There seems to be some sort of trade fatigue going around these days, with people refraining from thinking or discussing anything that has to do with international trade. One reason perhaps is that the world economy, as is normally happens, things being cyclical, is cooling down. Another is that the Doha Round of negotiations just went off the rails.
However, there are some who continue to discuss issues relating to international trade. Unfortunately, quite a few of them are those who know next to nothing on the subject.
Some insist on ranting against the WTO. Why? Some people persist on the wrong notion that, because of the WTO, Philippine tariff rates went down. However, it must be remembered that the WTO rules were framed in such a way that countries (including the Philippines) have a great deal of leeway in formulating their domestic rules so as to ensure that they get the most out of WTO membership. If our tariff rates are low (which they aren't that low really) it's because of our unilateral (meaning self-imposed) commitments made at ASEAN. [Note that we have just recently agreed to an expanded free trade system with ASEAN, a sort of EU type common-market system, by 2015, thus speeding up the process by 5 years. This is upon the initiative of Indonesia] Our bound rate commitments in the WTO are quite high (e.g., sugar is at 80%), with some products having no bound rate commitments at all (e.g., cement, ceramics). The WTO never asked us to engage in free trade, never asked us to unilaterally lower our tariffs to the levels that we have now, and the WTO rules have enough safety provisions by which a country can use to protect itself in cases where trade harms it enough. People should really just take the time to read the rule book.
Some people have complained that, because of the WTO, a lot of our vegetable farmers lose their livelihood due to the flooding of Chinese or Taiwanese garlic, onions, etc. Again, this is nonsense. Such vegetables are coming in not because it was our commitment in the WTO but because some of our unscrupulous businessmen are engaged in the smuggling of such vegetables. Obviously, we never committed to allow smuggling and the WTO never asked us to allow smuggling. If those vegetables are getting in, don't blame the WTO but blame the businessmen engaged in smuggling, and our government officials tasked with regulating/stopping smuggling.
Which leads to another point, that whatever we are bound to do as WTO Members it is because we committed ourselves voluntarily. It was not dictated upon us. To anyone who complains about the "green room", it must be remembered that in the end, all 149 Members would have to agree (by consensus) to whatever new commitment is there. As we have consistently wrote, the WTO is not dictatorial, if ever, it is too democratic (sometimes) for its own good.
Then there is the complaint that the WTO is dominated by the rich countries and is merely a vehicle for such rich countries to further exploit the poorer countries. Again, this argument belies the lack of understanding on the system and its nature. Firstly, you have the consensus rule, by which all 149 Members have to agree on a measure. The reason why Doha is sputtering is because the rich countries were stopped by an effective grouping of poorer countries from ramming their demands upon the latter. If the WTO were not around, such a thing could not have happened (more on that later). Secondly, the argument conveniently forgets the fact that with the WTO you have the most (without exaggeration) effective and efficient international dispute settlement system around. Here you have a system where a country as poor as Brazil can beat a powerhouse like the US. Finally, there is simply no alternative to the system. People have consistently used the analogy of international trade as a boxing match between a heavyweight (i.e., the US) and a lightweight (i.e., the Philippines), thus emphasizing the mismatch. The point is, even without the WTO the fight goes on. How anybody can actually think that without the WTO trade and business stops is beyond me. Business goes on, trade goes on. Thus, the analogy of the boxing match is that the fight goes on, with the difference being that if you have the WTO the fight would have a set of rules, with a system that allows you to litigate if somebody cheats, and a forum for countries to band together against the rich big ones.
Which leads to the next point of some people (thankfully they are only a few) that it would be better to do away with the WTO and instead have the Philippines go with bilateral trade deals. The lack of a sense of reality and common sense in the proposal is incredibly overwhelming. In any event, I have written about this before and will not duplicate the points in this entry. Let me just say that if these people want Philippine companies subjected to a world of multiple - and highly complicated - rules that can be readily exploited by multinational companies (which has the resources to master the rules, analyze them, and take advantage of them quickly) and by which our already overworked government agencies would have to grapple with (thus in all probability leading to an increase in smuggling and technical smuggling) then whose side are these people on?
Then you have some people complaining about rich country illegal subsidies, non-tariff barriers, etc. As if the WTO created those things. In reality, those things were in existence even before the WTO came into being. In fact, the WTO was created, in part, to actually provide a mechanism in order to get rid of the subsidies and the NTBs.
