International Foreign Trade from Philippines to Australia

Introduction

            In general, the relationship between the Philippines and Australia generally covers a large range of areas including cultural, security, defense, development, economic, and political relations between the two nations. It is important to note that the Philippines has an active embassy in Canberra and it also has an active consulate in Darwin, Adelaide, Brisbane, and Sydney. Actually, both of the nations have been in connection for a long time now(Deogracias & Johan, 2016). In this research, international foreign trade from the Philippines and Australia will be evaluated and explored. In addition to it, all the challenges that are faced will be determined and solutions for overcoming them will also be explained.

Background and Context

            Generally, the earliest links between Australia and the Philippines have been actually through the explorations performed by specific Spanish sailors. Torres Strait was one of the water bodies that effectively connected the two nations. The people who habituated the water body were specifically of Melanesian descent and they spoke different languages. They were completely different from the Aboriginal Australians who lived on mainland Australia. It should be noted that the name of Torres Strait was after a Spanish captain, Luis Vaz de Torres who sailed towards the Philippines(Rahman & Mamun, 2016).

            Early contacts and relationships between the two nations have actually been in the form of effective trade. In addition to it, in the nineteenth century, Nicolas Loney’s services were used by the Philippines for improving the industry of sugarcane. Two British Brigs were utilized by Lone including the SS Camilia and SS Pet for docking effectively at the Port of Iloilo for loading sugar going specifically to Australia where the Sugar Company of Victoria was waiting. Sugar was also exported by the Negros Islands. Australians tend to make the use of purchased sugar from the Philippines for rum distillation. In return, Australia marketed its fresh bottled milks. Manila hemp is actually another commodity that is effectively valued by Australia from the Philippines. The whiteness of color, lightness, and length of the manila hemp are the key reasons why it is demanded significantly in Australia. In fact, merchants from Australia understood and realized how profitable this trading has become which enabled them to move further North(Schram, et al., 2020).

            Another contributing factor to the early relations of the nations is the Filipino migrant workers. Actually, the earliest workers were referred to as ManilaMen and they worked specifically in the pearling industry in Australia. Particularly from the southern and central parts of the nation, these Filipinos were brave, daring, and responsible. An integral part was played by Filipinos in the development of peart, beche-de-mer, and trochus industries. In fact, it is important to note that in 216, a group of Australians came to the Philippines for tracing their ancestry and even meeting their Filipino relations.

            Actually, the Philippines and Australia were on friendly and even effective terms after the end of WWII. Ben Chifley and Manuel Roxas exchanged and they shared messages of friendship for marking the independence of the Philippines in 1946. The successor of Roxas, Elpidio Quirino, sought out and considered Australia a strategic partner, hoping to lessen the dependence of the nation on the US or the United States. It is quite important to note that the relationships between the two nations were damaged significantly by the treatment of Lorenzo Gamboa by the Australian government. He was a Filipino man and he was refused entry into the nation with regards to the White Australia policy. Furthermore, in 1949, a bill was passed by HermenegildoAtienza into the House of Representatives. The bill would ban any person from entering the nation unless the laws of another nation allowed the entrance of Filipinos. It was targeted directly at Australia(Patalinghug, The Philippines in a Liberalizing Trade Environment: Issues and Prospects, 2019).

            Australians were called the biggest hypocrites by Cipriano Primicias in the ensuing debate. Disappointment was expressed by President Quirino in a meeting and he determined that they were humiliated deeply by their neighbor. After a change of government, the new government of Australia allowed the entrance of Gamboa in the country. Still, his poor treatment continued to be reminded by the nation for several years.

            At present, bilateral relations between the two nations have increased and they have significantly improved to encompass numerous people. In fact, when it comes to these relations, assistance towards effective and sustainable growth, cooperation in terms of law enforcement, defense, and investment and trade for expanding ties cannot be ignored. The two nations take turns for hosting the PAMM or Philippines-Australia Ministerial Meeting. Actually, the MAMM sets the vision and the direction of bilateral relations between the two nations and it also serves as a forum of discussing activities and initiatives for strengthening the bilateral partnership. It is important to note that in 2015, Malcolm Turnbull and Benigno S. Aquino met and they signed the Philippines-Australia Comprehensive Partnership Declaration. Actually, this declaration seems to acknowledge the increasing significance of relations between the two nations. In addition to it, it establishes the base of the relations in the future(Ghazouani, Boukhatem, & Sam, 2020).

