FairTrade Statement on the SC Twin Decision Assailing the Constitutionality of Safety Nets Law

Safeguards and the National Interest

In 1997, the Supreme Court, in Tañada vs. Angara, upheld the accession of the Philippines to the WTO by promising that local industries can rely on safety nets such as safeguard measures to protect itself from unfair foreign competition: “GATT itself has provided built-in protection from unfair foreign competition and trade practices including anti-dumping measures, countervailing measures and safeguards against import surges. Where local business is jeopardized by unfair competition, the Philippines can avail of these measures.”

However, eight years later, the Supreme Court has come out with two decisions that rendered the Safeguard Measures Act (RA 8800), that provides agricultural and industrial producers temporary relief against unfair trade practices of other nations, useless, ineffective, if not unconstitutional.

On the first decision involving the local cement industry, the Supreme Court emasculated RA 8800 by stripping both the Department of Trade and Industry (DTI) and Department of Agriculture (DA) off their powers imposed to counter import surges threatening the viability of agriculture and industry.

On the second decision involving the local industry, the Supreme Court, in effect rendered RA 8800 unconstitutional when it affirmed a writ of preliminary injunction issued by a local court restraining the implementation agencies of RA 8800 (DTI, DA, Department of Finance, Bureau of Customs) from enforcing the said Safeguards Law.

These decisions, if not reversed, will leave our farmers, our vegetable, onion and garlic growers, poultry and livestock producers, fisherfolks, shoe, cement, glass, ceramic tile manufacturers or the whole economy literally defenseless, unprotected and powerless in this era of unbridled liberalization.

Consider the following:

One, There are 5,000 direct workers and 115,000 indirect workers in the cement industry. Taxes paid by workers of the domestic cement industry to the government amounted to P230 million in 2000. Without the safeguard measures, these would be drastically reduced.

Two, the ceramic tiles has a total of 2,100 direct employees and 10,000 upstream and downstream employees. In 2001, it paid P279.5 million in taxes to local and national coffers and provided income to workers worth P579.8 million. Their economic contribution to the nation’s economy would be seriously eroded by this SC decision.

Three, the 65,300 workers of the glass industry in the downstream would also be endangered.

Four, the 300,000 workers from upstream to downstream footwear industry including the tannery industry would also be affected by the removal of the safeguard measures.

Fifth, the vegetable industry has 400,000 farmers in the Cordilleras, not to mention those in other regions would be severely affected with this recent SC decision.

Sixth, the Pulp and Paper industry directly provides 8,000 workers with jobs and it is also a source of livelihood for more than 10,000 people. They would also be endangered.

In the light of the above and the many other industries that are similarly situated, we, at the Fair Trade Alliance, call for the reversal of the two SC decisions rendering ineffective and virtually unconstitutional the Safeguards Law.

The implications of these decisions are indeed great and alarming. It will go directly against on our right as a nation and as a people to determine our own development agenda in accordance with our nationalist framework and spirit laid down in our Constitution that “the State shall develop a self-reliant and independent national economy effectively controlled by Filipinos” and that “the State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods and adopt measures that help make them competitive” (Section 19 Article 2 and Section 12 Article 12, Philippine Constitution).

Sad to state, some judges and justices do not really know where our national interests lie and what is our common good.

The issue of safeguards is an issue crucial to all domestic producers. A safeguard measure is a globally-recognized safety net. It has become essential for the survival of Philippine industries. For our domestic industries to remain going concerns under globalization, they need to modernize by investing on new technology, skills and capacities, for this is the only way they can beat the cheap labor and subsidies of other countries. Without the safeguards, the industry has little incentive to sustain ongoing modernization.

Inexplicably, it has been even argued that the imposition of safeguard measures would be violative of our WTO commitments. On the contrary, WTO allows countries to use safeguard measures, as what US did when it imposed safeguard tariffs of steel and shrimp imports to protect their own industries. Even developing countries like India, Argentina and Ecuador use it against import surges so that their industries can survive the onslaught of imports. There is no reason why we cannot avail of safeguards for ourselves, to protect our own industries.

Liberalizing agriculture, industry, and services without the proper infrastructure and support systems to make them strong and competitive locally and globally will injure and destroy these sectors. With a terribly high cost of doing business in the Philippines, safety nets are important to at least level the playing field and counter unfair trade practices.

In this era of intense globalization and trade liberalization, where every country is protecting their own national self-interests, the interest of their local farmers and industry, Philippines on the other hand, instead of implementing and strengthening our own domestic laws, regulations and economic policies that will help sustain the viability and sustainability of our industries and agriculture is doing the opposite.

To survive global and regional competition, our industries need all the assistance the government can give vis-à-vis industries of other countries which do not hesitate to provide their own industries credit, technology, marketing and other forms of assistance, including safeguard measures. The SC twin decision will decimate and destroy Philippine industries, agriculture, jobs and livelihoods of Filipino workers and farmers, and ultimately the consumers as well. Without adequate safeguard measures, our sizable domestic market will continue to be a prime target for cheap imports and outright dumping.

We therefore welcome the decision of both Secretaries of Department of Trade and Industry and the Department of Agriculture to file a motion for reconsideration of this said Supreme Court decision.

We, at the Fair Trade Alliance, are not advocating for opportunistic protectionism. We are advocating for fair and just trade not only for the Philippines but for all countries. The imposition of safeguard remedy for our local industries is clearly impressed with national interest. It is vital to the sustainable growth of the Philippine national economy the fruits and benefits from which will be enjoyed by most, if not all, of our people.

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