Remarks at Manila Rotary Club

Ambassador Francis Ricciardone
March 13, 2003
(As prepared for delivery)
 

     It's a pleasure for me to address the oldest Rotary Club in the Philippines, in fact the oldest in Asia, at the Manila Hotel, where General MacArthur resided for so many years.  That historic connection makes it particularly appropriate that I discuss US-Philippine relations today.  

     Relations between the United States and the Philippines have never been stronger or closer than they are now.  We look forward to the visit of President Macapagal-Arroyo to Washington later this spring.  This will be only the third state visit of the Bush Administration, and the first by an Asian head of state.  

     This visit will spotlight our common interests: interests in security, in prosperity, and in providing services to our citizens.  The events of the past week also serve to highlight these interests:

--  We welcome the Philippines enactment of a law to strengthen protection against money laundering, and allow Philippine citizens to enjoy world-class protection for their financial transactions.  This law will be an important tool in the war against terror, preventing criminals and terrorists from misusing the international financial system.  The White House has already congratulated President Macapagal-Arroyo and Congressional leaders here for this important advance in the Government's program to reform the economy, fight against crime and corruption, and stamp out terrorism.  It is likely that the Financial Action Task Force (the "FATF") will signal its approval of this legislation, and call off the countermeasures that were contemplated against the Philippines.  Even better, after this law is effectively implemented, FATF will be able to remove the Philippines from its list of Non Cooperative Countries and Territories. 

--   At the same time, we condemn the terrorist and criminal bombing that took the lives of citizens of both our countries in Davao, as well as the brutal killings in Cotabato.  We are already working with Philippine authorities to investigate the Davao incident.  Both these incidents serve to underscore our common resolve to combat crime and terrorism in the Philippines and around the world.
  
     The United States and the Philippines continue to have strong shared economic interests.  Let me describe briefly some of the areas in which we cooperate, or would like to cooperate, with the Philippines.  The United States continues to be the Philippines' leading economic partner, in both trade and investment.   According to US Census figures, in 2002 the United States purchased nearly US $11 billion worth of goods from the Philippines (actual: $10.985 billion), while the Philippines purchased slightly over $7 billion worth from the United States (actual: $7.27 billion), leaving a trade balance  -- from the US point of view   -- of $3.7 billion in the red.  The Philippines was the United States' 20th largest supplier of imports, and was the 19th largest buyer of U.S. goods.    The U.S. trade deficit with the Philippines was the 25th largest among the United States' trading partners.    

     In investment too, the United States ranks near or at the top in the Philippines, depending on how the figure is calculated.   U.S. Foreign Direct Investments in the RP at the end of 2002 were valued at $3.3 billion, or 22% of total FDI - only slightly less than the $3.5 billion from Japan, according to Central Bank figures.  Actually, the US figure is somewhat misleading, as it reflects only equity investment.  Much of US investment is in the power sector here, a sector that requires enormous financial commitments to construct dams, pipe and transmission lines, and power plants  -- sums that are normally borrowed and technically not included in FDI.  In this respect, total investment would be many billions of dollars if debt-based investments were included.  

     We all know that there are problems in the investment climate in the Philippines: problems of the weakness of the Rule of Law, including peace and order, which was disrupted in Davao and Cotabato last week.  Another weakness of the Rule of Law manifests itself in corruption, weak protection of intellectual property, and other forms of fraud.  There are problems with the infrastructure:  highways are congested.  Airports need upgrading.  Ports need modernizing.  

     Yet despite such difficulties, most US companies are happy to be doing business here in the Philippines.  There are 275 American companies in the American Chamber of Commerce  -- which itself is the oldest in Asia (just like the Manila Rotary Club)  -- and quite a few of them have been doing business here for many years.  The Mobil Philippines Company traces its history here back to 1892, for example.  Last year, Citibank celebrated its 100th year in the Philippines.  15 American companies in the Chamber, many of them major US corporations, have a history in the Philippines of 75 years or more.  

     And I want to say as the American Ambassador that I'm proud of what US companies are doing here  -- not just in terms of providing employment, and providing training for their workers, but because of their involvement with their local communities.  Just last week I visited Quezon Power company, a US company that recently won an award from the US Secretary of State for its community-based projects.  Quezon Power is helping to protect the environment near the site of its plant at Mauban, as I saw for myself when I visited the Filipino Giant Clams under water at the coaling pier.   It has medical and dental outreach programs that have benefited thousands of patients in the area.  It has also made many contributions in education, including providing reference books to an elementary school and funding a scholarship program that has benefited many gifted students.  Quezon Power has been the very model of a good corporate citizen, and I'm happy to say that it is not the exception, but the rule among US companies with which I'm familiar.

     In addition to our trade and investment relationship, the United States is a key provider of assistance to the Philippines.  In 2002 the United States Government provided more than 900 million dollars in assistance and payments to the Philippines and its citizens.  From Counter-Terrorism training to USAID funds for social, economic and environmental development in Mindanao, the United States-Philippines bilateral relationship is deep and dynamic.  United States Government assistance ranges from grants and loans to debt forgiveness and credit guarantees.  Also, thousands of Filipinos benefit yearly from millions of dollars of United States Government veterans and Social Security payments.  

     Perhaps more impressive than this deep bilateral relationship between our two governments is the depth of the relationship between our citizens.  Skilled and ambitious Filipinos working in the United States remitted more than 3 billion dollars last year, adding to the strength and vitality of the US, Philippine and global economy.  US charitable organizations, such as the Ford Foundation and Habitat for Humanity, are active and engaged in the Philippines.  American tourists travelling to the Philippines for family, cultural, or business reasons added almost $500 million to the Philippine economy last year.  These are deep and lasting ties and I believe they will only grow stronger.   
             
     For instance, just last month in Washington we made important progress towards reaching an agreement on aviation matters that will benefit air travelers and cargo services of both our nations.  We look forward to continued talks in the Philippines in this area at a mutually acceptable time. 
 
     We are working right now to nail down an umbrella agreement on Science and
Technology that will help us increase cooperation in this important area, including cooperation on environmental matters.  One of the areas on which we are already working is Tropical Forest Conservation.  Last year we signed an agreement under which the United States will in effect forgive part of the debt owed by the Philippines to the US in exchange for Philippine support for projects, which will assist in the preservation of tropical forests here in the Philippines.   Our recently reinvigorated US-Philippines Trade and Investment Council contributes to a closer economic relationship.  Last year, after a decade of dormancy, we held two Trade and Investment Council meetings with the Philippine Government (one at the ministerial level) to address business and investment issues hindering further economic cooperation.  The Council has proven itself to be a useful forum for resolving our differences and for promoting further cooperation.  We are looking forward to the next TIC, which will be held in April via videoconferencing.

     Our common interests in providing security, prosperity and services to our citizens makes the US - Philippine relationship deep and diverse and our further mutual cooperation in these areas will work to the advantage of the citizens of both our countries.    

     The importance of this relationship for both nations will be highlighted during President Macapagal-Arroyo's State visit, but the true strength of our relationship is evident to us at the US Embassy in our daily contacts with our Philippine friends and colleagues.  That is why it is a pleasure for me to meet with you here today to talk about our close ties.  

     Thank you.
 
 

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