            Through the declaration, Australia and the Philippines reaffirmed the significance of cooperation and engagement in counter-terrorism fields, law enforcement, security and defense, and political areas among others. Furthermore, thee exchanged views on challenges regarding regional security and maritime security. The two nations are committed to performing meaningful and substantive activities and tasks between the Australian Defence Force and Armed Forces of the Philippines for fostering camaraderie.

Challenges, Barriers, and Risks

            The objective of Australia is to strengthen and improve its economic ties with not only the Philippines but also with other countries in the specific Asia-Pacific area. Actually, both the Philippines and Australia are members of APEC and the latter is also an active participant in the EAS or East Asia Summit. In fact, the trade relationship of Australia with the Philippines is supported by the free trade agreement between New Zealand and Australia as well. This trade agreement enables 95 percent of the products of Australia to enter the Philippines without any duty or tax while Australia can be entered by approximately 97 percent of the Philippine-made products with the same benefit. Still, there are some challenges that seem to hinder investments in the Philippines and trade with the nation. Other than these challenges, there are some risks and barriers as well(Go, 2020).

Decline in Economic Growth

            When it comes to investing in and trading with the Philippines, one of the most important challenges is the declining economic growth and outlook. Actually, before the spread of the pandemic, the economy of the Philippines was growing at a significant rate. In fact, it would not be wrong to say that the Philippines was among one of the most rapidly growing economies in the whole Asia with a GDP growth of 6.3 percent on average. Even though it is determined and even predicted that the economy of the nation will recover in the coming nations and might grow at a faster rate than before, there is always a risk that the forecasts might be accurate and the expected results might not be achieved. There is a risk that the expected results might not be achieved.

            This is not only a challenge and even a risk that effectively stops and adversely influences both investments and foreign trade with the Philippines. As a challenge, it needs to be overcome to make sure that foreign trade with the nation is promoted and investments are improved within the nation(Fauci, Lane, & Redfield, 2019).

Corruption and Graft

            Corruption has been and is still an important challenge to investment and trade. Even though the government of the Philippine has made some significant strides in fighting and battling corruption and graft, there were not significant and as show in the ranking of the Philippines in the Corruption Perceptions Index. In 2019, the ranking of the nation is 113^th out of a total of 180 nations. There is a significant need to overcome this challenge to make sure that not only investments are increased and foreign trade is improved.

Regulatory System

Labeling and environmental requirements, product standards, and product registration tend to place some restrictions and limitations on some specific products. Furthermore, some products tend to need special permits and licenses prior to shipments. Thus, there is a need to ensure that all the predetermined standards and regulations are not only considered but also met before trading them. if they are traded before identifying whether they meet the necessary standards, they will not be accepted. They will also serve to hamper the relationship between the two nations. Therefore, there is a need to make sure that these standards are considered before products are traded to the nation. Thus, this challenge needs to be overcome as well for making sure that trade is promoted and encouraged.

Philippine Government Procurement

It is quite important to note that in the Philippine government, there are significant procurement opportunities. However, to utilize and consider these opportunities, there is a need to consider and have a local partner. In addition to it, the law or rule on government procurement generally has significant paperwork requirements. It can pose some serious difficulties for a trader(Hill, 2017).

Infrastructure

            When it comes to infrastructure development, the Philippines generally lags behind many of its neighboring nations. Port and urban congestion are actually raised regularly as constraints to business. Additionally, the country seems to rank as one of the lowest nations in the region for the penetration of internet, speed, and connectivity. However, the costs of the internet are comparable significantly to the market of the US. In addition to it, cyber-security seems to remain an issue.

Strategies to Overcome Challenges

Forming Trade Pacts

            As it has been determined above, due to the pandemic, the economic growth of the Philippines has declined. However, it should be noted that the economy of the nation is expected and even determined to recover in the coming year. However, this recovery and growth can be improved with the development of trade pacts with other nations. It is quite important to note that there are several nations that are not really contacted by the nation and they can not only be reached by the Philippines but they can also be formed trade pacts with. Trading with new countries and nations can serve to improve the trade activity and it can also serve to boost economic recovery and growth. This will help in improving the overall economic outlook of the nation.

Implementing Stronger Laws

            In the nation, there is a significant corruption level and even though a number of rules have been implemented, corruption still seems to persist in the nation and it has not been eliminated. Due to corruption, the nation still seems to rank significantly higher in terms of corruption and this serves as a challenge to foreign trade and investment. In order to overcome this challenge, there is a need to implement stronger laws and action needs to be taken against all the identified corrupt authorities and people. When effective laws are implemented within the nation, it would serve to ensure that corruption is not only controlled but it is also eliminated in an effective manner.

