PH holds biggest potential market in APEC for RE products – PIDS
The Philippines holds the biggest potential market in the Asia Pacific Economic Cooperation (APEC) region for renewable energy and clean technology production products worth $182.9 billion.
The Philippine Institute for Development Studies (PIDS) noted that countries that specialize on exports of environmental goods (EGs) would more likely benefit from most-favored-nation (MFN) liberalization, as the advantage is not distributed uniformly among the APEC member-economies.
APEC members have devised a list of 54 EGs and committed to reduce their applied tariffs to five percent or less by the end of 2015, anchored on the goal of promoting green growth and sustainability while addressing climate change in the region.
"Looking at the impact of the APEC list on the Philippines, a cut-off of 60 percent seems to be a promising benchmark for which comparative advantage is greatest. If the country were to choose a subset of environmental products to liberalize ahead of the others, the products falling within the 60-percent cluster are the promising candidates for the Philippines," PIDS said.
In terms of commercial viability, the APEC supply predominance (ASP) cut-off of 60 percent, which corresponds to the greatest comparative advantage and covers 16 products, is a good benchmark.
A small ASP value means that the APEC supply of the good is small relative to world supply. In this case, the benefits of liberalizing trade for that particular good by APEC can spill over to non-APEC suppliers, who may continue to maintain high tariffs for that good, indicating a high free-rider incidence.
Conversely, a large ASP indicates less free riding, as the countries that benefit from tariff reduction are APEC members.
To address free-rider problems, the dominant supplier approach is employed in ranking the elements in the APEC list according to their ASP. There is a considerable share of APEC environmental product exports to world exports, with ASP values ranging from 28 to 99 percent.
Under this approach, only the products where APEC is a dominant global supplier would be considered for liberalization.
"In principle, if the source of the actual or prospective supply is within the APEC area, APEC members will mostly benefit from tariff reductions on the chosen goods," said PIDS.