Finally, and most illogically, is the joy of some people when the Doha Round got waylaid. Doha was an attempt to correct certain imperfections in the rules and system (and, having said that, there is no such perfect system). There were, supposedly, some rules that were slanted against developing countries and in favor of developed countries. Doha was supposed to correct that slant. Now think: with Doha comatose the status quo remains and the status quo being: the continued presence of some rules which are slanted against developing countries in favor of developed countries. What is there to be happy about that? Granted, no deal would perhaps have been better than a bad deal. However, the fact that we have been deprived a good deal should make us mad and sad, not happy.
The WTO is not perfect. Nothing is. But it is the best thing we have. It gives trade a set of rules, a dispute system second to none, and a forum for groupings of countries with similar interests. Some people criticize the WTO for not guaranteeing an even or level playing field. The problem with that is what is a "level playing field"? There is no such thing explicitly defined. Nor can it be even if people try. Admittedly, some of the reasons for the confusion regarding the WTO are that those who advocate for it get carried away by their own rhetoric. What is to be remembered is this: the WTO never promised the undefined level playing field, never imposed free trade, or aspired for free markets. Its goals are more humble and real: that "the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development". I suggest people take at least few minutes to read the Marrakesh Agreement. Why anybody would oppose those goals is beyond me.
Contrary to the thoughts of some, trade negotiators and trade experts are not naive people. They know that competition is harsh, they know that our trading partners are looking out for themselves first and foremost, and they know that markets fail. That is why we need the rules precisely because the competition can get really nasty. As for markets failing, the mere fact that competition policy is being discussed urgently at the WTO way way back is an acknowledgement that markets do fail and is sometimes in need of correction.
The naivety actually lies with the anti-WTO lot. Thus, you have some people criticize the WTO for not completely reigning in richer, more powerful countries and having everybody being completely equal. Right. That only happens in smurf land. Or, as Homer Simpson would say, in "Happy Land in a gumdrop house on Lollipop Lane". Even the UN makes a distinction, officially, between the powerful countries and the less powerful. That's why there is the Security Council permanent members. At least you don't have that distinction in the WTO. In the WTO, unlike in the UN, every member has veto power.
The problem with the anti-WTO activists is that they act as if they're infallible. Which they're far from being. Nobody is. They have to realize the incredible struggle that our trade negotiators and policy makers do to keep up, just keep up, with the bewildering details that international trade demands. If they really believe in what they preach, all fine and good, but they also have to accept that a clear majority of Filipinos are believers in trade and globalization. Who are they to say that they alone can be right and that the majority of Filipinos dumb enough or misled enough to be in the wrong? Besides, if they think that the economic direction of the country is wrong then let them run for office. Let them get accountability for their opinions and thoughts. The problem is, they won't get elected because of their hysterical approach to policy making, which requires a cooler mind and a restrained disciplined intellect. Filipinos are smart enough to recognize that. If they say they don't have the resources to win an election or at least have their voice heard, then welcome to the real world because the Philippines, in the international community, is faced with the same problems vis-a-vis the rich boys like the US and the EU.
One thing we have to remember about international trade is that it only ensures smoother transfer of goods from one country to another. It does not force people to buy imported goods. It does not force Filipinos to drink Coke (instead of Sarsi), wear Nike (instead of ... Boston), eat McDonald's (instead of Tonang's palabok), watch My Super Ex-Girlfriend (instead of I Wanna Be Happy), or use a Nokia cellphone (instead of using the ... public payphone). If our countrymen prefer such goods because either they're better, cheaper, or just because, who are these anti-trade activists to tell them otherwise? The solution is not to deprive people of choice but to make better Philippine goods. If the option is really there to get a good Philippine product, most Filipinos would certainly buy Filipino. But if that option is not there then people may not want to opt for some Philippine products not because they're not nationalistic but because they don't have the luxury of gambling their income on more expensive but uncertain products. Thus, it would be better if the anti-trade activists practice what they preach: stop using laptops, don't drive cars, don't eat foreign foods, don't read foreign books (might as well be consistent), don't wear foreign clothes and shoes. They shouldn't watch foreign movies. They should buy only local goods even if they're more expensive and not as good (thus, on the latter, reward the inefficient over the efficient). These anti-trade activists should do it because they're probably the ones with the income to spare, as most of the rest of our countrymen who are under poverty levels need all the cheap but good products they can buy with their meagre incomes.
