×

Here's why the Philippines doesn't want to tick off the US

Monday's diplomatic dustup between the U.S. and the Philippines was over almost before it began, after newly elected Philippines President Rodrigo Duterte quickly apologized for calling President Barack Obama a "son of a b***h."

A quick look at the trade and investment relationship between the two countries shows why Duterte was quick to try to mend fences.

The comment prompted Washington to call off a bilateral meeting during the president's tour of the region.

Duterte was reacting to press reports "that President Obama would 'lecture' him on extrajudicial killings," which "led to his strong comments, which in turn elicited concern," the Philippines government said in a statement.

"[President Duterte] regrets that his remarks to the press have caused much controversy," the statement said. "He expressed his deep regard and affinity for President Obama and for the enduring partnership between our nations."

The relationship between the two countries, which began in 1898 when Spain ceded the Philippines to the U.S. after the Spanish-American War, includes strong military ties. After World War II, the commonwealth became independent. Since then, the U.S. has maintained a military presence that has become strategically important in recent years as China has pursued a more aggressive military stance in the region.

The U.S. is also one of the biggest investors in the Philippines, with some $731 million in direct investment flowing into the country last year, much of it invested in the country's manufacturing sectors.


The U.S. is also one of the biggest buyers of Philippine exports, including some $5 billion worth of machinery and more than $1.1 billion in apparel.

And the U.S. has a big presence in the services industry in the Philippines. Sales of services there by majority U.S.-owned affiliates totaled 3.6 billion in 2011, the latest data available, according to the U.S. Trade Representative.

But the trade relationship between the two countries is very lopsided, with the Philippines much more reliant on the U.S. as a trade partner than the other way around.

While the U.S. is the world's second-largest customer for Philippine exports, among buyers of U.S. exports, the Philippines ranked 33rd.