Archive for the ‘Speeches’ Category

Wigberto Tañada, Lead Convenor

I would like to thank the Scalabrini  Migration Center and the other organizers of this conference for inviting me to this important forum.  I would like to congratulate Dr. Manolo Abella, a kababayan from Quezon, for his enlightening and provocative piece on migration and development.

The debate on the migration-development nexus is an old one in the Philippines.   Four decades ago, under martial law, Marcos justified the labor migration policy, focused then in the deployment of overseas contract workers (OCWs) in the Middle East, as a stop-gap temporary measure.  The argument then — deploy the OCWs to ease the unemployment problem  while the new economic doctrine propounded our political and economic leaders had not yet delivered the promised full employment.  What was this doctrine?  The labor-intensive export-oriented or LIEO program, which gave birth to the garments, electronics assembly and various EPZ-based enterprises.  The LIEO program was also used to justify the massive borrowings from the IMF-WB.

By the l980s, the debt crisis exploded and the economy collapsed.  The LIEO failed to take off and the outward movement of Filipino OCWs intensified.  This time the destination countries in Asia had multiplied, with the addition of Japan and the Asian NICs.  This time, our economic technocrats deepened the LIEO and baptized it as the structural adjustment program (SAP) backed up by the IMF-WB’s structural adjustment loans.  This time the SAP slogans were even shriller – open the economy through the all out-liberalization of the trade regime, all-out liberalization of the investment regime, all-out deregulation of agriculture, and all-out privatization of government assets and corporations competing with the private sector.

By the mid-1990s, the Philippines was second only to Singapore in economic openness in Asia.  And yet, it still registered one of the highest unemployment and underemployment rates in the region.   Yes, I agree with Manolo Abella — the high population growth rate was and still is a major explanatory factor to the unemployment problem.

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Wigberto Tañada, Lead Convenor

Congratulations to PLCPD and its partner civil society organization for organizing this event. Hopefully, this conference will see a rich harvest of ideas on the right development policies that will benefit the 88 million Filipinos, specially the poor and the marginalized within our midst, and finally propel this nation to a higher, real and not illusory, level of development and prosperity.

I believe all of us gathered in this hall share the same view – the be-all and end-all of policy making is the development of our people. This is non-negotiable. The policies that we make should lead not only to the creation of more and better jobs and the delivery of more and better social services to our people, but also to the enlightenment and empowerment of ordinary citizens, ordinary Filipinos. They must become active agents, not passive objects of development. This means institutionalizing and broadening the process of information sharing, public consultation, multi-sectoral social dialogue, and public participation in the crafting and implementation of any policy.

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Wigberto Tañada, Lead Convenor

We, at the Fair Trade Alliance, are happy to be part of this conference-workshop on social protection for the informal sector. The informals are indeed the most numerous and yet they are the least protected. No minimum wage. No overtime pay. No night differential. No collective bargaining. No health insurance. No pension system. No death and accident benefits. Mahirap mabuhay, mahirap ding mamatay.

According to the ILO, the informals constitute 65 per cent of the work force. If I may borrow from one old folk wisdom, God so loves the informals, He made so many of them.

The army of the informals is large and keeps growing. Every city and town in the Philippines today is teeming with the informals. Inpormal sa kalunsuran, inpormal sa kanayunan. In fact, you easily see them in the proliferation of cardboard villages all over the country.

Why are the informals multiplying? Why is the informal economy large and growing?

The answer is not difficult to find. Because the formal economy is not growing fast enough. Because the creation of good, quality and protected jobs is not moving fast enough. Because the Philippines has failed to industrialize – despite five decades of IMF’s so-called assistance and despite three and a half decades of World Bank’s ‘structural adjustment’ program for the country.

In short, the large and growing informal economy is a giant testimony to the grand failure of the economic technocrats to build a modern and progressive economy based on their narrow concept of development — That growth automatically happens when the market is liberalized and opened up. This is exactly what the government did. In the l980s and l990s, the industrial and agricultural sectors were opened up. In fact, we cut our tariffs way below those of other countries and way below our own commitments to the WTO. And look what happened. Natimbuwang parang mga cardboard boxes ang ating mga pabrika. Maraming na-lay-off. Ang ating agrikultura ay di na umusad. From a net agricultural exporter up to l994, the Philippines, starting in 1995, has become a net agricultural importer. This year we are headed towards the importation of two (2) million tons of rice, the highest in the country’s history. And yet, our agricultural officials are even thinking of setting aside 1.24 million hectares for Chinese investors, to allow them to grow hybrid rice, hybrid corn and hybrid sorghum. For whom? Of course, for the Chinese, not for the hungry Filipinos.

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Wigberto E. Tañada, Lead Convenor

We, at the Fair Trade Alliance (FairTrade), welcome this initiative of the Philippine Chamber of Commerce and Industry (PCCI) to hold this forum on “Save our Skies or Open Skies: A View from Both Sides.” Yes, we do need more public discussion on an issue that has apparently generated acrimony and confusion, not unity and clarity of what is best for the national interest.

A few weeks ago, a columnist chided the Fair Trade Alliance for siding with the local aviation industry on the proposed wholesale opening of Clark to foreign carriers. By opposing an open skies policy in Clark, we have been taken to task for taking a stand that is allegedly anti-tourism and anti-OFW. We have been reproached and admonished for continuing to adhere to the ‘Filipino First’ policy, which they said had failed and was even anti-Filipino. These certainly are big sweeping accusations by those seeking an all-liberalization of our skies against those demanding a calibrated, measured and progressive opening.

Let me clarify why the Fair Trade Alliance has sided with the local aviation industry by citing here some of our fundamental beliefs as an Alliance:

First, we are not against economic liberalization per se. However, we are for an economic liberalization that is calibrated, measured, progressive and synchronized with our own development priorities and the capacities of our industrial and agricultural producers, many of whom are members of the Philippine Chamber of Commerce and Industry. We are accordingly for calibrated protection, for this is what our neighbors – Japan, South Korea and now China and Vietnam – have done and are continuing to do. The problem is that our economic technocrats, from the time of Marcos to the present, have a very limited concept of attaining economic growth – that is, opening up of the economy in an accelerated, one-sided and even lazy and reckless manner.

Thus, in the l980s and 1990s, we opened up our manufacturing in a wholesale manner in accordance with a World Bank timetable, making us one of the ten most open economies by l997, this according to the Bank of International Settlements of Switzerland. The result? Many of our industries producing textiles, tires, tiles, plastics, chemicals, auto parts and so on have been decimated by the unilateral trade liberalization, aggravated by a culture of smuggling in the country and the anti-Filipino attitudes of our own technocrats. We did the same in agriculture, from the mid-1990s to the present. The result? From a net agricultural exporter, the Philippines is now a net agricultural importer of almost everything — from rice and corn to onion and garlic, from fruits and vegetables to meat and milk. Thus, if a food crisis will break out in Australia, Thailand and Vietnam simultaneously, this country will go hungry, as many of our displaced Filipino farmers have already been experiencing.

And now, from unilateral industrial liberalization and unilateral agricultural liberalization, we want to open up unilaterally our skies, our aviation market, without any equal reciprocity. My God, what is happening to this country?

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Wigberto Tañada, Lead Convenor

We welcome this initiative of the WTO and the Friedrich Ebert Stiftung (FES) to hold here in Manila this two-day multi-stakeholder dialogue-consultation workshop for the Asia-Pacific region on the WTO trade talks.

