MANILA - As the maritime standoff between
China and the Philippines over Scarborough Shoal
in the South China Sea nears one month, Philippine
legislators are preparing a retaliatory trade war
by calling for a boycott on Chinese-made goods.
House minority leader Danilo Suarez said
he will suggest a resolution to impose "a simple
economic sanction to China" when Congress resumed
session on May 7. His proposed move would
likely involve a review of all
the goods and services the Philippines imports
from China. Other congressmen are pushing for
punitive new taxes aimed at pricing China-made
goods out of local markets.
Sinophobia is
on the rise in the Philippines as perceptions gain
currency that China is bullying its smaller
Southeast Asian neighbors, particularly over
contested territorial claims in the potentially
energy resource rich South China Sea. Growing
trade and investment linkages, however, will make
it difficult for Philippine legislators to follow
through on their boycott and tariff threats.
China's previous "soft power" campaign,
characterized by trade and investment initiatives,
have strengthened regional economic integration
and will likely temper individual country's
response to its now rising assertiveness. As
Manila now bids to recalibrate its trade and
diplomacy more towards the US and European Union,
the economic reality is that China represents a
still fast expanding major market while growth in
the crisis-hit West is expected to remain flat for
the foreseeable future.
A
soon-to-be-implemented China-Association of
Southeast Asian Nations (ASEAN) Free Trade
Agreement is expected to accelerate that
integration trend. The latest official trade
figures in the Philippines show that China is the
country's third-largest export market, accounting
for 13.3% of total trade and lagging only Japan
(18%) and the US (15.5%). Last year the
Philippines notched an over US$1 billion trade
surplus with China, led by exports of electronics
and electronics components.
The
legislative threats are already causing ripple
effects in the Philippine business community. "We
foresee that (China) will become the top export
market for the Philippines come 2016," said Sergio
Ortiz-Luis Jr, president of PhilExport, a trade
lobby group. "At the end of the day, we will be at
the losing end [of a boycott on Chinese goods.] If
they retaliate, we would lose a big market for our
products."
Legislator Suarez told Asia
Times Online that he prefers to use the term
"economic sanction" as opposed to a full-blown ban
on Chinese goods. He noted any such ban could
prompt China to retaliate by either blocking
Philippine imports or sending home hundreds of
thousands overseas Filipino workers based in Hong
Kong, Macau and mainland China. He also
acknowledged a boycott would be difficult
economically because cheap Chinese goods help to
contain domestic inflation.
"The sanction
is basically just a statement that we would not be
intimidated against China's bullying," Suarez
said.
Ortiz-Luis emphasized that average
Filipinos would suffer the most from any
anti-China boycott because prices of many goods,
especially food, would sharply rise due to more
expensive imports. Small-scale entrepreneurs would
lose resupplies of their China-made merchandise,
resulting in business closures and job losses, he
said.
"We have to be realistic that we
can't win it economically or militarily" if we go
head-to-head with China, Ortiz-Luis said.
The current bilateral confrontation is the
most serious since 1995, when China forcibly took
Mischief Reef, an area in the contested Spratly
Islands close to the Philippine island of Palawan.
The Scarborough Shoal is just 230 kilometers from
the country's main island of Luzon and a few more
kilometers from its capital Manila; China's
nearest territory, Hainan province, is located
some 1,200 kilometers away from the shoal.
China claims all of the South China Sea as
part of its historic territory, including waters
and islands close to the coast of the Philippines.
Beijing had said it doesn't recognize the United
Nations-set 200 mile exclusive economic zone (EEZ)
because of what it refers to as its "historic
rights". The Philippines has countered that
Scarborough Shoal has been included in Philippine
maps since 1743 and that the disputed islands are
within its EEZ.
The standoff has elicited
a surge of anti-Philippine rhetoric in China.
Global Times, a state-run Chinese newspaper,
suggested in a recent editorial that China "should
select the most arrogant provocateur, conduct
comprehensive strikes, and exert pressure
economically, politically and militarily". A
Chinese army general was quoted in another
newspaper commentary published by the state-owned
website china.org.cn calling for "decisive action"
against the Philippines and suggested that China
hasn't abandoned the idea of "war at all cost".
Philippine appeals to ASEAN to take a
unified stand against Chinese aggression have so
far fallen on deaf ears inside the grouping, which
is increasingly split between pro-US and pro-China
camps. President Benigno Aquino said in a recent
speech that "our weapon really is for the world to
know what [China is] doing. These nations could
start thinking if this how we are being treated,
maybe there will come a time that they will get
the same treatment."
China's perceived
bullying threatens to spark a wider nationalistic
backlash in the Philippines. Senate organizer
Loida Nicolas Lewis of the US Pinoys for Good
Governance has called on the over 12 million
Filipinos abroad to rally in front of Chinese
embassies and consulates on May 11 to protest
China's encroachment at Scarborough Shoal.
At home, those pledging to join the rally
include former Philippine president Fidel Ramos
and Broadway star Lea Salonga. Even the
Philippines' top communist leader, Jose Maria
Sison, supports the Philippines' claim to
Scarborough Shoal and has called China's
historical claims "absurd".
Ethnic Chinese
Filipinos, who run several major conglomerates and
by some estimates the bulk of the local economy,
are worried that simmering anti-Chinese sentiments
could hit their business interests, including
through local boycotts against their products and
services.
Others with extensive business
interests in mainland China are concerned that
Beijing could respond to any boycott by making it
more difficult for them to do business there,
according to a private consultant who works with
one local Chinese business owner.
Joel D Adriano is an independent
consultant and award-winning freelance journalist.
He was a sub-editor for the business section of
The Manila Times and writes for ASEAN BizTimes,
Safe Democracy and People's Tonight.
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