CATCH UP WITH ASIA: JUNK THE NEO-LIBERAL PARADIGM NOW! RECALIBRATE THE TARIFFS NOW! ADOPT BOLD ECONOMIC REFORMS NOW!

WE, representatives of the different sectors of our society — business and industry, farming, trade unions, academe, civil society, informal labor, youth and students,

Having come together in the Conference on ‘Defining the National Development Agenda in Global Trade Talks’ held here at Club Filipino, Greenhills, San Juan, Metro Manila July 19-20, 2005, in search for bold solutions to the economic ills bedeviling the nation, foremost of which are the country’s eroding agro-industrial base, severe and chronic fiscal distress, flight of capital and entrepreneurial talents, massive unemployment and poverty, and widespread feeling of hopelessness among our people,

Hereby express our collective unity on the urgency and necessity of the following economic reforms to arrest the ignominious descent of the Philippines into Asia’s industrial laggard and to reverse decades of agro-industrial stagnation, fiscal deficits, capital scarcity, joblessness and despondency:

1.  Junk the Neo-Liberal Paradigm Now!

After three decades of faithful adherence to the neo-liberal development paradigm of unilateral trade and economic liberalization, the Philippines has become less industrialized, its agriculture a virtual wasteland and the treasury dependent on foreign borrowings.   It is time that this paradigm be junked and be replaced with a more pragmatic, more balanced and more pro-Filipino and Asia-like approach to trade and development issues, through a new development paradigm which seeks to

  • Develop both the export and domestic markets,
  • Rely on the contributions  of both foreign and domestic investment,
  • Preserve and strengthen local industry and jobs amidst global and regional integration,
  • Promote greater value addition and employment in existing capacities through more value-adding and networking activities that give greater depth and breadth to the agro-industrial structure,
  • Depend less on foreign borrowings and advice,
  • Strengthen national sovereignty and independence, and
  • Promote global and regional integration in a calibrated and nuanced way and is sensitive to the level of development of existing industries and the development needs of the country.

2. Stop smuggling now!  Recalibrate tariffs now!

In Asia and in the developing world, Philippine tariffs are among the lowest.   In the ASEAN, we are second only to Singapore; however, compared to Thailand,  ours is three times lower.  The situation is aggravated further by widespread smuggling, both outright and technical.

We demand:

  • The upward recalibration of our industrial and agricultural tariffs to the maximum rates we are entitled to under our binding commitments to the WTO, except for the raw materials and other inputs needed by local industry, and whenever our own tariff rationalization program so requires.
  • The immediate passage of the anti-smuggling bill, now passed in the House but pending in the Senate, seeking to increase penalties for smuggling and strengthen  rules against smuggling such as in the determination of the true value of imported goods,
  • The consolidation of the government-private sector initiatives in cracking down on smuggling and the releasing of the necessary funds to finance purchases by local producers of imported goods deemed lower than their true value, and
  • The closure of all duty-free shops located outside the international airports, the enforcement of the ban on the use of the special economic zones such as Clark and Subic for the importation of second-hand vehicles and other goods destined for the domestic market, and the strict monitoring of all facilities granted duty-free importation privileges such as the customs bonded warehousing units (CBWUs) to ensure that they are not disposing part of their imports on the domestic market.

3. Resolve the fiscal and debt crisis in a fair and just manner – now!

The fiscal and debt problems are albatrosses hanging on the economy’s neck.   They put Philippine industry and agriculture at a great disadvantage, global competition-wise,  due to the ensuing efforts of the government to tax them more than what is needed, the inability of the government to provide needed and affordable infrastructures and support services,  and the tendency of banks to lend to the cash-strapped government rather than to the local businessmen, farmers and small entrepreneurs.

We demand:

  • An across-the-board import surcharge of up to 5-7 per cent which is preferred to the E-VAT or other new taxes, be imposed on all imports in the next 2-3 years until the fiscal situation is fully stabilized,
  • Debt service payments for onerous debts such as the Bataan nuclear power plant be renegotiated immediately for payment suspension,
  • Automatic debt servicing law be repealed,
  • Tobin tax be imposed on speculative foreign capital, and
  • New and bold  joint executive-legislative initiatives on how to reduce the debt stock and lower the debt service burden be undertaken in the light of the experience of Argentina, the recent G8 initiative for Africa and the history of the debt problem of the country.

