Philippines, Mexico Exploring Free Trade, Currency Pacts

Finance Secretary Carlos Dominguez III has raised the possibility of a free trade pact along with bilateral agreements on currency and taxation harmonization between the Philippines and Mexico, which is our 19th largest export market and 28th biggest trading partner.

Dominguez pointed out at a gathering of Filipino and Mexican business persons that there is “much headroom” for improving economies relations between Manila and Mexico City—whose ties date back to centuries past when both were colonies of Spain and the port city of Acapulco was the Philippines’ main trade link to Europe—within the framework of the Asia-Pacific Economic Cooperation (APEC).

“Unfortunately, in the years we were independent nations, little was done to expand trade between our two economies,” said Dominguez at the recent dinner reception hosted by Mexican Ambassador to Manila Julio Camarena Villaseñor at the Ambassador’s residence in Dasmarinas Village, Makati City.

“Over the recent years, however, trade between the Philippines and Mexico picked up. In 2016, our exports to Mexico jumped 31 percent over the previous year. By the latest figures, Mexico is our 28th biggest trading partner and our 19th largest export market,” said the finance secretary.

“The world had changed much and I am sure there is much headroom for improving our economic relationship. We are looking to the possibility of a free trade agreement between our two countries as well as agreements on other areas of cooperation such as currency and taxation harmonization,” Dominguez said.

“Within the framework of APEC and carried by the wave of free trade agreements among countries who confidently embrace globalization, I am sure there will be more areas of economic cooperation to be opened,” he said.

APEC comprises the Philippines, Mexico and 19 other Pacific Rim economies that promote free trade across the Asia-Pacific region.

“In a few weeks, a forum on East Asia and Latin America cooperation will convene in South Korea,” said Dominguez in reference to the Forum for East Asia and Latin America Cooperation (FEALAC), which will be held this June.

“There we should be able to begin envisioning a road map for our own bilateral relationship,” he said. “As the mature economies begin looking inward, it is for the emerging economies to push the momentum of economic cooperation.”

According to Dominguez, “The relationship of our two countries has deep roots. For over three centuries, Spain administered the Philippines through Mexico. Acapulco was our main trading link to Europe. Through that port passed the agricultural produce we sold to Europe and everything we bought from them in return.”

“Many of our religious practices, such as the dawn masses, were distinctly of Mexican origin,” he said.

For Dominguez, “The vast expanse of ocean that lies between our two countries is no longer a hindrance to rediscovering our deeply rooted friendship. There are many opportunities for trade and investment open to visionary businessmen on both sides of the Pacific.”

“I am sure the conversations initiated today will bear much fruit in the future,” he said.

“We recall with immense gratitude that Mexico offered substantial assistance when Super-typhoon Yolanda struck us few years ago,” he said. “That is a gesture that will be long remembered.”

“Let me thank the Mexican ambassador for facilitating this meeting. This is an opportune time for both our countries to begin a mutually beneficial partnership,” he added.

In a meeting just days before the dinner reception, Dominguez had discussed with Villaseñor ways to further heighten cooperation on trade and investments between the two countries.

The meeting had focused on Mexico’s concerns regarding the pending concurrence by the Philippine Senate with the agreement on the avoidance of double taxation, which also includes an exchange of information on tax matters between the two countries to combat tax evasion.

They also discussed Mexico’s proposal to do away with the triangulation of the exchange rate between the Philippine peso and Mexican peso, which means that the two currencies are traded in the forex market without having to go through the US dollar conversion process.

Villaseñor told Dominguez at that meeting that, “Our portfolio in the Philippines is getting bigger and bigger. This agreement (on the avoidance of double taxation) is very important….The investments of Mexico has reached the USD 6-billion figure in the Philippines.”

Dominguez had assured Villaseñor he would immediately take up the double taxation issue with the Senate, which has yet to concur with the agreement.

He had also agreed with Mexico’s proposal on scrapping the triangulation of exchange rate between the currencies of the two countries, saying that, “We will make sure that we’ll follow it through (with the Senate).” The agreement on double taxation avoidance with respect to taxes on income and the prevention of tax evasion was signed between the Philippines and Mexico in 2015. The Philippine Senate has yet to concur with the accord.

Dominguez and Camarena also met last February to explore ways of enhancing cooperation on trade and investments between Manila and Mexico City.

Commercial relations between the Philippines and Mexico date back to 400 years ago, with the Manila-Acapulco Galleon Trade in 1565 beginning the two-way exchange of goods between the two countries.

Last year, the Philippines and Mexico discussed the establishment of a Joint Economic Committee to further expand bilateral trade and investments between the two countries.(PR/PNA)