the region amidst strategic competition with the People’s Republic of China,” it said, as it vowed to expand its presence in the region.

Through the strategy, the US has deepened and elevated its alliances with the Philippines, Japan, South Korea, Australia, and Thailand. “We have also undertaken our historic cooperation between the US, Japan, and the Philippines,” it added.

The Philippines and other IPEF members last year signed a supply chain agreement that will enter into force later this month.

Under the agreement, members seek deeper collaboration to prepare for possible supply chain disruptions. They seek to enhance supply chain transparency and information sharing, diversify supply chains, and mobilize investments to boost their workforce and industrial capacities.

Ties between Washington and Manila had been strained after former Philippine leader Rodrigo R. Duterte led a foreign policy pivot to China in 2016 in exchange of investment pledges, few of which had materialized.

Mr. Duterte had on some occasions threatened to abrogate the US-Philippines Visiting Forces Agreement (VFA), which provides rules for the rotation of American troops in and out of the Philippines for war drills.

His successor,  Ferdinand R. Marcos, Jr., has given the US access to four more military bases on top of the five existing sites under the 2014 Enhanced Defense Cooperation Agreement as the country confronts an increasingly aggressive Chinese presence in maritime territories within the Philippines’ exclusive economic zone.

Lucio B. Pitlo, a research fellow at the Asia-Pacific Pathways to Progress Foundation, said the US Indo-Pacific strategy has yet to show more economic muscle.

While the US statement cited strides in revitalizing security ties with longtime allies and upgrading security partnerships with non-allies, “there was no mention on the progress of the IPEF or the Partnership for Global Infrastructure and Investment or mention about whether Washington would recommit to multilateral trade deals,” Mr. Pitlo said via Messenger chat.

“These economic configurations can show the US resolve to compete with China in promoting free trade and connectivity in the region,” he said. “Needless to say, there is much room to grow in building the economic aspect of America’s strategy towards the mega-region.”

In November last year, the US State Department said it will collaborate with the Philippines “to explore opportunities to grow and diversify the global semiconductor ecosystem” under the CHIPS Act’s International Technology Security and Innovation Fund, a $52-billion subsidy program for US semiconductor manufacturers and research.

The initial phase, which was made public during Mr. Marcos’ weeklong trip to the US, will involve a comprehensive assessment of the Philippines’ semiconductor ecosystem and regulatory framework, as well as workforce and infrastructure needs.

The US, through the CHIPS Act, is seeking to incentivize chipmakers to relocate from China back to the US or to other friendly countries.

The US was the largest destination of Philippine products in 2023, accounting for $11.54 billion or 15.7% of the country’s export value.

The US was ahead of China ($10.86 billion), Japan ($10.45 billion), Hong Kong (8.84 billion), and South Korea ($3.53 billion).

On the other hand, China was the largest source of Philippine imports last year, accounting for $29.38 billion of the total. It was followed by Indonesia ($11.51 billion), Japan ($10.26 billion), South Korea ($8.48 billion), and the US ($8.41 billion).

“An evolving alliance should mean a more proactive Philippines knowing what its agency should be like on the regional stage, which Washington must support,” PUP’s Mr. Espeña said. “If [economic aspect is] left unaddressed, the gains taken a year ago at the military level might be spoiled at the developmental level.”

He said the US should play an important role in boosting the Philippines’ defense base, especially under Manila’s Comprehensive Archipelagic Defense Concept.

“For instance, if it needs multi-role fighters, it must diplomatically insist to Washington that such need is based on a workable arrangement of acquiring the F-16s with quality and quantity,” he said.

The US has been on the forefront of international condemnation of China’s intrusions into Philippine waters in the South China Sea.

Earlier this month, Washington and Manila held their third joint sea and air patrols in three months, with the second one being in January and the first one in November last year.

“Without this proactive move, China might exploit US-Philippines relations at the military, economic, informational, and diplomatic levels, which means countering the gains made last year,” Mr. Espeña said.

In a statement on the second year of its Indo-Pacific Strategy, the NSC said the US will “proudly continue to prioritize our work in this critical region for our future.”