4. Clarify/assert Philippine development priorities in trade talks now!

    It is abundantly clear that nations participate in trade agreements to advance their own national development agendas and priorities such as creating new markets for their products, protecting the technologies developed by their industries and so on and so forth.  The Philippines can no longer afford to remain naïve by embracing trade liberalization agreements without any clear development framework or measurement of what are ‘the goods’ and ‘the bads’ in each and every agreement and how the potential gains can be realized and the potential losses be minimized.

We demand:

  • An independent assessment of ten years of WTO membership and  12 years of AFTA – in terms of industry and job gains and losses — be first made before the country subscribes to any new agreements under the WTO and AFTA,
  • A stronger Philippine position against any weakening of the delivery of essential services and the liberalization of the land market through the General Agreement on Trade in Services (GATS),
  • Resistance to the inclusion of the fishery and footwear to onerous provisions in the Non-Agricultural Market Access (NAMA) and the rejection of any market access opening formula which ignores earlier Philippine liberalization efforts,
  • Support to the global campaign seeking a reduction in the $1billion a day agricultural subsidy by developed countries, the G30 campaign for recognition of special products (SPs), special safeguard mechanisms (SSMs), special and differential treatment (SDT) and the Philippine campaign for quantitative restrictions (QR) for rice,
  • Full transparency, consultation and coordination with affected stakeholders in the negotiations for any bilateral, regional and global trade talks with the creation of relevant task forces, and
  • The immediate passage of a law creating the Philippine Trade Representative Office, with a multi-sectoral composition, charged with the job of strategizing and coordinating all trade talks and ensuring full transparency and consultation with stakeholders are observed in any trade negotiation.

5.    Re-build the nation’s industrial base now!

No nation can aspire to be strong with a weak industrial base.   With the failure of the three-decade old neo-liberal project, the Philippines has to institute a number of reforms to rebuild and strengthen our industrial base.

We demand that:

  • Basic industries and investments expanding domestic productive capacity and value-adding activities be assisted in terms of technical capability, credit guarantees and transition tariff safeguards,
  • Tariff structures for industry sectors involving downstream, midstream and upstream players be harmonized in support of the development of the entire sectors,
  • Prices of power, infrastructures and the likes be benchmarked with other Asian producers and that national programs to lower the cost of these items be put in place, and
  • DTI, DOST and other concerned agencies work closely with the private sector in insuring that vulnerable industries get the necessary technical and other assistance to make the transition towards survival and growth through niching, modernization and the likes.

6.    Re-build the nation’s agricultural base now!

In today’s highly volatile and unpredictable world, the Philippines can not afford to have no food and raw material security of its own.   The government can also ignore – at its own peril – the food, income and welfare needs of our farmers and large rural population, whose lives have been adversely affected by government’s policy inconsistency (swinging pendulum-like from protection to deregulation and back) and lack of a clear pro-farmer sustainable development strategy for the sector in the last three decades.

We demand:

  • No required reduction in agricultural tariffs unless other countries’ subsidies are significantly reduced.
  • Whenever appropriate, increasing tariffs towards the bound rates and in special cases, increasing bound rates and having bound rates if necessary.
  • Safety nets and support services to go with the tariff recalibration for each sector,
  • Farmers’ and other concerned private sector representatives should be involved in trade negotiations and the creation of the appropriate multisectoral task forces, specifically for bilateral and regional agreements,
  • The anti-farmer agricultural deregulation policy be formally junked,
  • A National Farm Bill, providing for a holistic or integrated approach to development, be enacted into law,
  • The land reform program be completed in a year or two and the promotion of sustainable agriculture and food self-sufficiency.
  • A halt on any land conversion involving productive farms or arable lands,
  • A stop to any two-million-hectare agribusiness plantation development scheme, but instead the promotion of small farmer development;
  • A full and transparent accounting of the use of the Marcos wealth meant as support for the agrarian reform program,
  • Promotion of sustainable agriculture and food self-sufficiency,
  • Strengthening of the Philippine phyto-sanitary rules and procedures to guard against infested and chemical-full agricultural imports (e..g, strict implementation of the MRL  or Maximum Residue level), and
  • Review of the parameters and implementation of the national land use policy, including the development of water and other natural resources.
  • Increased support for the very neglected agriculture sector, such as following the AFMA directions of giving P 32.5 billion annually to the rest of agriculture instead of the current P 15 billion given today, with transparency on the use of this budget given to the agriculture and fisheries councils

