America first
There’s trouble in the BPO industry, one of the nation’s top employers, and it’s not just due to President Duterte’s apparent dislike for most things American.
You’ve heard the news, and it isn’t encouraging: after President Donald Trump’s “America first” promise, US companies – the biggest operators of BPOs in the Philippines – have put on hold expansion plans. The news has fueled fears of eventual shutdowns or significant downsizing.
Trump wants to roll back the tide of globalization. Normally this looks like a quixotic quest. But because this is the leader of the United States talking, people are waiting to see how he intends to compel American businessmen to go along with him.
American manufacturers took advantage of globalization and moved production out of the homeland to countries with lower labor and other costs. It also made sense in terms of logistics; outsourcing moved them closer to many of their markets.
Naturally, the move took away American jobs. But it helped ease unemployment and poverty in many developing countries. Why should America care? Steady jobs and rising incomes mean improved purchasing power for people in developing countries, which means larger markets for advanced economies such as the US. Developing nations may not be hiring American, but they’re buying American, and European, and Australian-New Zealand…
China, for example, has become one of the largest markets for everything from automobiles to coffee and the world’s luxury goods. If the Association of Southeast Asian Nations can get its act together, its combined market of about 650 million people can be a strong bargaining chip in trade negotiations.
Some Filipinos visiting the US are disappointed when they can’t find items under their favorite American brands that are made in USA. But the Philippines has been among the top beneficiaries of US outsourcing and liberalized trade.
Fidel Ramos, in a visit to the US during his presidency, once needed gloves for the cold. His wife Ming bought a pair from one of the upmarket US shopping chains, and was surprised to find out later that the gloves were made in the Philippines. In early October 2001 when I went to Hawaii as a Jefferson Fellow at the East-West Center, the most striking aspect of life in those first weeks after 9/11 was the widespread flag-waving as Americans expressed their patriotism.
And the striking thing about the Stars and Stripes being sold in all sizes all over Honolulu, from convenience stores to supermarket chains and the main shopping center, Ala Moana, across Waikiki Beach was that most of the flags were made in China and the rest in other developing countries.
I remember our futile hunt for a US flag made in USA because our fellowship included an amiable participant who is now a big shot in Chinese internet giant Tencent. She was amused by our hunt for a US-made flag and the trite jokes about God making the world while everything else was made in her country.
As we know, flags aren’t the only items sold by the Chinese to the world. It seems they have a lock on tourist souvenirs – t-shirts, baseball caps, key chains, cups, wristbands.
Cheap production costs lured a horde of foreign investors to relocate to China, including iconic US jeans brand Levi’s.
What may worry American manufacturers is the competition posed by their Chinese counterparts, who can produce almost everything cheaper. While consumers tend to get what they pay for and cheaper can mean inferior quality, there are millions worldwide who settle for cheaper versions.
This kind of competition posed by China’s factories put several Philippine industries in the ICU, among them textiles and apparel as well as furniture. This is the state of the global economy that Donald Trump wants to upend under his “America first” policy.
Trump has said he wants his country to buy American and hire American – his formula for making America great again. Can he bring Levi’s back to America?
US Ambassador Sung Kim urged us last Tuesday to let the Trump administration get settled first, to let the new president run his ideas by his economic team.
Kim expressed confidence that US commitment to free trade and fair trading rules would be sustained under Trump. Although the envoy was careful about making predictions about policy thrusts of the new administration, he said he did not expect a “dramatic shift” in the way Washington approached the issue of trade, except in “specifics” such as a new focus on bilateral negotiations.
Even with Trump pulling the US out of the TransPacific Partnership, which the Philippines has also not joined, Kim said his government would continue to focus “on the importance of free trade, encouraging everyone to play by fair rules.”
“I don’t think that’s going to have a negative impact on countries like the Philippines and on US-Philippines trade ties,” Kim told us. Still, the world is in jitters. After all, Trump vowed to set up a physical wall between the US and Mexico, and now he’s moving to do it.
We should be ready for any adverse impact of “America first” on our BPO industry.
At the start of the BPO boom, a top official of a major development organization happily told me that the industry was slowing down the exodus of Filipinos for jobs overseas. Steady jobs with decent pay, the official also noted, was also weakening patronage politics especially in the countryside, because people no longer felt beholden to local politicians for many of their needs.
Trump, of course, is not the only leader who is turning inward in an effort to stop the tide of globalization. There’s our very own President Duterte, although his anti-foreign rants are tempered by subsequent clarifications from his economic team. And unlike Trump, Du30 is befriending China.
Instead of engaging in a trade war with China, Trump the business mogul can learn from the Asian dragon, which became the second largest economy by embracing the world and the free market.
One day Trump and others who equate isolationism with nationalism may consider that what’s good for the world generally tends to be good for individual states.