The Philippines is strengthening its deepening economic ties with Japan and the United States, including the possibility of joining a trilateral key mineral agreement.
Bloomberg reported on Tuesday that Philippine Trade Minister Alfredo Pascual stated in an interview on Monday that the Philippines must become “economically strong” to be an effective strategic partner. He said, “Both the US and Japan recognize this. Having a lame duck as a partner is unwise.”
Pascual mentioned that the Philippines is reviewing its existing free trade agreement with Japan and hopes Japan can lower its banana export tariffs. Japan is the largest destination for Philippine bananas, with current export tariffs ranging from 8% to 18%, depending on the season.
“We hope to ship more bananas to Japan and ensure we have alternative options in case there are issues with other countries we sell bananas to,” Pascual said.
He did not mention China, the second-largest destination for Philippine bananas. In 2012, during a dispute over the sovereignty of the Ren’ai Reef in the South China Sea, China strengthened quarantine measures on some Philippine banana exports. In 2016, under the new president Rodrigo Duterte, the restrictions were lifted as the Philippines improved relations with China.
While pushing for tariff reductions, the Philippines has faced escalating tensions with China over territorial disputes in the South China Sea. In April of this year, Philippine President Ferdinand Marcos Jr. held the first trilateral summit with US and Japanese leaders at the White House, strengthening relations with the US and Japan.
As tensions escalated over the past year between the Philippines and China, particularly due to President Marcos’ opposition to China’s extensive maritime claims in the South China Sea, trade with China continues as usual. The Philippines has been expanding its economic ties with other countries to mitigate potential impacts from maritime disputes with China.
“It is important to strive for diversified markets and sources of supply,” Pascual stated. “That is our counter, you know, because China is currently our largest trading partner.”
He mentioned that the Philippines will resume free trade negotiations with the European Union, progress is being made on a similar agreement with the United Arab Emirates, and the Philippines is exploring trade agreements with countries in Africa and Latin America. Last year, the Philippines signed a free trade agreement with South Korea.
Having engaged in negotiations with the US and Japan, the Philippines may potentially become part of a key mineral agreement between the two countries, as it seeks to increase domestic processing of its abundant nickel ore, primarily destined for China.
“This agreement is significant as it allows us to create favorable conditions to encourage US and Japanese companies to invest in the Philippines,” Pascual explained. He noted that processed nickel ore from the Philippines may be shipped to Japan for electric vehicle battery production, with these batteries potentially used by American electric car manufacturers or energy storage companies.
“We have been in talks with US companies involved in electric vehicles or battery production,” he added.
Pascual also mentioned that China’s largest electric vehicle manufacturer, BYD, had expressed interest in establishing a plant in the Philippines but the plans have yet to materialize as “they are also sensitive to what is happening.”