As all of us gathered here are aware of, the trade talks under the Doha Development Round (DDR) are on their 7th year. Director General of WTO, Mr. Pascal Lamy, a former Socialist leader of France, has virtually tried everything in the books to break the impasse in the DDR talks – dramatically suspending the talks last year, quietly reviving them early this year, holding official individual meetings with the stubborn members, shepherding a critical few in Davos, and in his own words, swinging back and forth from blustering to bantering. And yes, hopping from one capital to another, in search of the elusive global consensus.

And so last February, Mr. Lamy was here. He met with the business community and a few representatives of the civil society movement. As one of the privileged civil society speakers, I told Mr. Lamy that a large number of people in the Philippines have been wary of the DDR talks. For after 12 years of existence, the WTO has not delivered the promises of more and better jobs for the workers, more and better incomes for the farmers and more and better businesses for our entrepreneurial class. After 12 years of WTO, the Philippines’ poor have become poorer and more numerous, with hunger now affecting one out of every seven Filipinos.

The poor performance of the Philippines under the WTO is apparently replicated in the uneven pattern of development in other developing countries of Asia and elsewhere. This is especially true in agriculture where global imbalances have remained huge and global trade has increasingly tilted against the small farmers of Asia. Thus, the growing number of farmers committing suicides, from Korea to India and Pakistan.

But what must have surprised Mr. Lamy in the Manila forum last February were the blunt statements made by the members of the Philippine business community. They told him frankly and unequivocally – that the global trading system under the WTO is tilted against the poor developing countries, that the giant agricultural subsidies of the North are fueling hunger in the South, that the lower tariffs of the rich developed countries can not make up for the higher protection extended by patent monopolies on technologies, and that the one-size-fits-all liberalization formula is no development formula at all. The WTO and the trade liberalization ideology it has come to represent have no social constituency in the Philippines and many parts of the world.

This is why the DDR talks, focused as they are on more market access opening in agriculture, industry and service sectors, are deadlocked. Advocates of fair and just trade want a correction, not an exacerbation, of global trade imbalances. They demand the universal observance of the principle of special and differential treatment (S&DT), for not all countries are created equal. And not all have the capacities to follow a uniform formula of liberalization. Equal rules for unequal partners often lead to more inequalities and sufferings among the weak and vulnerable.

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Wigberto E. Tañada, Lead Convenor

Magandang umaga sa ating lahat! A warm welcome to you all, especially to our foreign participants and delegates to this Regional Workshop on Access to Medicines!

This Regional Workshop comes at a most appropriate time. And we thank all the participants and delegates from the different Asian regions for coming together to share their respective experiences in the campaign and the battle for insuring and increasing people’s access to medicines. Indeed shared experiences, shared learning and a shared future are our best teacher and inspiration in this arduous fight against the goliaths of the global pharmaceutical industry.

The WTO’s Doha Declaration on TRIPS and Public Health provide member countries certain crucial flexibilities such as the right of countries to resort to parallel importation in order to lower drug prices, the right of governments to give compulsory licenses for drugs critical in the treatment of diseases affecting a large part of society and the right of governments to engage in the domestic production and timely distribution of drugs whose patents are about to expire. Despite its limitations, the WTO Doha Declaration on TRIPs explicitly upholds the rights of governments to enforce measures that will protect public health and insure access to affordable medicines for all especially the poor. Through parallel importation, patented medicines can be purchased from the cheapest source rather than from the patent holder manufacturer. Compulsory licensing on the other hand allows governments to order a local firm to produce a drug and pay a negotiated royalty to the patent holder.

Since this is a gathering of fighters for affordable medicines, I believe we are all familiar with these WTO TRIPs flexibilities. The problem really is how do we counter and overcome the transnational resistance to our exercise of these flexibilities. The bigger challenge is what can our societies do beyond these flexibilities in order to make medicines accessible and affordable for all. As it is, these WTO Doha TRIPs flexibilities are merely on paper and they will remain to be so unless governments are able to summon the will to implement and make use of such flexibilities in the face of the transnational resistance.

In this connection, we, in the Philippines, have experienced last year and this year the reach and power of this transnational resistance. In our effort to avail of these flexibilities, some of our health and trade officials were brought to court by Pfizer on specious grounds, specifically infringement of their patent rights. And in our advocacy and campaign to have these flexibilities reflected in the appropriate amendments to our Intellectual Property Code, the drug transnationals mounted a huge and expensive campaign to stop the approval of these amendments by our Congress and they even tried as well to misrepresent the position of the people fighting for these flexibilities, by raising the bogey of sub-standard and counterfeit medicines flooding the market.

Fortunately, at least for now, we survived the transnational campaign against our own legislative campaign to enshrine and incorporate these flexibilities into our existing IPC. Yes, we are bruised but we are victorious even for a moment, while the other side has been exposed as a selfish corporate lobby seeking to keep drug prices and profits high through their transnational monopoly hold on patents.

But let us not fool ourselves. The battle is not over, the fight has just begun. We have to anticipate the counter-attack of the transnationals in the bicameral deliberations on the proposed amendments. It is a foregone conclusion that they will still try to derail the final approval of said amendments and their enactment into law through various means. And even if they become law, they will not stop, they will continue the fight in the drafting of the implementing rules and regulations. They may even elevate the case to the appellate courts. It will surely be an uphill battle, as we are seeing now and as we have seen in our own Philippine experience with the generics. Through their expensive marketing and media programs, the transnationals have managed to hold back the development of the Philippine generics industry despite a two-decades-old enabling law.

This is why this conference is most important. We want to learn from one another on how to counter this transnational resistance and lobby, how to press governments to remain consistent and how to win the larger public to our side.

This is what we, at the Ayos na Gamot sa Abot-Kayang Presyo (AGAP), an alliance composed of representatives coming from organized groups such as the labor, health, industry, agriculture, and the consumer sectors, have been trying to do. We set up AGAP because we saw the need for a broad multi-sectoral coalition, which includes progressive officials and agencies in government, both in the executive and legislative departments. For the reality is that we can not help change policies and enforce measures that will bring down the prices of medicines in the country if we are badly divided and if we pit one sector against another, which is what the PR operators of the drug TNCs are trying to do.

In this regard, we need to build up unity based on principles and social partnerships, for this is the only way we can neutralize and overcome the power of the transnationals. Practical experience also tells us that we need to respect each other’s spaces and initiatives and unite on the basis of concrete principles and doables. So it is my fervent hope that this conference will discuss how different civil society groups, no matter how diverse, can unite in the campaign for WTO’s DOHA TRIPs flexibilities and affordable medicines.

I say this in all candor because I truly believe we are just at the beginning of a long and intermittent fight. We do need a bigger victory. We can only secure such victory if we are united and strong.


Speech delivered at the Regional Workshop on Access to Medicines organized by Oxfam-International East Asia, Third World Network (TWN), Department of Health (DOH), Ayos na Gamot sa Abot-Kayang Presyo (AGAP) Coalition, and Cut the Cost, Cut the Pain Network (3CPNet) , held at SEAMEO-Innotech, Diliman, Quezon City, March 15-16, 2007.

Regional workshop on access to medicines
Doha Development Round Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) and public health

The Intellectual Property Code of the Philippines (RA 8293)

Wigberto E. Tañada, Lead Convenor

Trade is a powerful instrument to promote growth, job creation, and sustainable development — if it is based on a clear and balanced development framework and if it provides weaker parties, such as the Philippines, space to push their own development priorities based on flexible trade commitments.

However, trade can also be an instrument in perpetuating global inequality. Was it not during the American colonial period (1900-l940) when “free trade” was used in transforming the Philippines into an exporter of cash crops and minerals and an importer of finished American goods?  This colonial free trade experience, shared by many “hewers of wood and carriers of water” in the developing world, was the basis of a world divided between the haves and the haves-not.

