How is Business Responding?
ADBI series on Asian Economic Integration and Cooperation
Edited by Masahiro Kawai and Ganeshan Wignaraja
Ganeshan Wignaraja, Dorothea Lazaro and Genevieve De Guzman 8.1 INTRODUCTION The Philippines offers an interesting case study on the impact of the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA) agreement on business behaviour, and one that offers lessons for similar newcomers to free trade agreements (FTAs) in the developing world. Compared to other countries in East Asia, the Philippines has placed more emphasis on outward orientation and ASEAN regional FTAs and less emphasis on bilateral agreements. Since the early 1990s, the Philippines has leaned toward a more regional approach to liberalization through membership of AFTA, and has subsequently relied heavily on ASEAN in negotiating FTAs. Between 2005 and 2010, the country implemented three ASEAN FTAs with major regional powers – the People’s Republic of China (PRC), Japan and the Republic of Korea (hereinafter Korea) – and the ASEAN–Australia and New Zealand FTA, as well as signing the ASEAN–India FTA (see Table 8.1 for a list of Philippine FTAs by status). The country’s only bilateral FTA, the Japan–Philippines economic partnership agreement (EPA), was signed in 2006. Limited attention has hitherto been given to evaluating the impact of FTAs on business activity in the Philippines. Focusing on AFTA, which has a 15-year implementation history, and looking at other FTAs that were not yet in effect at the time of the survey described in this study but are beginning to draw the interest of firms, this chapter combines descriptive analysis of firm-level data with econometric analysis. It attempts to...
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