Raising Awareness regarding Standards

            There is a need to ensure that all the nations including Australia that partner with the Philippines are aware of the standards and the guidelines that need to be considered and followed by them. When their awareness is raised, it will help in ensuring that all the nations consider and comply with these standards. In addition to it, it will also ensure that trade is effective among partners and there are no issues or problems that occur between the two(Patalinghug, The Philippines in a Liberalizing Trade Environment: Issues and Prospects, 2019).

Providing Investment Opportunities

            It is important to note that in the nation, investment opportunities should be provided to foreign nations. In the Philippines, there are several areas that seem to lack investment and they can be targeted by the government. The government can serve to promote and even encourage investment in these specific areas. It will play quite an important role in making sure that the desired results are achieved and it will also ensure that foreign countries consider investing in the nation. It will also help in making sure that the infrastructure of the nation is developed.

Why Philippines is Suitable for International Trade

            When it comes to international trade, it is important to note that the Philippines is quite an attractive choice for foreign nations. Nations can consider investing in the nation because it does not only provide opportunities but it is also ranked quite attractively among countries suitable for business and trade. For instance, the nation is ranked 95^th out of all the nations. Actually, for traders, one of the most important aspects and factors to consider is paying taxes. In the nation, there are some attractive policies for all investors. Actually, it would not be wrong to say that the nation boasts flexible tax payments and in comparison, with other nations, it also offers attractive tax options. In addition to it, in terms of the resolution of insolvency, it is ranked as 65^th.

            In comparison with other nations, the Philippines tends to impose lower tax levels and tariffs on nations and traders. This aspect alone tends to make the Philippines one of the most attractive options for foreign trade. In addition to it, the nation has a history of making long and fruitful trade agreements. It means that the nation is willing to be engaged with a nation in the long-term without any issue.

Strategies for Promoting International Foreign Trade

Following are some specific strategies that need to be considered for ensuring that international foreign trade is promoted effectively:

·         First of all, there is a need to ensure the restrictions on trade are lowered to an attractive level. In comparison with some specific nations, the Philippines tends to impose tougher limitations on trade.

·         Second, the Philippines need to promote free trade. When free trade without tariffs and higher taxes is promoted and even pursued, it will cause several other nations to consider engaging the Philippines in trade. In addition to it, it will cause them to form pacts with the nation regarding the trade.

·         Third, the Philippines should focus on the improvement of its infrastructure. When the infrastructure is developed and even improved in an effective manner, it will serve to attract different nations from the world to engage the Philippines in trade. It will cause these nations to consider trading with the nation and will also cause them to consider investing in the nation in an effective manner(Balié & Valera, 2020).

Conclusion

            Overall, it can be said that the Philippines and Australia are engaged in bilateral relations and they tend to cooperate and collaborate with each other in an effective manner. Their relations with each other tend to date back to the explorations of sailors. In recent times, their trade relations have improved. It has been determined in this paper that although there are some challenges that restrict investments and trade with the Philippines, there are some strategies and plans that can be effectively considered by the nation for improving its relations and trade with not only Australia but also with other nations. Upon considering these strategies, international foreign trade can be considered and promoted.

References

Balié, J., & Valera, H. G. (2020). Domestic and international impacts of the rice trade policy reform in the Philippines. Food Policy.

Deogracias, C., & Johan, O. (2016). Australia-Philippines relationship status:" it's complicated".

Fauci, A. S., Lane, H. C., & Redfield, R. R. (2019). Covid-19—navigating the uncharted. 2020, 1268-1269.

Ghazouani, T., Boukhatem, J., & Sam, C. Y. (2020). Causal interactions between trade openness, renewable electricity consumption, and economic growth in Asia-Pacific countries: Fresh evidence from a bootstrap ARDL approach. Renewable and Sustainable Energy Reviews, 133.

Go, E. C. (2020). Trade implications of transport cost in the Philippines. Department of Economics, University of Sussex Business School.

Hill, M. (2017). The book trade in the colonial Philippines. Book History, 20(1), 40-82.

Patalinghug, J. (2019). The Philippines in a Liberalizing Trade Environment: Issues and Prospects.

Patalinghug, J. (2019). The Philippines in a Liberalizing Trade Environment: Issues and Prospects.

Rahman, M. M., & Mamun, S. A. (2016). Energy use, international trade and economic growth nexus in Australia: New evidence from an extended growth model. Renewable and Sustainable Energy Reviews, 64, 806-816.

Schram, A., Aisbett, E., Townsend, B., Labonté, R., Baum, F., & Friel, S. (2020). Toxic trade: the impact of preferential trade agreements on alcohol imports from Australia in partner countries. Addiction , 115(7), 1277-1284.