Today, developed countries and their neo-liberal economists have been talking about free trade once again, this time to promote a romanticized notion of a borderless global economy. We are being pressed by the developed states — and even by some of our own economic technocrats — to embrace a new round of trade liberalization in support of free trade through a cacophony of trade agreements under the World Trade Organization (WTO) — Agreement on Agriculture, Non-Agriculture Market Access, General Agreement on Trade in Services, and Trade-Related Aspects of Intellectual Property Rights. This is what the Hong Kong’s Ministerial Conference in December this year is all about.

We in civil society know better. A decade of WTO membership and a quarter of a century of pursuing the neo-liberal dogma favoring an accelerated and one-sided liberalization have neither alleviated poverty nor increased jobs in the Philippines.

Many in the developing world have also become painfully aware of the imbalances in global trade. The issue is not further trade liberalization per se but fairness in global trade rules. Why open up to global trade the agriculture sector of the Philippines and other developing countries when the developed countries do not play fair by subsidizing their farmers to the tune of US$1 billion a day? This distorts global trade in agriculture and subverts the capacity of small farmers in developing countries to compete.
Why not recognize the right of developing countries to develop their industrial and agricultural sectors and maintain jobs in these sectors? Why undermine the power of government in the delivery of basic services, such as health and education, by opening this up in favor of transnationals and big corporations. Why reduce the capacity and flexibility of developing countries in producing cheaper drugs? Why not give life to the WTO’s oft-repeated clause on the inherent right of developing countries to a “special and differential treatment” in global trade since not all countries are created equal and have different capacities? Why kick away the ladder to higher development through a one-size-fits-all trade liberalization formula?

False Hopes

Unfortunately, our government has not clearly defined where it stands on key issues tabled in the forthcoming ministerial conference in Hong Kong. Yes, it has joined the global battle of the Group of 20 developing countries against the trade-distorting agricultural subsidies provided by the developed countries and the efforts of the Group of 30 or so nations seeking full recognition of the right of developing countries to “special products” and “special safeguard mechanisms.” But during the recent official WTO assessment of Philippine liberalization compliance, the government failed to point out the devastating impact on the economy of the existing trade liberalization program and the need for the country to have some breathing space from it. Further, we read with dismay the official claim that trade liberalization has been good for the Philippines in general and that the government is prepared for more of it.

But has trade liberalization really been good for the country?

In l994, during the debates on Philippine membership in the then newly organized WTO, I cautioned my colleagues in the Senate not to foolishly rush such membership, if no readiness program for our industry and agriculture had been crafted and if the supposed safety nets for our workers and farmers were not fully in place. The late Sen. Blas F. Ople and then Sen. Gloria Macapagal-Arroyo ignored our arguments, citing the imaginary gains for the economy that early membership would cause, including the imaginary jobs that such membership would create.

Today, the jury is out. Many of the promised gains did not materialize.

The proponents promised half a million new jobs a year in industry and half a million new jobs a year in agriculture. Together with the jobs being created by the fast-expanding services sector, such growth in jobs would have wiped out our unemployment problem in five to seven years.  Instead, our unemployment and underemployment have deepened since. The latest figures show that we have five million unemployed and over six million underemployed.

The massive unemployment is due to the collapse of many industries such as textiles and rubber and agricultural cropping areas such as corn and vegetables. Another explanation is the failure of new industries to grow and expand.  In fact, the only Philippines export winner, electronics assembly, is not even dependent on trade liberalization per se, for this industry is based on the global outsourcing by electronic transnationals to their own production outfits based in duty-free economic zones or industrial parks.

Our agricultural exports have steadily declined while our agricultural imports have risen tremendously.  We are now a net agricultural importing country and the ratio of agricultural imports to exports is now close to two-to-one. Trade liberalization and agricultural deregulation are killing local agriculture, averaging a measly 1.5 per cent in the l980s and l990s. The projected P60 billion in gross value added a year in agriculture was never realized.

Another reason for the colossal collapse of industry and agriculture is the failure of the government to crack down on smuggling and import dumping, abetted by the precipitate shift to the WTO’s “transaction valuation.”

This system of valuation has been widely abused by importers and corrupt customs officials to mean simply “as declared by the importers themselves” (in sharp contrast to the old home-consumption valuation based on the value of goods as sold or priced in the exporting countries themselves). Thus, we have shoe importers declaring a pair of leather shoes to cost as low as $.50 (50 US cents) a pair, which means payment of super-low tariffs of 7 percent (or $.035) and 10 per cent VAT (or $.050), or a total of less than P5 total tax for a pair that fetches between P500 and P1, 500 at Greenhills.

Homemade Tragedies

Of course, some of our problems are homemade.

As provided by the WTO, we enacted safety net laws against dumping and export subsidies.   And yet, we have a weak state incapable of decisively implementing these laws.

The United States, European Union, Australia, Thailand, India, Brazil, and other countries routinely impose safeguard tariffs as high as 100 percent, or sometimes as much as 200 percent, against sudden import surges. Here, importers have no difficulty securing court injunctions against the impositions of safeguard tariffs, citing strangely the supposed “unconstitutionality” of the law. Worse, the Supreme Court upheld, in the case of steel and cement products, the validity of the injunctions against the safeguards law or Republic Act 8800, thus sustaining indirectly the “unconstitutionality” argument.

Given the glaring failure of the government to support local industry and agriculture through cheaper credit, more efficient infrastructures, better research and development, market development assistance, and so on, the recent court rulings on safeguards are truly a cause for national concern. The Philippines is discriminating against its own producers!

Another homemade tragedy is the Philippine adoption of a unilateral and one-sided trade liberalization program, which has made our applied tariffs much lower than our binding rates under the WTO and virtually equal to the free-trade 0-5 percent tariffs under the ASEAN’s Free Trade Agreement (AFTA).  With our tariffs equal to only one-third of those of Thailand and much lower than those of China, India, Brazil, and South Africa, our industrial and agricultural products cannot compete, not in such an uneven playing field.

Due to this unilateral trade liberalization, imposed as part of the IMF-World Bank structural adjustment conditionality way back in l980 (and implemented vigorously since), our tariff rates are virtually the same as those of the developed countries.  However, there are big differences  the developed countries maintain peak tariffs as high as 200 percent or more for sensitive products (we do not have any), they have developed a complicated system of product certification which keeps out unwanted imports (such as what Australia has done with our mango and banana exports), and they can act decisively on import surges (while we have succeeded in rendering RA 8800 inutile and in making the Philippine economy one giant ukay-ukay center for virtually everything).

A Riot of Proposals

In the meantime, the country is being bombarded with new trade liberalization proposals.  Aside from those mentioned above, there are proposals for an “ASEAN Economic Community” and Priority Integration Projects (PIPs) under the ASEAN.

It was only when Chinese Premier Jintao visited the country that our officials admitted that an “early harvest program” with China had been inked. This has naturally alarmed our vegetable farmers in the Cordilleras because smuggled GMO vegetables from the Chinese mainland are the ones killing the local vegetable industry.

An economic partnership agreement is also being negotiated with Japan by a handful of technocrats who have refused so far the requests of Congress for a copy of the draft text, the tentative list of included and excluded products, and the commitments that each country is making.

The non-transparent process of trade negotiation is also extended to the Philippine-US bilateral free trade agreement, which the beleaguered Arroyo administration has recently announced as in the pipeline. If the US-Singapore bilateral free trade agreement is any guide, such a bilateral agreement with the US and other countries dangerously limits the flexibility of the country in crafting and pursuing its own development agenda. For aside from the usual zero-tariff regime, bilaterals also include non-trade issues such as investment, government procurement, trade facilitation and competition policy, the very issues that were roundly rejected by developing countries and led to the collapse of the WTO’s Cancun Ministerial in 2003.

