USTR report out

The USTR came out with its report on the National Trade Estimate On Foreign Trade Barriers, describing the probable areas in which US goods are being denied market access and the measures to be taken to address the same. In a summary of the report, the USTR said that it is:

· beginning a review of the implementation of our existing trade agreements, including the enforcement of the labor and environment provisions;
· initiating a process to prioritize trade barriers enumerated in the National Trade Estimate Report and to address the most significant;
· identifying new cases where market access for U.S. goods and services is in jeopardy because of disregard for the rule of law, costing our workers and businesses export opportunities and jobs;
· planning to prosecute those cases through multilateral and bilateral dispute resolution, so that American workers can trust that their trading system yields results; and
· working with Congress to improve trade enforcement.

For a copy of the report, click here. For alleged Philippine trade barriers, see pages 397-404 of the report.


IEL updates

(the updates are taken from various sources)

> The US blocked Mexico's request for establishment of panel in the case dubbed Tuna-Dolphin II. In a statement by the USTR, the US expressed disappointment that "Mexico has chosen to move forward with a request for panel establishment" and that the US "considers its dolphin-safe labeling regime central to the protection of the dolphin population in the Eastern Tropical Pacific ocean." Finally, the US declared that it is "confident that, if this dispute were to proceed to a panel, the U.S. dolphin safe labeling measures that Mexico has challenged would be found to be consistent with U.S. WTO obligations." For a copy of Mexico's request, click here. As per WTO rules, Mexico can make a second request for panel with the DSB, for which the US would not be allowed to block.

> Ron Kirk, former mayor of Dallas, has been sworn in by US Vice-President Joe Biden as the new USTR. To get an idea of the direction of US trade policy, you may want to read Kirk's comments in response to the written questions of Senators on the Finance Committee (click here). For the comments of VP Biden, click here.

> The U.S. Department of Commerce (DOC) yesterday announced last 24 March 2009 its affirmative final determination in the antidumping duty investigation on imports of circular welded carbon quality steel line pipe from China, with dumping rates of between 73.87% and 101.10% issued. The DOC will thereafter instruct U.S. Customs and Border Protection to collect a cash deposit or bond based on the final rates. The U.S. International Trade Commission (ITC) will issue its final injury determination on 7 May 2009, which would then serve as basis for the DOC's anti-dumping order.

> In a study by Chad Brown, associate professor in the Department of Economics and International Business School at Brandeis University, indicates that anti-dumping cases have increased during this economic downturn. The number of new antidumping measures applied in 2008 increased by 19 per cent compared to 2007. Developing countries dominated use of antidumping (73% of all new investigations) in 2008, and developing country exporters were the most frequent target (78% of all new investigations). For copy of the study, click here.

> The USTR released last 2 March 2009 the Trade Policy Agenda for 2009 and 2008 Annual Report of the President of the United States on the Trade Agreements Program. Both are submitted to the Congress pursuant to Section 163 of the Trade Act of 1974, as amended (19 U.S.C. 2213). Chapter II and Annex II of this document meet the requirements on the World Trade Organization in accordance with Sections 122 and 124 of the Uruguay Round Agreements Act. In addition, the report also includes an annex listing trade agreements entered into by the United States since 1984. For copy of the Agenda and Report, click here.


The Church and trade liberalization

. . . is the topic of my latest Trade Tripper column in this Friday-Saturday issue of BusinessWorld. Excerpts:

"Recently rereading the Compendium of the Social Doctrine of the Church and again appreciating how much the doctrines of the Catholic Church on trade liberalization could be read alongside the objectives of the WTO.

x x x

Interestingly, Paragraph No. 352 of the Compendium declares that: "The fundamental task of the State in economic matters is that of determining an appropriate juridical framework for regulating economic affairs, in order to safeguard ’the prerequisites of a free economy, which presumes a certain equality between the parties, such that one party would not be so powerful as to practically reduce the other to subservience.’"

To this, Pope Benedict XVI’s Encyclical Letter Deus Caritas Est expounds: "In today’s complex situation, not least because of the growth of a globalized economy, the Church’s social doctrine has become a set of fundamental guidelines offering approaches that are valid even beyond the confines of the Church: in the face of ongoing development these guidelines need to be addressed in the context of dialogue with all those seriously concerned for humanity and for the world in which we live. x x x The just ordering of society and the State is a central responsibility of politics. As Augustine once said, a State which is not governed according to justice would be just a bunch of thieves." (underscoring supplied)

As I wrote in last week’s column, more than individual freedoms, today’s complicated world actually demands of us to consider each of our responsibilities instead. To this, I add, that to have a consistency of our thoughts and actions with our values is necessary as well."

Legrain article

Philippe Legrain has an article in McKinsey: "Don't take globalization for granted." For the article, click here.

Obama's designated thinker

"A policy wonk who relishes the kind of esoteric arguments that everyday people might find boring and incomprehensible ... With a rumpled appearance and a tendency to ramble to the far corners of any debate." Nope, the article wasn't about me. Rather, it was about President Obama's "designated thinker" Larry Summers. To read the article, click here.


Imports fall

From BusinessWorld:

"Merchandise imports slid further in January, highlighted by a continued fall in shipments of key electronics components, in a sign that the global downturn was continuing to take its toll on trade.

January’s 34.5% decline to 3.27 billion, which was slightly worse than December’s 34%, was the lowest monthly total for imports since February 2005 and the fourth straight month that inbound shipments had fallen on an annual basis.

The Philippines had a trade deficit of $759 million for the month after a revised deficit of $7.62 billion in 2008."


Sugar high

That's how Robert Zoellick, former USTR and now World Bank head, describes stimulus packages, adding that "they would likely lead to another crash." (click here.)