I have read anti-WTO literature, specially those being relied on a lot by local anti-WTO activists. However, when you analyze what is being said in those literature (particularly the reasonable ones that bat for lessening of subsidies, more market access for poor countries, better balance for intellectual property particularly for medicines) they are not really against the WTO. And they are not really against trade. What it comes down to is that those literature, taking their natural and logical conclusion, are actually asking for an improved WTO and international trade system. That actually is what Doha is supposed to be about. Ironic. What is also ironic is that anti-WTO activists have a habit of resorting to trade liberalization and globalization to have access to all these imported or foreign anti-WTO literature. Then use their imported laptops or pc's to broadcast their thoughts to the rest of the world. Ironic. And funny. Funny because the anti-trade group seems so sure of themselves, their information, and their sources. However, it must be considered that for every Chomsky, Stiglitz, or Bello that the anti-trade people can quote, the rest of the world has Legrain, Bhagwati, or Habito (or Alburo). For every Confessions of an Economic Hitman (which I've read), there is also Why Globalization Works (or A World Without Walls). Obviously,therefore, there is a lot that can be learned from each side, particularly for so complicated a topic. I know that trade advocates take the criticisms of the system to heart and thus you would presently find a lot of serious analysis on what actual form international trade should take and if such can be or should be country specific. Thus, for the anti-trade advocates, a little open-mindedness and intellectual humility is perhaps needed to make the discussions on the subject more constructive.
In any event, if the anti-trade activists really believe that a protectionist approach (I refuse to call an approach that says the Filipino can't succeed in the global market place "nationalistic") is the best way forward, the WTO rules provide enough reasonable leeway for us to get away with it. However, if they want to completely close our borders and get out of the WTO then they should go bat for the idea. Remember, however, that if we do close our borders then do not think that the other countries will be happy to open their markets to us. If these anti-trade activists really believe that a lessening of our exports, higher prices for domestic consumers, lesser access to production materials are all better then go for it and work to have the Philippines get out of the WTO. We'd probably be the only country on earth to want to do so but who cares? China is a member. Iraq wants to be a member, so does Russia, Vietnam, Iran, Afghanistan, and Lebanon. Mahathir's Malaysia is a Member. Hugo Chavez's Venezuela is an original WTO Member. Chavez - the hero of the anti-trade lot - may mouth anti-trade slogans but he sure does not reject the benefits of oil trade and other such trade to keep his people happy and him continuing in power. In fact, Chavez, just today, unveiled plans to trade/export oil to China. But then who cares? Our local anti-WTO activists, so sure are they that international trade doesn't work (perhaps relying on analysis from some foreign anti-trade economists) have come across something that the rest of the world doesn't know. I am sure they have already provided for the possibility of us, by our lonesome, making all the televisions, cars, shoes, computers and laptops, milk, rice, meats (cannned or fresh), all the cement we need, all the steel we need, all the fishing equipment we need. I am sure they already have provided for all the technnology we'd ever need to manufacture all the stuff mentioned and more. They have come to the conclusion that all the medicine we need we can make by ourselves from scratch - from scratch as we can't use patented products that either have to be imported or need a foreign trade component (incidentally, the WTO was in the process of loosening up patent rules). I'm sure the anti-WTO activists have already assumed into their calculations the huge amount of cheap labor that would be available due to the returning OFW's, etc. who would now have to return home either because of retaliation by our former trading partners or simply because we don't have the WTO rules on services to protect them anymore. Finally, I'm sure they've also found a way to pay the equivalent income to those people who'd lose their jobs if the multinational companies up and leave and decide to take their business to "nationalistic" countries like Vietnam, Malaysia, Indonesia, or China.
Enough, therefore, of the name calling. Of calling our hardworking and patriotic trade negotiators or policy makers as traitors. If they are traitors, then what do you call domestic industry CEO's who fail to upgrade their facilities, fail to improve production methods, fail to give proper training to their staff, fail to foresee market trends, fail to protect the employment of the people working for them, and - after all is said and done - buy themselves mercedes benz's or family vacations to Hong Kong? The point is, international trade is an inherently difficult and complicated subject, for which name calling, hysterics, and sloppy thinking will be absolutely of no help.
What is needed here is constructive dialogue and - more importantly - disciplined informed thinking between the various sectors of our society. Thus, read the anti-WTO lit if one must but such should be read more carefully. Then, don't be one-sided or narrow minded, read WTO lit as well. Also important, read the WTO texts in the original. Take the effort. We're all in this together, rise or fall: government, business, academe, religious, etc. The headlines may scream "impeachment" and politics as usual but the rest of the world goes on. Trade goes on [in fact, at present, global trade growth is going much faster than global GDP; this information should be read alongside the fact that the Philippines still has a trade deficit, with only the electronics sector exports doing particularly well]. So should we keep on going - all of us together - as well for our country.