Development for Whom?

Of course, the basic issue remains: what is the overall development framework that the government is pursuing in relation to all these trade initiatives?

For whom are we liberalizing? Are we not supposed to be winners, too? What then and where are the safety nets and adjustment measures that we are undertaking to ensure a win-win and painless transition for our society, for our workers and farmers, in particular? What are the corrective measures that the government should have by now instituted to make the rules fair and just to our very own producers?

The evidence is clear and more than compelling. It is beyond reasonable doubt. The Structural Adjustment Programs and the neo-liberal policies we have been implementing have not worked to our advantage. In fact, it has further damaged and eroded our already weak agro-industrial base.

It is now time to have a serious re-assessment of our trade and development priorities and a major overhaul of our existing trade policy regime.

Speech delivered in a forum on the Millennium Development Goals (MDGs) entitled “Achieving MDG 8: Eleven years after WTO – Impact on Philippine Agriculture, Industry and Jobs” held on 9 November 2005, 9:00 – 12:00 NN
Tañada Room, Senate of the
Philippines at Tañada Room, Senate of the Philippines

Wigberto E. Tanada, Lead Convenor


The topic given me – ‘Impact of WTO on Southeast Asia’ — is fairly broad and exciting.

In fact, proponents of economic globalization and trade liberalization love to cite Southeast Asia as one of its models.  Accordingly, it is one of the fastest-growing regions in the world.  It is also surrounded by economic dynamos.  In the north is China, the new economic dragon of Asia, which seems to be overtaking everyone in the world.  In the east are Japan, the original Asian dragon, and the tigerish economies of South Korea and Taiwan.  In the west is the emerging dragon economy of India, whose IT industry is changing the complexion of the global economy.

Within Southeast Asia itself, you have the tiger economy of Singapore and the rapidly growing economies of Malaysia, Thailand and, yes, Vietnam.

So who can not be gung-ho about Southeast Asia?

As you all know, Southeast Asia is home to over 500 million people belonging to ten countries.  These countries have formed what is known as the Association of Southeast Asian Nations (ASEAN) that was originally composed of the non-communist six countries – Brunei, Indonesia, Malaysia, Philippines, Thailand and Singapore.   Later, the four other Southeast Asian countries – Kampuchea, Laos, Myanmar and Vietnam – joined the ASEAN when they became market oriented, following the collapse of the old Soviet bloc and the rise of Reaganite/Thatcherite economic thinking everywhere.

Today, Southeast Asia is better known in some circles as the ASEAN region.  Its economic integration project – the ASEAN Free Trade Agreement (AFTA) – is also hailed as a major liberalization project similar to that of the European Customs Union and the North American Free Trade Agreement (NAFTA) of Canada, Mexico and the United States.   This AFTA was launched in 1992, while WTO was formed two years after.
Through the AFTA’s CEPT or the Common Effective Preferential Tariff system, the ASEAN is trying to deepen the economic integration of the ten ASEAN economies.  In fact, in Bali 2003, the ASEAN Leaders declared that like the European Community, the ASEAN will be an ASEAN Community by 2020.   This borderless ASEAN Community shall consist of three communities – the ASEAN Security Community, the ASEAN Socio-Cultural Community and the ASEAN Economic Community or AEC.   In other words, the formation of AFTA is a precondition for the eventual development of an ASEAN Economic Community, which, in turn, is a precondition for the evolution of an ASEAN Community.

So what has been the impact of the 13-year old AFTA, a regional integration project, on the ASEAN region?  And yes, what has been the impact on the ASEAN of the 11-year old WTO, which is a global economic integration project?

These are fairly difficult for me to answer exhaustively given the time limitations and the complexity of the topics themselves.

Instead, let me focus on what I think are the key development challenges facing the ASEAN region in the light of the operations of AFTA and WTO.

But first, let me clarify where I am coming from.  Unlike many neo-liberal economists, I do not worship on the altar of free trade.   Thus, I do not look at the liberalization and globalization goals of AFTA and WTO with misty eyes.   However, I also do not subscribe to an out-and-out protectionist policy which leads to an autarkic economy closed to the outside world.   I believe in calibrating liberalization and protection measures based on the actual needs of the economy and its people.

To me, the AFTA and WTO projects matter only if they are able to serve the basic needs of the Filipino and other ASEAN peoples, meaning they are able to create conditions for the realization of full employment and higher prosperity for every country in the region.

So what are the development issues facing the region under AFTA and WTO?

Liberalization and uneven development

First, let me point out that the region is developing in a very uneven manner under economic liberalization and globalization.

Development has also been very uneven in the individual ASEAN countries, with some benefiting from economic integration and many others, not.  In some countries, the number of the excluded constitutes the large majority.  Our NGO friends and progressive social scientists in Indonesia, Philippines and Thailand have extensive documentations on how liberalization and globalization tend to benefit a few, mainly the economic partners of transnational corporations and some skilled professionals like IT programmers.

At the same time, these processes  of globalization and liberalization do marginalize many others — the excluded such as the small farmers, communal fisherfolk, small and micro enterprises with no global linkages, domestic industries producing for the home market, indigenous peoples who do not comprehend the meaning of tradeables and exportables, workers displaced by privatization and corporate restructuring,  and many others who have no sustainable jobs or business niches under globalization and economic liberalization.   Even in tiny Singapore, you have a growing segment of old redundant workers who can not find meaningful and secure jobs in a liberalized and globalized economy.

Such a situation is not sustainable, politically and economically.  Terrorist threat, insurgency and social unrest breed in the fertile ground of social inequality and the exclusion of large sectors of the population from the benefits of growth.

Intermeshing liberalization programs
And AFTA’s limited impact

Of course, it is also difficult to isolate the specific impact of WTO and AFTA on the different ASEAN countries.

First, there are many liberalization processes taking place at the same time.  In the case of the Philippines, we have been implementing a unilateral liberalization program – reducing our tariffs, opening up one economic sector after another and privatizing virtually everything, from government assets like military camps to government services like support services to farmers – since l980.  This unilateral liberalization program is not a product of a development program debated upon by the Filipino people or even by their legislators.  It was an imposition of the IMF-World Bank and the neo-liberal economic technocrats in government.  It was imposed without any consultation with the basic sectors, including the business community; nor was it preceded with any information sharing.

As a result of the unilateral liberalization, our actual tariffs are way below those of our binding rates under the WTO and way below those of our neighbors, except those of Singapore.  Because of unilateral liberalization, our tariffs are virtually the same as our AFTA tariffs.  In short, both the WTO and AFTA have only limited impact on our actual tariff rates.

As to the region in general, you will note that intra-ASEAN trade has not grown as fast as extra-ASEAN trade.  In fact, growth of intra-ASEAN imports and exports have been flat since l993.   For example, intra-ASEAN trade constituted 21.1 per cent of total trade of the ASEAN countries with the world in l993; in 2003, this shared has increased by one per cent, to 22.8 per cent.  In the EC, I understand intra-EC trade constitutes nearly 70 per cent of total trade.  This is what economic regional integration is all about, to hasten growth through increased trade among member countries.

So what has been happening is that the ASEAN member countries are integrating globally, but not necessarily regionally with one another.   If you need further proof of this, look at how fast trade of the ASEAN countries with China has been growing despite the absence of any formal agreement with this country in the l990s.  It was only in 2002 that the ASEAN concluded an early harvest program with China.  Another proof of the limited impact of AFTA is the limited use by importers and exporters of the ASEAN’s Form D, the document needed to avail of lower intra-ASEAN tariff treatment.   A Form D certificate indicates that the product being imported is an ASEAN product, with 40 per cent ASEAN content.  Hardly anybody in the region is using Form D.