Speaking at a forum in Belgium last Saturday, he also says that the global economy will shrink up to 2 percent. Citing an IMF report, "global economic recovery won't come until 2010, according to the IMF report. The world's economic powers will struggle to break even in the new year, while developing nations' economies will surge by up to 4.5 percent."

Here is a Time article on the AIG bailout.

Memory of things to come

. . . is the latest topic of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld. Excerpts:

"Hence, the value of institutions. And why the weakness of such in our society also signals the weakness of our society. Every institution, whether it be the family, schools, church, marriage, government, professions, all make certain demands on its members. If the institution is weak, the demands and the discipline imposed are weakened as well. Institutions serve to keep a fair amount of standards imposed. Obviously, blogging, for example, serves an important social and public function. I blog. But without the discipline and rigor that journalism imposes, the reliability and security necessary for blogging to fully reach its public service potential will not be attained. Michael Jordan can do all those miraculous shots because he mastered the basics of dribbling and shooting. Picasso became great after learning to perfect every style of painting. Bill Gates, before becoming the gazillionaire he is today, started out as an extremely focused computer programmer. If you can’t do the small things well, how can you expect to do the big things properly?

Another value of institutions is it serves to protect us from our frailties. One problem I have with our society is that the inadequacy of one serves to put a stop to the progress of the rest. An example is our allowing clearly malfunctioning road vehicles on the streets when any other society would have banned them. Another is our unwillingness to punish society’s malefactors. What we’re doing is that we allow the welfare of the public and the country to suffer for a mere few that could not keep up their end of the bargain. This is false compassion. In fact, this is not compassion – period. It’s actually selfishness. We as a people are just so afraid and concerned about our own weaknesses that, instead of striving to be better as other people would, we resort to condoning other’s weaknesses in the hope that we would get the same undeserved absolution rather than being strong and face the consequences. Ironically, it’s this fear that’s limiting our ability to take care of those truly unfortunate. And it’s this fear that’s destroying our people, our country, and the future of our children."


Protecting globalization and trade

(article written in 2007)

One of the more difficult points to get across with regard to discussions about trade is the entrenched belief among people regarding its supposed "inevitability". That no matter what is done, trade (and globalization) is impossible to stop, that it is as relentless in the way Thomas Friedman described it: like the rising sun, it may be good, it may be bad, but there's nothing anyone can do about it.

Thus, a lot of the policy discussions proceed from an implicit acceptance of this alleged “unstoppable” attribute, with the unfortunate consequence that people look at globalization and trade with helplessness or resentment. Advocates for trade have also fallen into apathy. This is unfortunate. For the reasons that we shall discuss below, rather than being complacent about or rejecting the idea of a more open Philippines, we should continuously and actively support it. For contrary to common belief, globalization and trade are not inevitable. Such are also not as widespread as most would like to believe.

Japan closed its doors from the rest of the world in the 19th century. Trade slowed in the years following World War I or the Depression. Even in this day and age, despite all advances in technology, China can stop the flow of information. North Korea, of course, is pretty much shut off from the rest of the world. It must be also noted that not all countries have chosen to liberalize (though those that didn’t are relatively poorer than those that did) and even those that did have not done so at uniform levels. The point here is that if governments so decide, they can put a stop to trade and globalization.

Economist Pankaj Ghemawat recently pointed out that "90 percent of all phone calls, Web traffic, and investment is local." This observation, however, is not new. Philippe Legrain wrote about this nearly a decade ago in his classic Open World. For a host of practical reasons, not the least of which is costs, people would prefer to do business with those nearby. For any number of reasons, not the least of which is the near similarity of circumstances, people would prefer to interact with their neighbors. Taking the Philippines as an example, setting aside the trade done with the US (of which the Philippine’s history with it plays a big part), a substantive amount of trade is done with ASEAN, Japan, China.

What emerges then is a picture of globalization and trade that is tentative, minimal, and – the most consequential attribute – fragile. Any number of circumstances – the election of shortsighted politicians, a new terrorist attack, strong lobbies and weak governments – could result in the reversal of policies that are designed to help those that need it most: the poor.

This is because, despite all the venom heaped against globalization and trade, study after study has shown that they have done well in lifting people out of poverty. Just to pick some at random: a World Bank study of 19 countries done in the early 1990’s showed that economic growth is boosted by liberalization; a recent study by two Stanford University economists found that “countries that have liberalised their trade regimes have experienced, on average, increases in their annual rates of growth on the order of 1.5 percentage points compared to pre-liberalisation times”; even more recently, a Financial Services Forum study concluded that trade “produced enormous aggregate benefits” for the global economy; and finally – and most famously – a study by Jeffrey Sachs (with Andrew Warner) showed that poor countries that liberalized grew six times faster than those that didn’t. Specifically for the Philippines, studies have shown that increased trade has been, on the whole, beneficial. Dr. Cielito Habito observed stronger industry growth and employment. Dr. Emmanuel De Dios pointed to the fact that liberalization efforts resulted in the creation of new export industries and also of price stability. Globalization and liberalization are obviously forces for good. As the book Naked Economics put it: “trade paves the way for poor countries to get richer. x x x Is there an example in modern history of a single country successfully developing without trading and integrating with the global economy? No, there is not. Which is why Tom Friedman has suggested that the antiglobalization coalition ought to be known as ‘The Coalition to Keep the World’s Poor People Poor.”

In these trying times, the temptation to revert to closed, regressive, and shortsighted policies is strong. This should be thoroughly resisted. As we’ve seen, the future of globalization and trade – obvious forces for good – is far from certain. There is a real need therefore for more people to stand up and energetically advocate for a more economically open Philippines. The progress of this country and the lives of its poor are at stake.

