Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said any escalation in the ongoing trade friction between the United States and China will limit opportunities in the global trade environment.
Espenilla, however, said it was too early to call the tiff between world’s two largest economies a “trade war.”
“It is too premature… so what we have heard and seen so far, we have heard of some countries wanting to take strong initiatives, and heard some countries responding to that. So I would say it is in a discussion and negotiation phase,” Espenilla said.
He said a trade war was really basically one country imposing tariffs with the other country retaliating.
‘“When it escalates that is the real war. But we are not there yet. So in the end, this can only be resolved and people resolve their differences in terms of trade opportunities,” he said.
He said the Philippines in the past benefited from an open trading system where it could compete and sell to any market that had an interest in its products, goods and services.
Espenilla agreed if the situation worsened, the trade war could obviously affect the Philippines because the country was trading with many other countries.
“But the net effect still remains to be seen… We have to understand who’s involved, and what products are being affected. I think that is key to understand it. But until that becomes a real issue, then our position is really to discourage these kinds of initiatives that limit the opportunities,” Espenilla said.
The US imposed tariffs on imports of steel and aluminum from China. China retaliated by imposing tariffs on US goods including pork, wine, fruit and nuts.
Finance Secretary Carlos Dominguez III said in a previous statement that the US-China trade spat, if became full-blown, would eventually affect the Philippines.
“We are growing our market locally, so we are very robust. We don’t rely on exports or imports as much as other economies. So we are sort of insulated but still I am not downplaying. If there is a full-blown trade war, everybody is going to be affected,” Dominguez said.
“We can’t say if there will be a minimal impact because we really do not know what is going to happen… And you know quite frankly, there is no winner in a trade war. So if our two markets get hurt, China and the US, we will also get hurt… I’m really concerned,” Dominguez said.
He said while the Philippines was investing domestically to weather the potential impact of the escalating US-China trade war, that would not be enough .
Dominguez said focusing on the Asean region, considered one of the global growth drivers, would be good in the long run.
Espenilla said the threats of increased protectionism in advanced economies would always be considered by local monetary authorities when it came to maintaining or tweaking the Bangko Sentral’s policy stance.