Still another proof of the limited impact of AFTA is the fact that between 40-50 per cent of the intra-ASEAN trade is trade with Singapore, which has concluded numerous bilateral free trade agreements with other countries such as the United States, Australia, Chile and so on.   How can a tiny country such as Singapore account for half of the region’s trade, if it is not used as a mere transshipment center?  And how come the ASEAN has allowed Singapore — and now Thailand, Malaysia and the Philippines — to conclude bilateral free trade agreements with other countries, if the idea is to have regional economic integration?   In the EC, it is unthinkable for a member country to conclude a bilateral agreement.  It is EC in the name of EC doing the negotiation.  Here, it is free for all.

WTO’s overall impact

As to the WTO, some ASEAN countries such as Vietnam and Laos have not yet acquired full membership in this body, although Vietnam’s application for membership was filed as early as l995.  Kampuchea was admitted only recently.

On the other hand, the original six ASEAN countries have pursued their liberalization programs unilaterally, some selectively like Malaysia and Thailand and others in a wholesale manner like Indonesia and the Philippines.   In addition, the individual ASEAN countries have their own liberalization commitments under AFTA, to the IMF-World Bank if they are heavily indebted (like Indonesia and the Philippines), and to bilateral free trade agreements they have concluded with selective countries.

Thus, it is really difficult to isolate the specific impact of WTO — and even AFTA – on the ASEAN.

However, it can not be denied that WTO has contributed to the general elevation of economic liberalization policy as the principal thrust in economic governance in practically all the ASEAN countries.   The WTO in a way helps ‘lock in’ the different ASEAN countries in the global regime of liberalization, in all areas – industry, agriculture and services.

Even the ASEAN is trying to mimic the agreements under WTO by having the regional equivalents of these agreements.   The only difference — the liberalization targets are much deeper.

Every country going export-oriented
But based on its national interests

And yet, it appears that all the ASEAN countries are trying to be outward-looking and export-oriented, like almost every country in Asia today.

Of course, countries try to be export-oriented in different ways.

At this point, let me clarify one beef I have against the neo-liberal economists.  They have been saying that for countries to become export-oriented, they have to liberalize their economies and bring down their tariffs and commit to various types of liberalization programs. This is not what Japan did.  This is not what the Asian NICs did. And this is not what China and even Malaysia and Thailand are doing.  These countries have succeeded in the export market or  in the global market  by targeting certain industries, by giving protection to these targeted industries, and by calibrating liberalization and protection at the same time.  They did not commit and have not committed to any program of wholesale liberalization, which, unfortunately is what the Philippines did and what Indonesia has done, after it submitted itself to the IMF discipline in l998, at the height of the Asian financial crisis.

Obviously, the difficulty of committing to wholesale liberalization is what is delaying the grant of full membership to Vietnam under the WTO.

One major challenge facing each ASEAN country, therefore, is how to attain success in exports while being able to maintain a balanced and broad-based development pattern amid all these liberalization initiatives and these grand projects called AFTA and WTO.

In this regard, the Philippines is a bad model, for reasons I have already mentioned.  Malaysia and Thailand are emerging to be good models, only because these countries have been very careful in defining their development priorities and have been very militant in asserting their national interests under globalization.

In the end, it is clear that every country should take care of its national interests in a strategic and balanced way, if it has to succeed under globalization.

The need to focus on capacity building

Thus, the present preoccupation of WTO and the ASEAN on more and more liberalization – in agriculture, industry, services and other areas – does not address the development needs of countries which are lagging in the growth and development process.

Countries are not created equally. Equal liberalization rules for all is akin to pitting heavyweight against lightweight boxers under the equal rules of boxing.

What the WTO and the ASEAN must focus on, therefore, is on the issue of how developing countries can catch up in the growth process, on the challenge of raising the capacity of these countries.   This, ironically, is what the Preamble of the WTO says.  The Preamble says that the goal of global trade is the promotion of full employment through trade and development based on the needs and capacities of member countries, developing countries in particular.  This is what the special and differential treatment or SDT clause of the WTO means.  This SDT is what the Doha declaration in 2001 proclaimed is the main task of the new trade negotiation round dubbed as the Doha Development Round (DDR).

And yet, this is not what the WTO is doing, when it is overly focusing on market access issues in agriculture, industry and services.  This is not what the ASEAN is doing when it tries to clone or ape what the WTO is doing.

May I conclude, therefore, by challenging you, the emerging leaders of the region and the world, to use your talents in designing and pushing for new rules of globalization and regional integration aimed at bringing about a just, equal and humane economic order where everyone is included.

Speech delivered at the 3rd Regional Seminar for Young Progressives Southeast Asia (YPSEA) – Young People Shaping Globalization held on 25 October 2005 at Discovery Suites, 25 ADB Ave., Ortigas Center, Pasig City

Wigberto E. Tañada, Lead Convenor

Isang maalab na pagbati sa kaguruan at mga mag-aaral.  Gayundin  sa mga kaibigan sa civil society movement.  Nagpupugay din po ako sa lahat ng kababaihang naririto at nakikibaka para sa makatarungang kalakalan at makatarungang ugnayan sa buhay.   Indeed, the struggle for fair and just trade is also a struggle for fairness and justice in other spheres of social life, including the relations between men and women and those between the governed and those seeking to govern.

Ngayon, narito po tayo para pag-usapan ang ilang mahahalagang usaping pangkabuhayan at pangkalakalan na natabunan ng mga usaping pampulitika. Mahalagang malaman natin kung papaano mareresolba ang krisis sa pulitika.  Kung sino nga ba ang mamumuno sa bansa.

Subalit huwag nating kalimutan – magbago man o hindi ang Administrasyon, nahaharap ang ating bayan sa isang malalim na krisis pangkabuhayan. Limang milyong walang trabaho. Anim na milyong alanganin ang trabaho. Mahigit sa 50 porsiyento ng mga pamilya ang naghihirap.  Kinse (15) porsyento ng mamamayan ay dumaranas ng gutom.  At marami ng mga pabrika at negosyo kundi man nagsara ay nagbawas ng trabaho.

We are in a period of deep political and economic crisis. So much uncertainty and instability surround our society.

It is clear that the political crisis hounding the nation today is deeply intertwined with our economic crisis. In fact the economic crisis is fueling the political crisis, and to a great extent, vice versa.
My friends, with your permission, let me now discuss two disturbing developments which I think require a decisive response from all of us.

Our disappearing safety nets

The first development is related to our disappearing safety nets.

As a backgrounder, in the 1994 Senate debates on whether we should join or not the WTO, I took the position that we needed more time as our industry, agriculture and the economy in general were not yet competitive and thus not ready for fuller economic liberalization.  Ang sagot po ng Senate majority, kasama na ang kasalukuyang Pangulo ng bansa, ay huwag kayong mag-alaala. May safety nets para sa mga manggagawang mawawalan ng trabaho.  May training at livelihood programs para sa kanila.  May safety nets para sa mga magsasakang apektado ng imports.  May government assistance para sa agricultural modernization, marketing ng mga produkto sa sakahan at iba pa.  At may safety nets para sa industrial at iba pang producers.  Maglalabas ng batas laban sa biglang pagdagsa ng mga imports (o safeguards law against import surges), batas laban sa pagtatapon sa ating palengke ng labis na  kalakal ng ibang bansa (o anti-dumping law), at batas laban sa subsidized imports galling sa mga developed countries  (o countervailing duty law).

Now where are these safety nets?  What is their status?

