New US Philippines Billion Mission Spotlights Alliance Geoeconomics
First-ever US-Philippines investment and trade mission led by Commerce Secretary Gina Raimondo highlights sectors such as semiconductors and critical minerals.
The headline-grabbing $1 billion in new investments touted at the first-ever U.S. presidential economic mission to the Philippines spotlights ongoing efforts to act on a growing geoeconomic imperative within the alliance amid the focus on the geopolitics in the South China Sea.
WonkCount: 1,432 words (~7 minutes reading time)
New US Philippines Billion Mission Spotlights Alliance Geoeconomics
Background
The growing geoeconomic imperative in the U.S.-Philippine alliance has become clearer in recent years, apart from Manila’s geopolitical significance as one of two U.S. treaty allies in Southeast Asia. The Philippines was one of the fastest-growing economies before COVID-19 hit and was forecast to be one of the world’s top 20 economies by 20501. That had sparked hopes of the country shedding pejorative labels such as “sick man of Asia” from the end of the 1980s rooted in structural issues such as corruption, even as former president Rodrigo Duterte’s economic outreach to China largely failed to materialize. Today, as we have noted on ASEAN Wonk, Washington also sees the Philippines as a partner in advancing alliance geoeconomic cooperation amid U.S.-China competition, a view which has also factored into the Vietnam double upgrade, new Singapore tech framework and elevated Indonesia partnership. This is partly rooted in Manila’s status as a critical minerals-rich country with a key role in semiconductor supply chains (see example graphic below on critical minerals from the International Energy Agency)2.
Share of Top Three Producing Countries For Selected Resources (2022)
The Philippines has explicitly pushed for intensified economic ties in the alliance to match growing security convergence amid South China Sea tensions, and Washington has tried to reciprocate. While the United States remains the top destination for Philippine goods and there is interest in the country from U.S. firms, there is still room for greater cooperation, with Washington now Manila’s third largest trade partner and fourth largest foreign direct investor. Beyond the strategic imperative, the economy is also one of Marcos’ chief vulnerabilities (see survey data from Pulse Asia below noting relatively softer approval ratings on economic issues)3. The Philippines also lags some other major ASEAN economies on metrics like FDI per capita and is trying to become among the top two net FDI regional destinations by the end of Marcos’ term4. Both sides have begun charting out avenues to boost collaboration, with a case in point including Philippines’ designation as a priority country for semiconductor assistance under the U.S. CHIPS Act and the upcoming co-hosting of the sixth iteration of the Indo-Pacific Business Forum in May 20245.
Comparative Year-on-Year Ratings of National Administration on Selected National Issues (September 2022 and September 2023, in percent)
Significance
Seen from this perspective, the first-ever U.S. presidential trade and investment mission is a signal that the Biden team is investing in the economic piece of the U.S.-Philippine alliance. While agreement on the mission was already reached during Marcos’ visit to Washington last May, carrying it out demonstrates the ability of the administration to follow through. During the mission from March 11-12 and before heading to Thailand for more economic engagements, Commerce Secretary Gina Raimondo reinforced messaging that the mission alone had generated an announcement of over $1 billion in U.S. investments as well as creating educational and career opportunities for over 30 million of Filipinos (more than a fourth of a population of over 100 million). The $1 billion number includes past U.S. investments as well as ones that are yet to be actualized from nearly two dozen entities. But the engagement was nonetheless an example of Washington trying to leverage the private sector in meeting the economic needs of its partners despite the challenges the Biden administration has faced in advancing initiatives like the Indo-Pacific Economic Framework. Marcos was also keen to emphasize this, calling the United States “an essential strategic trading and investment ally.”6
The mission was also just the latest example of U.S.-Philippine alliance geoeconomic cooperation across key sectors which reveals how dynamics may play out in the coming months (see tables below of some significant sectoral developments in the alliance as well as major investments announced during the mission; along with analysis of future prospects on these fronts).
Key U.S.-Philippines Alliance Sectoral Developments
