Updated 15:00 PM PHT Mon, February 27, 2017
(CNN Philippines) — Former United States envoys have called for calm as business leaders in the Philippines await the Trump administration's policies on trade, outsourcing and immigration.
In a dialogue with the Makati Business Club (MBC) on February 21, former U,S, ambassador to the Philippines John Negroponte said uncertainty was normal with every change in leadership.
"You're going to feel a little bit of turbulence on our ascent until we reach cruising altitude," he said.
Most MBC members expressed concern on the so-called border tax adjustment proposed by Trump, which intends to discourage American companies from outsourcing operations to other countries.
This could deflate the Philippines' booming business process outsourcing (BPO) industry, in particular. Nearly 70% of its clientele is American.
BPO is the largest contributing industry to the Philippine economy. It expected to earn nearly $23 billion in revenues and employ about 1.15 million people in 2016.
There are also concerns the border tax could be imposed on overseas remittances as well.
Even if such a tax doesn't push through, remittances could take a hit with crackdown on illegal immigrants. There are an estimated 300,000 unregistered Filipino aliens in the U.S.
Wait and see
But Negroponte pointed out that it was one thing for Trump to make campaign promises, but it was another to translate them into policy.
"For example, Trump has publicly questioned our trade deals. But his team is also beginning to understand how complicated it is to junk NAFTA (the North American Free Trade Agreement). The supply chain arrangements and company relationships are hard to disentangle," he explained.
Businesses would do well to wait and see, Negroponte said. Many of Trump's Cabinet picks have yet to be confirmed, and all the other officials below Cabinet Secretary have yet to be appointed too.
"By experience, it takes about six to eight months to stand up a U.S. government," he said.
Philippine companies should focus on honing their competitive edge in the meantime, former MBC Chair Ramon del Rosario said in an interview. Should the U.S. eventually impose a border tax, at least local firms can still offer cheaper costs and better quality.
Jose Antonio, the Philippines' special envoy to the U.S., agreed. "The cost of doing the same job in America is $20 an hour, versus $20 a day in the Philippines. If you were a corporation, where would you do it?"
TPP trade agreement junking: Blessing in disguise
Meanwhile, Trump's decision to withdraw the U.S. from the Trans-Pacific Partnership could open up trade opportunities for the Philippines.
The country should lobby for a free trade agreement between the U.S. and the Association of Southeast Asian Nations (ASEAN) instead, John Forbes, senior adviser of the American Chamber of Commerce of the Philippines, suggested during the forum.
"AmCham Philippines and all the American Chambers in the Asia-Pacific had actually included it in a position paper four or five years ago. So let's get people to talking about it," he added.
Jose Cuisia, Jr., former Philippine ambassador to the U.S., said he'd been stonewalled by Washington over his proposal for a U.S.-ASEAN deal in the last six years.
But with the Trans-Pacific Partnership scrapped, the U.S.-ASEAN agreement could garner more support.
According to a JP Morgan study, the ASEAN is a vital economic partner for the U.S. It is the largest investment destination and third-largest trading partner of the US in Asia.
The ASEAN is also one of the fastest-growing regions today. It is expected to be the world's fourth-biggest economy by 2050 after the U.S., European Union, and China.
Trump pulled the U.S. out of the massive, 12-country Trans-Pacific Partnership in January, claiming it would only encourage American companies to export more jobs to low-wage countries.
The deal involved economic giants like the U.S., Canada, Australia, Japan, and Singapore, but also neighboring emerging markets like Brunei and Vietnam.
"We missed out on the TPP because we were too slow to move," MBC's del Rosario said.
"But I think we're a leading voice in the ASEAN so with this [US-ASEAN trade deal], if it does move forward, I don't think there's any likelihood of us being left out. Hopefully, we will even be a leading force in it."