Of trade treaties and multinationals

There are still a lot of interesting issues cropping up regarding the nature and process of trade treaties. One big issue is the difference between treaties and executive agreements, and on this issue hangs the question on whether the legislative branch of government would have a say on whether the Philippines should indeed enter into a new international commitment. In one article of mine, I wrote:

"The Supreme Court also held in Commissioner of Customs vs. Eastern Sea Trading that treaties (which will require Senate concurrence for validity) generally refer to basic political issues, changes in national policy and permanent international arrangements; while executive agreements (which do not require such concurrence) refer to adjustments of detail carrying out well-established national policies, and temporary arrangements."

One reason why these issues keep getting raised is the ongoing confusion on how international law is to be considered in relation to Philippine law (specifically as a basis for a cause of action and not really on the question of effectivity thereof). This is further compounded by the fact that we seem to make no distinction between treaty law and customary international law, and for which we apply in both instances the doctrine of incorporation (rulings of the Supreme Court have indicated this, mostly using as basis Article II, Section 2, of the Constitution).

Other jurisdictions, particularly the US and the UK, have made such distinctions and with regard to treaty law, the transformation doctrine is usually employed and thus their need for an enabling law. The US, it must be noted, also makes a distinction between treaties and executive agreements, and further make distinctions between self-executing and those which are not self-executing. To appreciate the complexity of the US process, it has formulated four methods by which treaties are said to apply within the domestic jurisdiction. Add to this the "TPA" mechanism between the president and Congress. Japan's practice apparently is to constitutionally consider international law as part of the law of the land, with some instances indicating that international law could even be considered of having a status higher than that of its own constitution. The Philippines, the US, the EC, and a host of other countries do not follow this practice and have consistently held, at least as far as within their own particular jurisdictions are concerned, that constitutional provisions apply over and above that of international law.

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One interesting comment I got from a kind reader was with regard to the power of multinational corporations. This argument - which essentially says that multinational corporations have become more powerful than nation States, thus resulting in the diminishing of State sovereignty - has been raised a long time ago. And has been quickly debunked. I won't take up much space on this but the reasons why such is untrue lies in two words: "government" and "competition".

Note that multinational corporation's wealth, vast as it is, is still subject to territorial constraints in that whatever the business or asset or fund it would still have to land within the jurisdiction of a State. These assets don't just float around, after all, and thus would be subject to State regulation. [Interestingly, an article came out in today's issue of Business Mirror, discussing the issue of corporate nationality in the context of increasing globalization. See the 9 October 2006 issue, page C1, "The Rise of Corporate Nationality" - jemy] Boeing, GE, and Microsoft, no matter how big they are, still has to bow before anti-trust lawyers of the EC and the US. Big multinationals here in the Philippines, believe it or not, are powerless if the government suddenly decides to increase tariffs on an agri product or enters into a trade agreement involving industrial products. Those of you who are familiar with trade know what I'm talking about. Besides, ever wonder why large corporations are into environmental causes, labor development, etc? It's to protect their brand, their reputation. That gives you an indication how fragile corporate power is vis-a-vis that of governments. People (and their governments) can turn against them anytime. Witness what happened a few years back when a clothing/shoe company got charged with employing child labor in another country.

Besides, for those who are concerned with the power of multinationals, the solution is more freer trade and not less of it for the simple reason that they get to be subjected to competition. IBM vis-a-vis Microsoft, or GM vis-a-vis other auto companies are just a few examples. In a situation where freer trade is the norm, it is the consumers (with their power of choice), the people (with their empowerment), and their elected government that rules and not the vested interests of a few. That is not the case in our country, where protectionist policies essentially shield oligarchs and thus result to the detriment of consumers and the general Philippine public.

Contrary to the misconception of many, the Philippine economy is not that open. Liberalized trade does not mean only tariffs but rather a whole range of measures. The ironic thing about it all is that while our governments may mouth free trade slogans it doesn't necessarily mean they follow through. So essentially we still have a not so open economy but with the impression by many (because of the pronouncements) that we are. Hence, we suffer all the ill consequences of protectionist policies and trade liberalization gets the blame. What this country needs really is greater, consistent, and better managed trade liberalization.

Nobody is saying that multinationals are saints and if one is concerned with their power then one should be disconcerted about the possibility - should they so decide - of them tying up with the local oligarchy and exploiting our resources, with the rest of the population having little or no say in the matter. The solution, again, is more transparency and greater trade liberalization. Admittedly, markets could and can go wrong and, yet, supporters of freer trade know this and thus our ongoing and constant campaign for the enactment of competition policy laws in this country. In any event, for anybody who has worked in a corporation, one would know that size and power are all transitory, that such is still in the hands of the consumer and the nature of the competition. Microsoft, Nokia, Yahoo!, Samsung, and a host of others were just small operations until they hit it big. A lot of the giants at the time they were starting out are no longer around or not as big now as they were then (look at IBM, BT, or GM for example). Unfortunately, the benefits of competition and more equal opportunity for wealth access (which results in only a small number of people possessing a greater portion of the country's wealth) is sadly lacking in this country.

Nevertheless, for all the concern regarding multinationals, it must be remembered that they bring in much needed capital, income, and jobs to this country. They are some of the largest taxpayers here and do the country a great deal of good. They are also involved in a lot of governance projects, as well as in charitable works. The training, technology, and exposure that they are giving our citizenry is substantial and beneficial. Which is more than I can say for our oligarchic class.

For those who like numbers, there are a lot of formal published studies (which I noted elsewhere in this blog) that show that the wealth of corporations are not all that it's cracked up to be vis-a-vis the wealth and power of States and their governments.