Separate trade and industry

By Max V. de Leon
Published on the April 20, 2007 issue of the BusinessMirror

NOTING there is “glaring conflict of interest” between traders and manufacturers, the Federation of Philippine Industry is seeking the separation again, as in the old setup, of the Department of Trade and Industry into a Department of Industry and a Department of Trade to ensure that both sectors get equal treatment and protection from government.

Federation president Jesus Arranza said this separation is needed at this time because of heightened globalization, adding that they are now drafting a legislative proposal for this purpose. “We are now finishing our study on this and we will furnish the Congress with a copy.”

Since other countries have such separate agencies for the two sectors, they have also “sought the help of the different embassies to come up with the data and comparison.”

Philippine Chamber of Commerce and Industry chairman Donald Dee, however, does not buy the idea of splitting the DTI, saying it should be the department that should balance the interests of the traders and the manufacturers. “They are just being protectionists. They believe that they cannot survive if we continue opening up. But that is not how the world works now. We have the World Trade Organization and we are signing free trade agreements.”

Instead of clamoring for protection, domestic industries should strive to be more competitive and not seek government interventions to keep the local manufacturers afloat through tariff protection, Dee added.

The two departments were fused into one in the 1970s by then-President Ferdinand Marcos. The conflict became apparent when President Corazon Aquino issued Executive Order 413 to bring down the tariffs across-the-board, he added. Obviously, manufacturers want tariff protection while traders want lower tariffs.

Arranza said even the PCCI could not come up with a united stand then on the issue because some members of the group were traders and the others were manufacturers.

Because of that, Arranza said some members of PCCI bolted out of the group to challenge the Aquino EO at the Supreme Court. Today, he said the problem persists, just like in the issuance of the safeguard duties on the imported raw material for detergents.

“As Trade Secretary, you cannot escape getting accused of being biased for one group and of neglecting the other sector with the current setup. So we want two departments, one to protect the domestic industries and the other to facilitate trade and commerce.”

Rene Ofreneo, co-convenor of the Fair Trade Alliance, agreed with Arranza so that the country can properly focus industrialization strategy. “We need an all-out mobilization and support for our industry. Right now, we are the only country in the region that has a shrinking industrial sector.”

Arranza said with two departments, the conflicting interests will be presented and debated better and there will be a thorough reading of the situation. But if the administration does not want another layer of bureaucracy, Arranza said it should look at creating separate divisions for trade and for industry under the department, with the secretary “as the referee.”

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