Yong mga safety nets para sa trabaho, training at livelihood ng mga displaced workers, nakasulat po pala sa tubig —  sapagkat wala naming badyet.   Gayundin din ang safety nets para sa mga magsasaka.  Minsan nga, para lamang may maireport, isinama ng budget secretary ni Ramos ang mga flyovers sa EDSA na kabilang sa safety nets sa agrikultura.

Kaya, ang tanging safety nets na naiwan ay ang mga batas laban sa import surges (safeguards), dumping at countervailing duties.  Mga batas na naipasa limang taon pagkatapos ng ratipikasyon ng WTO.

Our affiliates in industry and agriculture have exerted efforts to get protection from  these   safety net laws, mainly the Safeguard Measures Act or RA 8800.  These laws are meant to level the playing field against the unfair trading practices of other countries, which are abetted by the greedy and unsconscionable attitudes of certain importers and corrupt  government officials.   At this point, let me stress that our local producers have huge handicaps, which the full implementation of the safety net laws can never cure.  Masyadong tagilid ang laban ng ating mga local producers sapagkat walang government assistance gaya ng ginagawa ng Malaysia at Thailand para sa kanilang mga negosyante at magsasaka, mataas ang cost of doing business and farming sa atin, sobrang baba ng mga taripa para sa mga inaangkat at sobrang taas naman ng buwis para sa mga lokal, talamak ang smuggling na hindi nagbabayad ng buwis, at halos walang opisyales na nagmomonitor sa unfair trade practices ng ibang bansa.

Gayunpaman, matiyaga ang mga industry and agriculture affiliates ng FTA.  Kahit magastos, bumababad sila sa customs para magbantay ng mga smuggled goods, nagmomonitor sila ng mga importations at presyo ng mga commodities at pumupunta sa Tariff Commission, DTI at DA para itulak ang mga ito na gamitin ang mga batas sa safety nets.   Trabaho ito ng gobyerno, pero nagiging trabaho ng local producers.  Ito ang dahilan kung bakit nagsasampa sila ng mga kaso laban sa import surges sa semento, bakal, ceramics, gulay at iba pa.

But now a sad development has taken place.

Two weeks ago, our Supreme Court reversed the decision of the Court of Appeals and sustained the decision of a lower court restraining or stopping the executive branch in enforcing  the Safeguard Measures Act or RA 8800, the safety net law that allows farmers and industry to get temporary relief against the predatory trade practices of other nations through safeguard tariffs, on the ground that it is unconstitutional. Shocking, terrible, appalling – frankly, I am at a loss for words to describe this turn of events. For the truth is that globally, nations aggressively protect their domestic industry and agriculture against the unfair trade practices of other nations through the enforcement of similar safety net laws.  The WTO itself recognizes the inherent right of member countries for such laws.  Clearly, such a decision of the highest court can only happen in a country called the Philippines.  This decision is one for Ripley’s believe it or not.

Ten years ago, when we lost the WTO Treaty ratification battle in the Senate, we also went to the Supreme Court. We raised the threat of fuller liberalization wiping out local industry and agriculture and globalization under the WTO favoring the imports.   The Supreme Court’s answer —  our fears are baseless, for they assured us: ‘safety nets are readily available’  for our affected farmers and manufacturers.

But some seven years after the said decision, here comes the Supreme Court, the same court which declared that safety nets were available,  now telling us that we cannot  avail of the safety nets because there is a need to protect the rights of the importers and their ‘workers’.  How many workers do these importers have compared to local industries?

The safety nets law are the last remaining protection for our domestic industries and agriculture against unbridled liberalization. Striking them down should never be an option. Other countries do not think or even dare do this. In fact, they use the safeguards as frequently as possible. For example, when steel imports to the US were eating into the market of US steelmakers, Bush immediately imposed a safeguard of 30 per cent. When the US prawn industry complained of injury due to the entry of Vietnamese prawns, Bush gave a safeguard tariff of 105 per cent. What is clear from the US behavior is that they protect the interests of their manufacturers and farmers first and foremost, no ifs and buts.   Imposing safeguards is an automatic response to any import surge, while in the case of the Philippines, applying a safeguard measure for any hurting industry is literally like passing through the eye of the needle, made narrow and impenetrable by the anti-Filipino perspective of certain officials in all three branches of the government.

The cha-cha threat

This brings me to the other sad and disturbing development – the campaign to change the Constitution and purge it of the few remaining ‘nationalist provisions’, ostensibly to promote more investments, jobs and growth.

As we all know, Malacanang is using cha-cha to insure its political survival. But worse is that it is also promoting cha-cha  to fast-track the further de-nationalization of the economy, an agenda that is spelled out in chapter 25 or the last chapter of NEDA’s Medium-Term Philippine Development Plan for 2005-2010.  I will limit my comment on the economic aspect of this issue.

You know, I can not appreciate the logic of those proposing to remove the nationalist provisions in the Constitution in the belief that the country would reap more benefits through more of the same kind of liberalization it has been implementing in the last three decades. Have these proponents forgotten that the Philippine economy is one of the most open in Asia and in the world today?  We have eliminated thousands of imports from a list of restricted items.  We have reduced our tariffs way ahead of many ASEAN and Asian countries, so much so that our tariffs now are just a third of those of Thailand and much lower compared to China, India, Vietnam, South Africa and Brazil.   We have opened the economy to foreign investors by coming up with a Foreign Investments Act with a short negative list, meaning only a few areas of the economy remain restricted to foreign investors.  We have even de-nationalized the retail and distribution sector, which means Wal-Mart can now come in anytime.  We have, on the initiative of Senator Gloria Arroyo, broadened the meaning of condominium to mean buildings, facilities and land, which foreigners can lease for 50 years renewable by 25 years.  This is a total of 75 years, which are longer than the average life span of a Filipino in these crisis-ridden times.

And yes, we have been throwing one party after another, dangling fiscal and other incentives, for foreign investors to come in.  And yet, they do not come to us, except the speculators. They  have been going to China, India, Vietnam, Malaysia, Thailand and other countries which maintain very restrictive laws against foreign land ownership and  foreign control of public utilities, media and advertising, the  areas of the economy which our cha-cha proponents say should be pried open, as if foreign investors can not go into these economic activities via the 60-40 equity sharing, the BOT schemes, the service contract agreement and so on.

What I am really saying is that the cha-cha proponents, especially those from NEDA, are trying to fool the nation by saying that more liberalization is good.  But a one-sided and unilateral liberalization has never been good to us, as reflected in the state of local industry, agriculture, employment and poverty now gripping the lives of millions of our people.

The problem is not cha-cha.  The problem is we are not implementing what the Constitution mandates. Section 19, Article 2 of the charter provides: “the State shall develop a self-reliant and independent national economy effectively controlled by Filipinos”.  We have not complied with this because we have surrendered economic policy making to the IMF-World Bank group and we have rushed into economic liberalization in a pell-mell fashion.

We, at the Fair Alliance, are firmly against the Constitutional change because the primary intent of those behind the initiative is to take away the policy of economic nationalism enshrined in the Constitution. It is strange that our policymakers are so bent on purging the Constitution of its nationalist economic provisions, when in fact it was the absence of economic nationalism in economic governance that is at the roots of the present economic crisis. It is not the nationalist economic provisions that are blocking foreign investments to come in. The high cost of doing business and farming in the Philippines, the gaps in infrastructure, the lack of economic support structures, the corruption in the government and the lack of dynamism in the domestic economy, these  are the main reasons why investors have not come and are not coming to the Philippines.

The truth is that our economic planners and policy makers, with their dependence on foreign advisers and lenders, never bothered to implement the Constitutional mandate to develop a progressive and balanced economy effectively controlled by Filipinos. We never tried to develop a self-reliant and independent economy. We never observed economic nationalism, and yet it is economic nationalism which is now being blamed for our economic backwardness.  This is a typical example of neo-liberal doublespeak.

