Senate President Pro-Tempore Franklin M. Drilon cautioned the country’s economic managers to put in place mechanisms to cushion the negative effects on the economy, if the President’s tirades against the country’s long-term allies will remain unabated.
Drilon said that while he supports the Duterte administration’s pursuit of an independent foreign policy, “the country cannot afford to lose the support of its long-time ally countries, especially in the economic and development sectors.”
“Antagonizing multilateral institutions and having poor relations with other countries may have serious economic consequences,” Drilon said.
The senator said that among these is the possible reduction in the foreign aid contributions to the Philippines, currently at a whopping $3 billion.
“The government should take precautionary measures to cushion the impact once foreign aid contributions to the country are reduced, or should the United States and the European Union take the President’s challenge to withdraw foreign aid seriously,” Drilon said.
Drilon also feared that the country risks losing trade preferences, including those covered by the Generalised System of Preferences (GSP) particularly in the EU member countries. The GSP allows local producers to export their products at either zero tariff or at a preferential tariff rate.
“If the GSP is withdrawn, then our products become expensive and non-competitive in the areas where these products are exported,” Drilon said, adding that such a scenario will hit hard Filipino exporters and ordinary workers alike.
Drilon cited the local tuna industry as an example and explained that local producers fin fishing communities in General Santos City currently exports its tuna products to EU markets at preferential tariff rates and will be hardly hit.
“It will badly affect our poor people who depend on our tuna industries,” he added.
Drilon said that poor relations with the EU might also affect around 25,000 Filipino seafarers in EU-registered vessels, whose employment situation largely depends on the Philippines’ relations with EU member countries.
“So the fact is, if we lose these privileges, then it will adversely affect our economy, and in turn the livelihood of millions of our fellow countrymen. So it is very critical that we maintain our good relations with our long-time partners and allies in the US and EU,” Drilon said.
The senator earlier expressed support for the administration’s pursuit of an independent foreign policy. He stated that the President as the chief architect of foreign policy is mandated by the Constitution to maintain an independent foreign policy.
However, Drilon stressed that the Duterte administration could pursue an independent foreign policy “without jeopardizing the billions worth of foreign assistance poured into the country annually.”
Lastly, the senator said that the government should prepare for the negative effects brought about by the weakening of the peso against the US dollar, as this will impact the country’s financial portfolio.
Citing the country’s debt service burden – currently at almost P6 trillion or 43% of the gross domestic product – as an example, Drilon said that the P334 billion allocation for debt service for next year may not be enough due to the weakening of the peso.#