Trade notes

Recently, I came across a quote, from Tocqueville, and it goes like this:

"Trade is the natural enemy of all violent passions [because it] loves moderation, delights in compromise, and it is most anxious to avoid anger."

There it is, in brief, a very good reason to like the subject. Interestingly, a recent survey showed that more than half of Filipinos favor international trade. I often wonder, however, if that survey was accurate or, perhaps more to the truth, whether the respondents were being honest in their answers. It's a lot like questions regarding corruption, everybody professes to hate it but won't hesitate to do it if caught speeding in traffic or standing in line for a government permit.

The thing is, if Tocqueville's statement is true and my experience so far in the subject says it to be, then it explains a lot why we're having so much difficulty engaging in world trade in a systematic way. We probably culturally are averse to the demands of the system. Alex Magno, say what you will of him, once wrote an article describing Filipinos as having a not too high regard of institutions, with words to the effect that Filipinos get uncomfortable with the impersonality that strong institutions bring, that established processes impose, and would rather go about things in a personalistic manner.

If Magno is correct and he may very well be, then we really have a lot of problems to overcome. International trade, by its very nature, would require one to be systematic, cold, detached, patient, manipulative, strategic in thinking, and highly rational. It's pretty much like international politics, with goods and currencies as your chess pieces rather than tanks and guns. It also requires strong and effective institutional structures, where decision making is based on a formal and set process, where institutional memory (a must) is developed and kept, and where accountability is clearly identified. The last is quite important also as we can't continue having bureaucrats running around establishing trade policy based on their obsessive unquestioning trust on free trade (or the reverse) and when things go wrong keep mum about it, blame others, and without taking responsibility for the price that our citizens had to pay. It's wrong and encourages sloppy thinking.

But perhaps we like it chaotic. It's the theatricals that spur people here to action. One can actually observe it in our daily life, with people chafing at anything that resembles a set neutral objective process. Our inability to form proper lines for the buses and taxis is a likely indicator of that. Our lack of adherence to promotions based on merit is another. I remember a Chinese basketball coach having once said, after the Chinese national team beat our national team, that "your players are good but rely too much on emotion". I think it's an assessment that applies to a lot of the facets of our life. Problem is, an over reliance of emotion, whether in internal governance, academic purposes, business, or others is an indulgence we can't presently afford.

And hence that is why I like freer trade. To put it in more melodramatic terms, we shape up or we die. There is a time and place for everything and if one wants sentiment and human warmth, you have Christmas parties to do that in. Otherwise, we hunker down, play the game, and do whatever it is that has to be done dispassionately.

Of course, having put it in terms of shape up or die, then it becomes a matter of perspective. You're either an optimist and believe the Filipino can adapt or think that we're too set in our ways and whither away. I, like a lot of people who advocate for freer trade, believe we can do it. That is if we, voluntarily or not, put our minds to it.


Abortion, birth control, and consistency

As reported, "President Obama quietly begun the process of overturning regulations that protect doctors and hospitals from being forced to perform or refer abortions. The Chicago Tribune reports that President Obama is directing the Department of Health and Human Services (HHS) to begin overturning the conscience rule that protects medical providers who are pro-life."

Catholics here in the Philippines should take this development with awareness and vigilance.

The demographic profile in the US, of course, is different than here in the Philippines with majority of Filipinos being Catholic. Obviously as well, there is and has to be a separation of Church and State but it also has to be considered that your beliefs, values, and conscience don't get left behind when you walk out the door of your house. You, for example, don't set aside being Catholic when you practice your profession, such as being a lawyer, doctor, or politician. Beliefs and one's profession or work or politics aren't suits interchangeably worn as if merely giving a performance in a play.

Thankfully, even in the US, a
poll indicated that "a majority of Catholics take a pro-life position and that almost one-third of Catholic voters who say they are "pro-choice" on abortion actually oppose all or most abortions."

As majority of Filipinos are Catholics, they should remember that our beliefs require us to oppose abortion and oppose birth control. That is what our Church asks of us for which we should be supporting, period.

David Brooks' article
What Life Asks of Us is instructive in this regard: "In this way of living, to borrow an old phrase, we are not defined by what we ask of life. We are defined by what life asks of us. As we go through life, we travel through institutions - first family and school, then the institutions of a profession or a craft.

Each of these institutions comes with certain rules and obligations that tell us how to do what we're supposed to do. "

The weakness of our culture is that we allow too much empathy and excuses: too poor, still young and with opportunity to learn, etc., etc. It's so easy to make excuses and everybody could claim to be special but it should be considered that every right and every privilege comes with its own corresponding responsibilities and duties, some of which are uniform and general. Just do what's required of you, period.

Citizenship and being a part of a religion (such as Catholicism) are not rights but privileges. Either one does what one is asked or do the right thing by exercising the freedom to be not part of that community or institution or religion that one can't commit to anyway.

There's just too much flakiness right now it's stupid. What's worse is that it's harming the development of this country due to the fact that duties and responsibilities are not being done and people are not being held to account for what they committed themselves to do. Commitments, though made for a certain benefit or privilege, always necessarily come with a price. We as a people should start learning to pay that price and stop acting like teenagers forever bemoaning our entitlements and whatever it is the world owes us. We call ourselves Catholics, we be it. We call ourselves a republican, democratic State, we be it.

As far as the Philippines is concerned, not only do we need to embark on an era of self-responsibility, we need to start on an era of consistency as well.


In defense of free trade

There have been a slew of thoughtful, articulate defenses made on free trade recently. Here's some of them:

> British Prime Ministers speech to the US Congress was a rallying call against protectionism and looked to free trade as the way out of the present economic crisis (click here).

> William Watson, commenting in Foreign Policy, that "free traders will prevail" (click here).