We, at the Fair Trade Alliance suspect that the real reason for economic cha-cha is to make the Constitution compatible with the demand of the developed countries to open up our service sector.   Tapos na ang industry sector liberalization, at tuluy-tuloy naman ang agricultural sector liberalization.  So services naman, in the name of the WTO’s General Agreement on Trade in Services.   What do they want opened up?  Everything, starting with the real estate market, public utility operation service, media and broadcast, and so on. Tatamaan din po ang education   service, health service, water distribution service, power distribution service, grains stabilization service and so on and so forth. GATS derogates the power of the State to regulate or intervene in the market for services and requires member-states to open up service industries to foreign players, who should be treated like the nationals. .

We need to expose the anti-Filipino thrust of cha-cha. We must educate the legislators and the larger public on the true causes of our economic misery and backwardness, which are both rooted in the unilateral and one-sided liberalization imposed by the IMF-World Bank group.   We must   push our trade negotiators to resist a one-sided GATS-liberalization.   Hindi dapat maulit sa services ang sakunang nangyari sa industriya at agrikultura.


Sa pagtatapos, sana ay hindi ito ang ating huling pagkikita.  Marami tayong dapat gawin.

Unang-una na, ibalik ang nawawala nating soberenidad sa kabuhayan.  Sa cha-cha, lalo itong mawawala.

Ikalawa, igiit natin at palawakin ang safety nets.  Walang silbi ang pamahalaan kung hindi nito kayang magbigay ng safety nets sa sarili niyang mamamayan at producers.  Dapat baliktarin ng Supreme Court ang mga nabanggit niyang desisyon na yan.

Ikatlo, dapat nang itakwil ang neo-liberal economic ideology na gabay ng pamahalaan nitong nakaraang tatlong dekada.  Puro kapahamakan lamang ang ating inabot.

Sobra na!  Tama na!  Palitan na!

Speech delivered during the Forum: “Nationalist Domestic Regulation under Intense Globalization held at Max’s Restaurant, Elliptical Center, Quezon City on August 29, 2005.

Wigberto E. Tañada, Lead Convenor

Isang maalab na pagbati sa ating lahat!

Idinaraos natin ang kumperensyang ito sa gitna ng mainit na krisis pampulitika na dinaranas ng bansa.   Subalit tulad ng alam nating lahat, ang krisis sa pulitika ay nakaugat sa krisis sa kabuhayan.   Kung tayo’y magpapalit man o hindi ng lider, hindi maiiwasan na kasabay harapin natin ang mga usapin sa ekonomiya, sa kalakalan at sa hanapbuhay, sapagkat ang mga ito ang susi sa pambansang kapanatagan at kaayusan. Anuman ang pananaw natin sa pulitika, mahalagang mahalaga na magkaisa tayo sa ugat ng krisis sa ekonomiya at sa solusyon sa krisis na ito.

A stagnating economy

Let me reiterate:  the political crisis hounding the nation today is deeply inter-linked with our economic crisis.  In fact, the economic crisis is fueling the political one, and to a great extent, vice versa.

And yet, the different economic technocrats, past and present, have been saying and are continuing to say that the government’s economic policy and direction are basically sound.   In fact, they claim that the economic reforms, such as the unpopular E-Vat are in peril due to the political noises emanating from society.

But are our economic policies indeed sound?

Our country has gone through EDSA uprisings, and yet we remain stuck with double-digit unemployment, double-digit underemployment, increasing fiscal deficit and ballooning sovereign debt.  Both the Social Weather Station and Pulse Asia report that over half of the nation’s families rate themselves as  poor, and that as much as 15 per cent of the total Filipino families, or roughly two million families,  are even experiencing hunger.  Meaning they know only  one meal  —  the altanghap or almusal-tanghalian-hapunan.

Our industries are in a dismal state.  They are either falling or shrinking, with many factories operating below capacity.   Except for banana and pineapple, our agriculture has been in a state of stagnation since 1980.  Yes, services are growing, but mainly in the retailing and malling industries, which cater to the families of OFWs.  A large part of the growing service sector is the informal sector composed of the numerous micro and solo enterprises found in the ever-growing slum colonies all over the country.  As the social scientists tell us, the informal sector is a coping mechanism for those who can not find jobs in our weak industrial and agricultural sectors, for those who are displaced from their jobs and for those who  are poorly educated to qualify for jobs overseas.

In Asia, we are the only country which has not moved out of the l997-98 Asian financial crisis.  Thailand, South Korea and Malaysia, which were badly hit, are all back on the high-growth radar, registering almost full employment.    We are also the only country in Asia which is experiencing de-industrialization, while all others have been experiencing robust industrial growth.   Even Vietnam is now poised to overtake us.  Overall, our economy has not moved forward but has instead deteriorated or stagnated.   For example, in the early l980s, both Thailand and the Philippines had a per capita GDP of about $1,000; today, Thailand has a per capita of $2,000, while the Philippines still has a per capita of $1,000.

A crisis in directions

So why are they continuing to say that our economic policy is basically sound?   Ganito na ang resulta, pero sinasabi pa rin nila maganda pa rin ang ating patakaran.  Di ba ang sukatan kung maayos o hindi ang patakaran ay makikita sa bunga at ibinubunga nito?

Two weeks ago, the Philippines made a report to the Trade and Policy Review Body of the World Trade Organization in Geneva. The Philippine Report appears harmless until one comes across a short note, the official claim that the liberalization program pursued by the government under various administration, past and  present,  has been generally positive for  the economy.  Thus, the recommendation for  the Philippines to go full steam ahead with the further liberalization of the economy as  outlined in the 2004-2010 Medium Term Philippine Development Plan or MTPDP.

Also two weeks ago, and in the midst of the current crisis, we heard proposals from some of our leaders to further open up the economy through constitutional change. Supposedly, there is a need to ‘modernize’ the Constitution by deleting the few remaining nationalist provisions of the charter, which they claim is the cause of our economic backwardness and why we have become Asia’s industrial laggard. They argue that deleting the nationalist provisions of the constitution will surely encourage more investments and therefore provide more jobs to our people. They want the old Parity Agreement with the United States, which gave the Americans the same rights as Filipino citizens to own lands, exploit natural resources, operate public utilities and own media, not only to be revived but to be extended to all foreigners.  And yet, they are silent on the fact that the new tiger economies in Asia – China, India, Thailand, Malaysia and Vietnam – all continue to have more protectionist laws than those of the Philippines.  In fact, all these countries have tariff rates, both in industry and agriculture, which are much higher than those of the Philippines. For example, the tariff rates of Thailand are three times those of the Philippines in industry and agriculture.  And yet, these countries are able to attract more foreign investments and capture more markets for their exports.

So  why are our economists still bent in pushing for the unilateral and all-out liberalization program when we know that it has not worked for us despite nearly four decades of implementation? Every time we ask our economists about poverty and trade liberalization, their stock answer is that we have not liberalized enough. And yet, as early as l997, our economy was already rated as one of the most open in the world by IMF. WorldBank, and the Bank of International Settlements of Switzerland.  We are one of the most open, with most of our tariff rates down to zero to five.  This is why very few are using the Form D of the AFTA, a form you use for intra-ASEAN trading to take advantage of the AFTA’s 0-5 tariff rates, since the Philippine tariff rates for the rest of the world are also 0-5 %.  This is why imports come in freely into our country, and which is further abetted by rampant smuggling.  And yet, here are the economists telling us we have not liberalized enough?  Ano ba sila bulag?  Sa Asya, Singapore lamang ang mas bukas sa atin, pero ang bansang ito ay matagal nang bukas sa kalakalan sapagkat isa itong entrepot economy.

