- Argee Abadines
Donald Trump, Rody Duterte, and the New World Order
Soon after Donald Trump became President-elect of the United States, President Rodrigo Duterte extended his warm congratulations to the former’s electoral victory. He highlighted one similarity between them: their penchant for swearing. Western media have consistently portrayed Duterte as the ‘Trump of the East’ and highly volatile. Both have won under a populist platform.
This is in sharp contrast to Duterte’s threat to swear at Barrack Obama if he questioned and criticized his war on drugs and criminality which has left a few thousands dead. Duterte also wants American troops out of the country in two years.
Perhaps the Philippines’ recent pivot to China was a strategic move by Duterte, who likely felt Trump was a shoo-in for the presidency. The move would provide a safety net for the Philippines given the protectionist and inward orientation of Trump.
BPO and OFW Remittances
If Trump’s election promises won’t remain as mere rhetoric, then investment flows to the Philippines from America will likely slow down. One of the industries that could suffer is the Business Process Outsourcing (BPO) if they cease operations and move to America. The BPO industry is one of the bright spots of the Philippine economy. In 2014, it yielded $18.9 billion in revenues for the economy and is projected to overtake OFW remittances in 2017. In 2016, BPO revenues are expected to reach $25.5 billion according to FT Confidential Research.
However, with the Philippines’ competitive edge in the BPO industry, it is unlikely that these BPO companies will easily be swayed or coerced to return to America.
Trump’s immigration policies can also be a game changer. Although most Filipinos in America have legal papers, those who don’t will definitely be deported. It will also likely be more difficult for Filipinos to immigrate to America, which remains to be the top choice for Filipinos who want to migrate to other countries. Family ties are highly valued by Filipinos and if there is a small chance that the whole family can be together in America, Trump’s immigration policy will prove to be deal breaker for those thinking of migrating to America.
America is home to around 3.5 million Filipino expats who sent home $10.4 billion worth of remittances in 2014. OFW remittances drive the domestic economy and a slowdown in remittances will have a chilling effect in consumer spending, in particular the real estate market. OFW remittances also serve as a buffer from global risks and external shocks.
Global Warming and Climate Change
Trump thinks global warming is an expensive BS and wants America to exit the Paris Treaty. This means less focus on renewable sources of energy and a resurgence of American extraction and production of coal, oil and natural gas. According to a study by Lux Research, a Trump presidency can create 3.4 billion tons more of carbon emissions compared to the Clinton administration.
The Philippines remains to be one of the top countries to be affected by climate change. With America’s possible exit from the Paris Treaty, extreme weather caused by climate change will derail the Philippine’s momentum in growing its economy and reducing poverty. In 2013, super typhoon Haiyan struck the Philippines and was responsible for over $14 billion worth of economic damage.
West Philippine Sea
Given Trump’s inward focus to the domestic issues of America, it is unlikely that his Presidency will seek to influence or deter Duterte’s pivot to China. The latter’s foreign policy includes bilateral talks on the West Philippine Sea, which China claims as part of its territory despite losing the Hague international tribunal decision. Trump’s presidency would be a boost to China’s military occupation of the disputed territories. The Philippines has no chance in taking on China’s military might and America under Trump will not be protecting the Philippines in the event a war breaks out despite the decades of close friendship and alliance between the Philippines and America. Hence the reason for Duterte’s strategic pivot to China to warm up the bilateral relationship and gain economic incentives in exchange for a friendlier tone in negotiation over the disputed islands. In a way, a Trump presidency may have reduced the possibility of armed conflict emanating from the disputed islands and territories.
Trade War and Economic Prosperity
Trump protectionist economic policies can lead to a trade war with China. America is China’s biggest export market and if Trump implements trade barriers such as 45% tariffs, China will likely retaliate and America’s exports to China will also fall drastically. This scenario will hurt both economies especially with America still recovering from the 2009 recession while China’s economic growth has gone into single digits after years of double digit growth. Recently, Trump advisors have been downplaying this possibility and this trade war heavily attacked during the elections is likely to remain as rhetoric.
If China’s economy continues to slow down as a result of a trade war with America and both economies suffer, global growth will continue to be anemic. The Philippines will finally be exposed to these external shocks as OFW remittances will slow down and global trade lessens. With Trump seeking to withdraw America from the Trans-Pacific Partnership, this dampens further the prospect of global prosperity. Although the Philippines will likely continue to outperform in the near future, the prospect of a weakening global trade environment creates many questions for the Philippines and the rest of the world.
(Mr. Abadines is an Economics teacher and founder of the thefilipinoteacher.com. He also runs the Bruner Learning Hub, a tutorial center in San Mateo, Rizal.)