> Daniel Ikenson of the Cato Institute discusses why protectionism will be short lived (click here).

> European Trade Commissioner Ashton also defended free trade, describing the WTO's role as the center of international trade governance. For copy of the speech, click here.

> Jagdish Bhagwati, who wrote In Defense of Globalization and Free Trade Today, says that the critics of free trade are mistaken (click here) and that free trade should be kept free (click here).

And it is Prof. Bhagwati who gives one of the best things to remember in the current debate relating to the economic crisis: “'Free but fair trade' becomes an exercise in insidious protectionism that few recognize as such." (from "Obama and Trade: An Alarm Sounds," Financial Times, 9 January 2009)

International economic law

I have always had a certain idea of what the legal profession is and such idea and passion has been magnified ever since I started focusing on international economic law.

Every lawyer worth the name sees the legal profession - and indubitably himself - in light of Thomas More's characterization in A Man for All Seasons, Al Pacino's idealistic lawyer in ... And Justice For All, or Jeremy Northam's brilliant and sedate barrister in The Winslow Boy. There has or always is that picture kept in every one of us of justifying our membership in the profession by doing what the profession was designed to do, which is - as succintly put in The Winslow Boy: that right be done. Most often that concept of right is identified with helping the poor, the downtrodden, the helpless. Thus, Northam's plea near the end of The Winslow Boy has always brought a special resonance through the years and serves as a call to most lawyers: "you shall not side with the great against the powerless."

Indeed. That is why it is almost heartbreaking to see the state of the legal practice in recent times. Although to say "in recent times" may be carrying it too far. For one could always say or think that the present state of the legal profession is but an extension of the practice as it has accumulated through the years. Not to discuss the practice in terms of the corruption that everybody talks about, publicly abhorred but oftentimes privately encouraged. One only need to look at the state of intellectual mastery and discipline exhibited by the lawyers of today.

Lawyering now seems to have been relegated to a matter of flashiness, of presentation, of marketability. Of blackberries and laptops, of designer suits and fashionable parties. Gone seemingly are the days when the law has been described "as a lonely passion", of the rumpled solitary individual buried beneath his files and his books. At least in the olden days, despite the corruption that even then has been complained of, eloquence was apparent. Today, even that has gone. I have had students who could talk your ears off in highly voluble and fashionably phrased conversation but who could not create, in speech or in writing, a decently coherent, in style and substance, piece of argumentation. These lawyers could talk to you of shoes by Manolo Blahnik, the latest trends in pop psychology, their takes on deconstruction by Derida but could not - in class or in practice - summon the appropriate craftsmanship necessary to defend their clients' interest in court that would be upheld if were left in the light of day.

One reason perhaps is that our society is so generously forgiving. Personal flaws, weaknesses, and failures are readily understood and accepted. While such may be good for the benefit of the individual concerned they do not redound to the good of society as a whole and the future of our country. The need to better oneself is not there, goaded undoubtedly by the lack of its demand.

Which leads me to think of this field that I utterly love and that is international economic law. I could go on and on, talking of its intellectual depth and breadth, its elegance and sophistication, combining as it does an understanding of private domestic law, public international law, economics, government, and diplomacy. At the least.

But this incredibly beautiful field is also demanding and, more to the point, unforgiving. If you do not work, study, think on the level required then your country suffers. Not merely an individual client or corporation but the country. Simple as that. Consequences that happen, are real, public, and substantial.

No friendly judge or clerk of court to cajole or befriend, no appeal to a "friendlier" court, no invocation to the opposing lawyer regarding the brotherhood of the profession, nobody to bribe and nobody to charm. It is a field that does not suffer fools and its cases are those that you wouldn't want to lose. One only has to talk to our coconut farmers, rice farmers, unemployed machinists, etc. to see why.

It is, however, for all these reasons that I love the subject. Its purity and sureness of purpose. It is lawyering as it was meant to be. Demanding as it is fulfilling.

Another and even greater reason is something I shall leave for further discussion at a different time but, for the moment, suffice to say that IEL is also a field of law that, done properly and given enough time, could contribute immensely to making this country what it should be: competitive, prosperous, and meritocratic.


On the Philippine trade representative office

(speech given in 2006)

Greetings - -

When I was invited to participate in this forum on the Philippine Trade Representative (or as I’d like to call it: the RPTR), I remembered that when the Uruguay Round of negotiations were contemplating the need for an international trade organization to oversee the various trade agreements being considered, a negotiation was specifically set aside to discuss the "functioning of the GATT system" and was given the acronym "FOGS". Out of this the WTO was created. Unfortunately, more than ten years later, what was deliberated under FOGS is still under a fog. It is with this in mind that we shall approach the discussion regarding the need for the office of the Philippine Trade Representative.


Everybody, I believe, is aware of the trouble that the Doha Round is in. On 27 July 2006, the talks will be formally suspended and - with the political calendars of the big country players - may take a while before the talks are resumed. I have every confidence and desire that the Doha Round will be eventually be successfully finished (like its predecessor, the Uruguay Round). There is no choice really for I believe that the biggest losers in the suspended talks are the poor. In any event, for now, there is a justifiable concern for the relevance and effectiveness of the WTO.

Then there is the interesting shift among trade experts and commentators from an absolute belief in trade to a more cautious and conditional stance. Today, free traders are now more apt to say that trade liberalization is good but is not enough. The accepted belief now, it seems, is that trade liberalisation is no substitute for either more domestic reform or foreign aid, and that admittedly some of the poorest countries need more time to open their markets than others.