7.    Strategize the development of the service sector now!

With the collapse of industry and agriculture as growth leaders, the service sector has emerged as the country’s biggest employer.  Its formal sector side, mainly in the wholesaling and retailing businesses, is growing because of the large population and the remittances of the OFWs.  Its informal sector side, composed of numerous micro and solo enterprises in urban and rural poor areas, is expanding like anything because of the poverty and unemployment situation in the country.   Lately, so much hype is made out of the call center/BPO industry, although this industry still has less than 100,000 jobs generated so far.

We demand:

  • Care be exercised in negotiating for GATS and other service-related agreements in other forums (e.g., ASEAN and bilaterals) because liberalization in the service sector often means merely changes in ownership of existing businesses, not new investments and new job creations, and can lead to dangerous monopoly positions favoring the big buyers,
  • Any talks involving strategic industries such as aviation, education and so on should be transparent and should involve all the key stakeholders,
  • Scaling the value chain in the call center/BPO industry so that more jobs and values can be created and that this industry does not become a mere transition industry,
  • Informal sector enterprises should be given all the assistance they need, e.g., business skills development, credit facility, etc.  to upgrade themselves and become competitive in the market, and
  • Informal sector entrepreneurs and their workers be covered by social security.

8.    Promote tangkilikan and support for Filipino products now!

It is a truism only the Filipinos can help themselves.  And yet this simple ineluctable fact tends to escape those who believe that growth can only happen through foreign assistance and investment.   Malaysia Inc. is growing because Malaysians support their own industry and their own producers, with the Malaysian government showing the leadership all the way.  In this era of globalization, we can do no less.

We demand:

  • The national flag law be enforced in all agencies and that products of displaced workers such as garments and shoe producers be given primary attention (an appropriate EO should be released NOW),
  • Government and the Fair Trade Alliance work out a system of national labeling for fair trade products,
  • Strengthening of the big enterprise-small enterprise  business linkaging program,
  • Teaching in all schools at all levels of tangkilikan philosophy and program promoting buy-Philippine-made products,
  • LGUs support tangkilikan among barangay-based enterprises, and
  • Documentation of good tangkilikan practices.

9.    Mobilize the nation

There is no other way for the Philippines to generate jobs and investments except through domestic or Filipino resource mobilization given the difficulty of the Philippines in attracting foreign capital because of its image problem.  In fact, foreign capital will only flow in a substantial way, if the Filipinos themselves are seen as leading the way.

We demand:

  • The launching of a national campaign to revive entrepreneurship at all levels of society, both in the urban and rural areas,
  • The re-launching of the OFI Bond and other OFW savings mobilization schemes,
  • Reward, through fiscal incentives and other measures, for those who re-invest their earnings and go into value-adding linkages,
  • The transformation of LGUs into investment mobilization centers, and
  • Development of a nationwide business networking program.

The whole point is – Only the Filipinos can help the Filipinos.

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  • Founded in 2001, the Fair Trade Alliance (FairTrade) of the Philippines is a broad multisectoral coalition of formal and informal labor, industry, agriculture, NGOs and youth pushing for trade and economic reforms.
  • FairTrade seeks to promote a job-full and progressive Philippine economy through: (1) the promotion of fair trade rules and active agro-industrial policies based on the existing development needs of the nation, (2) the development of a positive agro-industrial culture to foster innovation, hard work and solidarity between and among the productive sectors of Philippine society, and (3) the transformation of an economy debased and stunted by colonial mentality, unequal trade and neo-liberal dogma into a modern, sustainable and broad-based.
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