At ngayon, pati ang ating Saligang Batas gusto pa nilang pakialaman.

The NDA challenge

This is why we are gathered here in this Conference. We want to propound alternative solutions or approaches to our growth and economic development.

Tinkering with the Constitution and purging it of its nationalist provisions will not solve the economic crisis. Nor will be the continued reliance on a lazy, haphazard, accelerated and one-sided liberalization program.  The problem precisely is that we have been a victim for far too long of the wrong economic policy prescriptions formulated and dished out by some of our economists and technocrats heavily influenced by the IMF-World Bank

For our economy to grow and for people to have jobs, we need to develop industries producing goods and services accepted by the markets, both at home and overseas.  We need to create jobs and wealth by developing industries and productive capacities.

But for these industries to thrive, we need an enabling environment. Easier way of registering business, without any kotong. Lower cost of doing business. Better infrastructures.  Predictable rules.  Peace and order.

We also need an equalizing environment. Why give the foreign exporters so many advantages, allowing their goods to come in at lower tariffs and giving fiscal incentives, while ours are subjected to all kinds of taxes?   Why treat the local investors unfairly, calling even some of them as rent-seekers, and then hailing foreign investors as heroes when they treat our country only as a good market to sell their products but not a good place to produce them?

We also need a caring environment.  We need to treat our local producers as part of the family.  We need to patronize each other’s products.  We need to share technology and skills with one another and help push up, not push down, our own.  For how can we compete against China Inc. or India Inc. or Thailand Inc. if we are badly divided and busy tearing up each other’s business?

The point is that we need to change, if not reverse, economic policy gears, if we have to create jobs and wealth for our people.  This is what this Conference is all about – to draw up an alternative development agenda, which the government, old or new, can carry out.

We will be proposing and submitting to you later, FTA’s draft of its National Development Agenda (NDA) to address the various trade and development issues confronting the nation. NEDA’s Medium-Term Development Plan is defective and inadequate as it is still based on the old neo-liberal framework of one-sided liberalization.

What are we  proposing?

So what should be the thrust of the NDA?

Let me highlight a few points.

At the outset, let me state that we are not starting from scratch.  Many of the reform measures we are pushing under the NDA, especially those dealing with trade issues, are products of past brainstorming sessions and workshops among the affiliates and friends of the FTA.  With industry, with labor, with farmers, with informal labor and with civil society. We have also raised these in our dialogues with some executive and legislative officials in or out of   Malacanang or Congress.

What are some of these reform measures?

First, we demand full transparency and consultation with industry and other stakeholders in all trade talks.  This is why we denounce the efforts of the government negotiators to hide from the public the negotiations on the ‘Early Harvest’ bilateral agreement with China and the ‘Economic Partnership Agreement’ bilateral agreement with Japan.

Second, we demand that every trade negotiation should be based on a clear development framework, which outlines and strategizes how the country can maximize gains and minimize pains from any agreement.  Unfortunately, the government does not have any outside of the general liberalization framework.  Thus, in the forthcoming Hong Kong Ministerial Conference this December, it is not clear what position the government will take in the following crucial areas:

  • The Non-Agricultural Market Access (NAMA), which seeks to cover fishery, footwear and other industrial goods not previously covered by the WTO discipline.  Since the market opening formula being pushed by other countries is uniform, the Philippines stands to lose given the earlier unilateral liberalization measures it had taken.  We demand a recognition crediting of our earlier liberalization, the non-application of their proposed formula on our NAMA goods and the non-inclusion of fishery and footwear in the agreement.
  • The General Agreement on Trade in Services (GATS), which seeks to cover all service industries, including those dealing with public services such as health, education and so on.  Without any public consultation on affected sectors, our government has recently made commitments to open information technology, construction, distribution, energy, environmental, and tourism services.  We also do not know what our negotiators are still planning to offer in the succeeding negotiations.  Hence, we demand full transparency and consultation on GATS and for public services to be out of the GATS negotiation.
  • The Agreement on Agriculture (AoA) is very contentious.  We support the government’s efforts to share information and  consult the different sectors on special products, special safeguards and the quantitative restriction on rice.  But we demand that the government takes a stronger stand on global inequality arising from subsidies provided by developed countries.

Third, we  demand a recalibration upward of industrial and agricultural tariffs of our locally-produced goods based on our maximum binding rates under the WTO and based on the specific development requirements of major industrial sub-sectors.   As mentioned, our overall average tariff, averaging 7.4 per cent, is very low compared with our ASEAN neighbors who have not only higher tariffs but also maintain various non-tariff barriers. And while recalibrating the tariffs upward, the government should  try to harmonize the conflicting interests of the different segments of certain industrial sectors as well as invest in the necessary physical and institutional infrastructures to enhance our overall competitiveness.

Fourth, we demand the creation of the Philippine Representative Trade Office to harmonize and centralize all global trade concerns. In the present set-up, there is no mechanism of accountability on trade negotiations. There is no single office that handles trade agreements related to WTO, ASEAN-AFTA, JPEPA, and other bilaterals. Different agencies handle different areas, which make our negotiations dispersed, variant, confused and non-transparent, resulting in a weak bargaining position.  If we want consistency, accountability and strategic coordination in our negotiations, then the Philippine Trade Office, which shall  be multi-sectoral in nature, must be set up to strengthen and consolidate our efforts in the global trade talks.

Fifth, we demand an honest-to-goodness campaign against smuggling by treating it as a heinous offense and making it a priority program of the President. Smuggling bleeds the country dry, fleecing it with foregone revenues amounting to as much as 175 billion pesos a year. If the Anti-Smuggling Bill that has now passed in Congress but pending in the Senate can become a law the additional revenues collected can be used   for the needed social services for our people.

On the fiscal crisis which is facing the nation and is likely to haunt our country in the coming years, the proposal of FTA is for the government to impose an across-the-board import surcharge instead of resorting to divisive and painful taxes which hurt the local producers and consumers the most.   According to the study of PIDS, every one per cent import surcharge raises at least P8 billion for the country.  So a 5-7 percent increase, good for three years, can more than equal the expected revenues from E-Vat, which is likely to reduce the tax-paying capacity of the local producers.  Together with the added revenues from a more aggressive anti-smuggling campaign and a recalibration of tariffs upward, the fiscal crisis could be over in a year or two.  Further, the proposed import surcharge shall equalize the playing field for our local producers, who have been subjected to the mindless unilateral liberalization program of the neo-liberals.

Sixth, it is high time that we go back to the basic but important principles or values of damayan, bayanihan, and tangkilikan to develop a strong agro-industrial and entrepreneurial base to sustain a pro-Filipino economy and development. We call this the tangkilikan economics and I urge all of you to support the tangkilikan economics in the light of the overwhelming failure of the neoliberal doctrine to lift the people out of poverty.

Finally, however, we need deep structural reforms for our economy.

As our numerous FTA documents have pointed out, our agro-industrial base is badly eroded.  Without a strong agro-industrial base, a nation’s competitiveness is impaired.  We need to sort out in this Conference how this can be rebuilt, deepened and broadened.  In the process, we shall be addressing issues of job creation, welfare enhancement and so on.

Of course, we also have to address institutional issues.  We need to put an end to the slow-motion implementation of land reform which has driven away investments in agriculture and in addressing the heavy burden of servicing our huge debt.  There should be decisiveness and political will in these areas.

In closing, FTA wishes to state that who ever sits in Malacañang ,it is important that our leader must muster the political will to institute bold economic reforms now that represent a break from the past, from the accelerated, one-sided and uncritical liberalization policy regime.  We need to break away from this policy regime if we are to usher in a new tomorrow for this long-suffering nation.

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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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