The alternative, bilateralism or regionalism, has been put in doubt. I have been a doubter since 2003, right after Cancun’s collapse. A number of our business leaders, policymakers, and academics at that time supported the idea of bilateral trade deals. I didn’t. And I still don’t. However, now, it should be noted that even the government’s own research arm, the Philippine Institute for Development Studies, is wary as far as FTA’s are concerned. The 2006 PIDS study, entitled The Boom in FTAs: Let Prudence Reign and written by Dr. Josef Yap, President of the PIDS, goes to even express doubt as to the benefits that could be derived from FTAs. In fact, the World Bank itself expressed suspicion against FTAs, highlighting the risks that poor countries face when they enter into such.

So, right now, uncertainty in every sense of the word, a fog if you will, still hangs over the multilateral trading system. This uncertainty comes in three forms: first is with regard to the overall direction of the multilateral talks, second is with regard to the benefits, if any, that we stand to gain from further liberalization and, third, how such benefits can be attained. The answer, I believe, to those uncertainties, is not a further opening up of the economy or a closing of it but something a little more basic and that is the improvement of the structure by which trade issues and policies are processed and addressed.


The other thing that I happened to think of is the power of the concept of sovereignty. In a lecture I gave at Ateneo on 14 July 2006, I pointed out that the ruling of the Supreme Court laid bare in the case of Tanada vs. Angara is a concept of “sovereignty” that is seemingly in keeping with the concept as apparently understood by international law commentators, albeit with its ambiguities, that at the same time is seemingly different from the concept of an absolute, indivisible, inalienable sovereignty, a sovereignty that is supreme and uncontrollable that had been the hallmark of previous or traditional national understanding of sovereignty.

The implication of the ruling is in fact a continuation of the legal status quo, a continuation of the ambiguity the concept of sovereignty, which is both a bane and a boon. As I said in my lecture: “Taking the positive side first, the ambiguity allows the Philippines a wide policy space within which to interpret the economic provisions of the Constitution and at the same time within which to formulate trade policy. On the minus side, the ruling in Tanada does paint the Philippines in a legal corner. For having conceded to a mitigated power of sovereignty and, if the writings of Coquia are of influence (which they are), a narrower scope of sovereignty (to mere domestic jurisdiction - which it must be remembered is narrowly getting construed by international law), then the Philippines may have just given itself a weaker legal justification for an aggressive trade policy if it so decides in the future. On a wider view, the lack of a determined compass within which to guide ambiguities in our trade future would certainly have to be engaged sooner or later”.

Dealing with future challenges
In a briefing I gave in one of the workshops conducted by the House of Representatives, I gave the following recommendations in relation to meeting the three uncertainties I mentioned above:
> Improving the country’s governance, public transparency, business infrastructure (including credit access, stability of contracts, infrastructure development, transportation, energy, and a responsible workforce), other domestic reforms (such as lessening of corruption, better education, improvement of the peace and order situation, and judicial reliability);
> An effective competition policy;
> Review and amend some of our trade related legislation, particularly RA 8752 (the anti-dumping law), RA 8800 (the safeguards law), Section 304 of the TCCP, Sections 401/402 of the TCCP, and RA 9135 (the customs valuation law);
> Establishment of a formal consultative mechanism, by which private sector participation in the formulation of positions and the conduct of negotiations is institutionalized. Included in this suggestion is the conduct of periodic and regular hearings in Congress to determine the state of our trade activities.
> Conducting congressional review of trade agreements and included in this is the refinement of our rules to remove any ambiguity as to the need for our elected representatives to have a say in our entry into any trade agreement. This is especially with regard to the ongoing confusion regarding the classification of trade agreements into “treaties (which need Senate concurrence) and “executive agreements” (which do not). Thus, it is suggested that new rules be issued clarifying this matter so that any substantive trade agreement (and most trade agreements are substantive) will have to be submitted to the Senate for its concurrence or at least to a Congressional review. A process clearly needs to be established whereby trade agreements being entered into are reviewed and discussed publicly. If such review is not practically possible during the negotiations stage so as not to undermine the strategies being employed, then an oversight committee (perhaps by Congress) should be established, with powers to conduct public hearings on the propriety (or not) of such agreements on a regular or periodic basis.
> Caution on FTAs. As I mentioned above, I have had considerable doubts as to the benefits that FTAs can bring to the Philippines. However, concomitant to this is the bureaucratic difficulties that FTAs can impose on our government resources. Each and every FTA come with its own set of practical and at the same time highly technical problems. Most significant among these would be that pertaining to the rules of origin, the overlapping jurisdictions by the different dispute settlement systems in place between the multilateral trading system and the different FTAs, and the non-tariff subjects (such as customs procedures, sanitary and phytosanitary measures, technical barriers to trade, and - perhaps - the issue of smuggling).
> Establishment of formal written trade policy, by which the government shall lay down publicly, in writing, a detailed draft of what our trade policy actually is. The USTR, for instance, regularly publishes a white paper containing its trade policy objectives for all to comment - thereby allowing the USTR to refine its approach and make it more responsive to US national interest. Adopting a similar practice in the Philippines would not only better inform the public as to where the government intends to take us in terms of trade but would also give the most affected stakeholders (which is us, the private citizens) the opportunity to speak out on the wisdom of such policy.
> Finally, the creation of the RPTR. Trade negotiations of today are highly different from the trade negotiations of the past. Ten years ago, our prime trade activities circled around two or three countries. Now our partners are becoming more varied and, incidentally, Asian-centric. The inter-relatedness of the matters under trade discussions is greater. There is, obviously, a need for greater coordination between the different government agencies that deal in trade and affect trade. Also, most interestingly for me, considering that it is a well accepted fact that today’s multilateral trading system has definitely moved away from the previous negotiation’s based system to the present rules based system, there seems to be a dearth of lawyers working within government that focus on trade. The multidisciplinary approach to our trade activities needs to be recognized and developed.
Thus, the creation of the Office of the Philippine Trade Representative (RPTR) is recommended. This should not necessarily be a huge bureaucratic creation, at least at the outset. When the USTR was created in 1962, its legal counsel’s office was composed only of two men . Incidentally, when the Office of the US Trade Representative (USTR) was created, the reasoning of the US Congress that created it was that trade policy should not be entrusted to the State Department (which it is said looked out for the interests of foreigners or broad foreign policy goals) or the Commerce Department (which always looked out for narrow domestic political interests) but rather to an office that would take the objective position and have trade as its only mission.
For the RPTR, it is ideal that the same be peopled with professionals of diverse backgrounds: diplomacy, law, economics, finance, etc. It has to be the primary source of information on matters dealing with international trade and, at least with regard to issues arising principally from trade negotiations, be responsible directly to the President.
The office must be given the responsibility of organizing an inter-agency committee that will effect closer coordination among the different affected or involved agencies of government. There should also be a mechanism set up that will result in the constant and consistent consultation with the Philippine Congress. There should also be a process formulated that will provide Congress the avenue with which to exercise “oversight” functions over the office of the trade negotiator (i.e., annual briefings, etc.)
Finally, the office of the trade representative should be handed the responsibility - through a formalized process - of consulting directly and constantly with the members of the private sector.
In this regard, note must be taken of the USTR system of an established private sector advisory committee system. These advisory committees provide “information and advice with respect to U.S. negotiating objectives and bargaining positions before entering into trade agreements, on the operation of any trade agreement once entered into, and on other matters arising in connection with the development, implementation, and administration of U.S. trade policy”. Thus:

“The trade policy advisory committee system consists of 26 advisory committees, with a total membership of up approximately 700 advisors. Recommendations for candidates for committee membership are collected from a number of sources including Members of Congress, associations and organizations, publications, and other individuals who have demonstrated an interest or expertise in U.S. trade policy. Membership selection is based on qualifications, geography, and the needs of the specific committee. Members pay for their own travel and other related expenses, must obtain a security clearance.

Under the Trade Act of 2002, each advisory committee is required to prepare a report on proposed trade agreements for the Administration and Congress. These reports are made public on USTR’s website.”
Thus, if indeed we are looking at the creation of the office of the RPTR then the establishment of a private sector advisory committee system is strongly advised. This would resolve the suggestion above that a formal consultative mechanism be established. This is only fair considering that it is the very interests of the private sector that is at stake in international trade negotiations and policy determination. Furthermore, by having the private sector part of the process, we as much as possible develop a coherent voice in the negotiations, gain credibility for the position taken, acquired a substantial amount of intellectual resource for the development of the position, and - most importantly - avoid the seeming mistakes made in the Uruguay Round (and the concomitant finger pointing that followed it).
In conclusion - -
I am definitely not calling for us to be isolationists or protectionists. The point here is that, if one looks at the uncertainties prevailing in the multilateral trading system and at the ambiguity that the concept of sovereignty brings, the Philippines somehow seems to be faced with a valuable opportunity to re-calibrate the way it deals with the challenges of international trade.

The first step is perhaps to come to the realization that we need to remove ourselves from the protectionist/free trade simplistic debate and acknowledge the fact that trade is merely a means to an end. We also need to internalize the fact that trade is an utterly complex matter, that there is nothing absolutely certain about trade and no one size fits all formula that we could or should want to duplicate en toto. From this, we need to realize that the Philippines need a strong and deliberate foundation from which to move out and confidently engage our trading partners.

Thus, for the present, rather than formally and legally burdening ourselves with further international obligations or seeking to do so, it is suggested instead that that we prioritize reorganizing and making our house in order: improving governance, refining our laws and processes, and strengthening our institutions. On the last, the creation of the office of the Philippine Trade Representative is a big step in the right direction.

Thank you. I think I shall stop here.


PIL/IEL updates

(these updates were taken from various sources)

> Last week, while the rest of the world was transfixed with the warrant of arrest against Sudanese president Omar al-Bashir, an important decision was released by the ICC Pre-trial Chamber III to adjourn the confirmation of charges hearing in the case of The Prosecutor v. Jean-Pierre Bemba Gombo and to ask the Prosecutor to consider submitting an amended document containing the charges. Mr Jean-Pierre Bemba Gombo is charged with crimes against humanity and war crimes ‘jointly with Ange-Felix Patassé (former president of Central African Republic) through Mouvement de Libération du Congo troops’ under article 25(3)(a) of the Statute, ‘[wjithout excluding any other applicable mode of liability’. The Pre-Trial decision has been delivered on the basis of Article 61(7)(c)(ii) of the Rome Statute. For copy of the decision, click here.

> The London Court of International Arbitration (LCIA) issued its award two weeks ago in in a dispute filed by the U.S. against Canada under the 2006 Softwood Lumber Agreement (SLA). It is a state-to-state dispute adjudicated under the auspices of the LCIA, more commonly used for commercial arbitration. This is in part a result of the SLA’s genesis as a “mutually agreed solution” under Article 3.6 of the WTO DSU, attempting to settle six disputes in the WTO (and some more under NAFTA). Although the WTO context of the SLA is clear and the parties’ notification to the WTO Dispute Settlement Body (DSB) of the mutually agreed solution included the full text of the SLA, under conventional wisdom, “mutually agreed solutions” in the WTO cannot be enforced by the WTO’s own dispute settlement system. Hence the need, according to some commentators, for outside arbitration. For copy of the award, click here.

> The 23-24 March 2009 Appellate Body hearing for the dispute “United States - Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”) - Recourse to Article 21.5 of the DSU by the European Communities" will be open for public viewing at the WTO Headquarters in Geneva. Upon the request of the participants (the European Communities and the United States), the Division hearing the appeal decided to open the oral hearing to public observation by WTO Members and the general public via simultaneous closed-circuit broadcast to a separate viewing room. As there is a limited seating capacity, the places reserved for the public will be allocated on a first come, first served basis upon receipt of the completed application form. Completed forms should be sent by e-mail only to the following address: zeroingabhearing@wto.org. Applications will be accepted until 5 p.m., Geneva time, on 16 March 2009.


Of experts: real and false

. . . is the topic of my latest Trade Tripper column in this Friday-Saturday issue of BusinessWorld. Excerpts:

"I’m sure every occupation would have its own horror stories of "pretenders" conning an unwary public. But whether it be law, medicine, media, or economics, each self-respecting profession would see the need to protect the public by maintaining standards and excluding false practitioners. Thus, with international trade and customs, for example, the would-be seminar attendee or client is encouraged to look at the background of the seminar or service provider, ask the firm about their actual experience on trade cases, their academic credentials, and their reputation among those acknowledged to be knowledgeable in the field. The size of the team supposedly assigned for that service and the rank of the team members within the firm is also important. Frankly, except for one or two local law firms that had lawyers who actually previously worked on WTO matters, people are well advised to deal only with academic institutions or specialist NGOs, the PCCI, or the government (i.e., DTI or DA).

A fancy office or seminar venue, glossy brochures, or a buzzword-addicted firm representative talking about "strategic leadership" or of creepily having "fire in the belly," needless to say, adds nothing to the accuracy of the service. A local firm having multinational affiliation means little considering that, in the end, it will be the local staff that will do the work anyway. Having a foreign consultant isn’t very helpful either. It could actually be counterproductive, like when there’s a need to develop close (but professional) relationships with a government office. Cultural factors should always be considered. Ultimately, what every client does not want to do is to end up paying just to develop some novice’s education or experience. And, by the way, novices can be senior people too."


PIL/IEL updates

(these updates were taken from various sources)

> The big news, of course, is the warrant of arrest issued by the Pretrial Chamber of the International Criminal Court for Omar al Bashir, the incumbent president of Sudan, for crimes against humanity and war crimes but not for crime of genocide against the Fur, Masalit and Zaghawa ethinc groups. The warrant was issued pursuant to Article 58.1.a of the Rome Statute, which provides that ‘the Pre-Trial Chamber shall, on the application of the Prosecutor, issue a warrant of arrest of a person if, …, it is satisfied that: there are reasonable grounds to believe that the person has committed a crime within the jurisdiction of the Court’. For copy of the warrant, click
here. Whether the warrant will actually be carried out is another matter.

> Last 2 March 2009, renegade soldiers assassinated the president of
Guinea-Bissau in his palace, hours after a bomb blast killed his rival but the military said that no coup was in progress in the fragile West African nation.The military statement broadcast on state radio attributed President Joao Bernardo Vieira's death to an "isolated" group of unidentified soldiers whom the military said it was now hunting down. Luis Sanca, security adviser to Prime Minister Carlos Gomes Jr., confirmed the president had died but gave no details. The military said the armed forces would respect the constitutional order, which calls for parliament chief Raimundo Pereira to succeed the president in the event of his death. It also dismissed claims that the armed forces headquarters was implicated in Vieira's killing as a retaliation for the assassination late Sunday of armed forces chief of staff Gen. Batiste Tagme na Waie at his headquarters in Bissau.

> The US House of Representatives passed last 25 February 2005 by a vote of 245-178
H.R. 1105, the $410 billion Omnibus Appropriations Act of 2009, to fund much of the government for the remainder of fiscal year 2009. The omnibus appropriations bill makes several changes with respect to Cuba policy. Section 620 of the bill contains language that would amend the Trade Sanctions Reform Act to permit persons to travel to Cuba to market and sell agricultural and medical products under a general license, rather than pursuant to a specific license. Sections 621 and 622 of H.R. 1150 would defund enforcement of the 2005 Bush Administration changes to the rules governing "cash in advance" payments of agricultural sales and travel to visit family members in Cuba. The bill would also appropriate $83,676,000 to the Bureau of Industry and Security, of which of which $14,767,000 must be used for "inspections and other activities related to national security." The bill now goes to the Senate, where considerable debate is expected over the bill's high price and numerous earmarks.

> The European Union would consider appealing to the WTO if U.S. aid for the American auto industry made conditions unfair for European manufacturers, the EU's transport chief said.
"Europe is evaluating -- if that help should impinge on the competitiveness of our producers -- appealing to the WTO," European Transport Commissioner Antonio Tajani said. The Italian commissioner said that, with countries around the world providing incentives for their industries to protect national production and jobs, certain countries giving their own manufacturers an unfair advantage should be avoided. Meanwhile, China's commerce minister said last 27 February 2009 that the World Trade Organization should play a role in ensuring stimulus packages used to combat the economic crisis do not result in protectionism. Speaking during a trade mission to Britain, Chen Deming said there was insufficient coordination among stimulus packages around the world and that an international body could play a role in focusing the world's response. "Some countries are working away to protect their own national interests," he said, without referring to any country or region. "There's no coordination between stimulus packages. "I think perhaps the WTO can do some kind of evaluation or review of these stimulus packages and then as a result the WTO can share some recommendations with these economies."


Buying Filipino (again)

. . . is the topic of my latest Trade Tripper column in this Friday-Saturday issue of BusinessWorld. Excerpts:

"But the most glaring reason why we shouldn’t have a Buy Filipino measure in any government response to the economic situation is that we already have a Buy Filipino law for government procurement: the Flag Law, Commonwealth Act No. 138. That law has been around since 'pistaym,' enacted when Manuel Quezon was president (and affirmed recently by RA 9184 or the Government Procurement Act), and definitely brings into question the efficacy of Buy Filipino measures. All this goes to prove the point: Buy Filipino measures and even President Garcia’s Filipino First policy have never been helpful to the Philippines. They were ineffectual at best and at worst encouraged corruption, aiding only the loudest of cronies and lobbyists, helping the local 'elite' families maintain their exclusive hold on the country’s remaining wealth, and kept our poor remain poor.

Finally, while there’s no doubt that our manufacturing and export industries are hurting, the best thing to do nevertheless is to focus available government funds on helping the laid-off workers and the poor through unemployment insurance, allowances, lesser taxes for the lower income groups, expanded credit for SMEs, and further training and improved education. What should not be done is to provide financial aid to the companies themselves.

Philippine companies will just have to produce better products. Rather than forcing our citizens to patronize mediocrity, they should be allowed to voluntarily reward only those local companies that performed competitively. That, rather than being protectionists, is the better and patriotic version of 'Buy Filipino.'"


PIL/IEL updates

(these updates were taken from various sources)

> Last 2 February 2009, the International Criminal Tribunal for Rwanda Appeals Chamber rendered its judgment in the case (No. ICTR-01-74) against François Karera, former Prefect of Kigali-Rural. In a judgment handed down on 7 December 2007, the Trial Chamber had convicted Karera of one count of genocide and two counts of crimes against humanity (extermination and murder). He was acquitted of one count of complicity in genocide, which was charged as an alternative to the genocide count. The Trial Chamber sentenced Karera to life imprisonment. In its decision, the Appeals Chamber confirmed Karera's conviction and sentence, though it allowed his appeal in regard to several particular findings made by the Trial Chamber. For a copy of the judgment, click here.

> Last 26 February 2009, the International Criminal Tribunal for the former Yugoslavia Trial Chamber rendered its judgment in the case (No. IT-05-87) against Milan Milutinović, Nikola Šainović, Dragoljub Ojdanić, Nebojša Pavković, Vladimir Lazarević, and Sreten Lukić. The accused were senior Serbian officials who were charged with crimes against humanity (deportation, forcible transfer, murder, and persecution) and war crimes (murder) for acts allegedly committed in Kosovo during the first half of 1999. In its decision the Trial Chamber found Šainović, Pavković, and Lukić guilty of crimes against humanity and war crimes. They were each sentenced to twenty years imprisonment. Lazarević and Ojdanić were convicted of crime against humanity and sentenced to fifteen years each. Milutinović was acquitted. For copy of the third amended indictment, click here; for copy of the judgment, click here, here, here, and here.

> The European Union is preparing to impose temporary anti-dumping and anti-subsidy duties on US biodiesel following repeated complaints from the European Biodiesel Board, which maintains that US subsidies for its domestic biodiesel producers unfairly undercut European competitors in their home market. If the European Commission, the executive body of the EU, decides at its upcoming meeting on 3 March to impose the duties, the measures will take effect nine days later and will last six months, according to an EC document obtained by Dow Jones Newswire. At that point, the Commission will need to win the approval of EU national governments if it wishes to make the measures permanent. The complaint is focused on a US subsidy that offers domestic producers a tax credit of US$ 1 per gallon of biodiesel produced. The European Biodiesel Board, or the EBB, argues that this support has triggered a flood of under-priced US imports into the EU and caused European producers to lose market share.

> The Indian government has effectively licensed 200,000 local treatments as ‘public property’, making the local remedies free for everyone to use, but not to be branded for sale. This initiative follows the discovery by scientists in Delhi of the extent of “bio-prospecting” of natural remedies by foreign companies. The UK’s Guardian newspaper reports that an investigation of government records revealed that 5,000 patents had been issued, at a cost of at least US$ 150 million for “medical plants and traditional systems.” “More than 2,000 of these belong to the Indian systems of medicine,” claims Vinod Kumar Gupta, head of the Traditional Knowledge Digital Library. The discovery raised the question of why multinational companies are spending millions of dollars to patent treatments that they claimed were ineffective, Gupta said. “The problem with traditional medicines is that, yes it is known about within, say, sometimes a very small community,” legal expert Patricia Loughlan explained in an interview with Australia’s ABC News. “So big pharma can go into, say, India…and engage in what is sometimes called ‘bio-prospecting’ or ‘bio-piracy’,” she said. “They get this traditional knowledge and they patent it themselves and then start making monopoly profits from this patent for something that in effect they didn’t invent. They got the knowledge from someone who invented it say 500 years ago.” In Brussels alone there have been 285 patents for medicinal plants well known in Indian medical systems, principally ayurveda, unani and siddha, the investigation revealed.

> Gregory Shaffer of the University of Minnesota has posted Power, Governance and the WTO: A Comparative Institutional Approach. Abstract:

"The paper contends that, since all institutional processes are characterized by bias, institutional analysis-whether conducted from a normative or strategic perspective-should be comparative, the key question being how parties participate, or otherwise are represented, in an institutional context in comparison with its alternatives. As the paper shows, because of the open-ended nature of WTO rules, the WTO Appellate Body itself can engage in comparative institutional analysis and consider institutional alternatives in terms of their relative biases. The issue is not whether biases exist (they exist in all institutional contexts), but rather, what are the effects of an institutional process on participation in the weighing of competing concerns compared to its non-idealized institutional alternatives. The paper demonstrates the effects of institutional choice through its assessment of one of the WTO Appellate Body's most controversial decisions, one which has been referred to as a constitutional-like case for the WTO and global governance-the United States shrimp-turtle case. The case involved the interaction of domestic and international trade, environmental, and development concerns."