WTO case: Philippine taxes on distilled spirits

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

As we mentioned, after the country’s historic win at the WTO in the Thai Cigarettes case, the Philippines is again before a WTO panel tangling this time with the European Commission. The EC’s complaint points to GATT Article III, the "national treatment" provision, and alleges that the Philippine tax structure (under RA 9334) on distilled spirits discriminates against imported products. The United States later filed its own separate complaint, with Australia, China, India, Mexico, Thailand, and Chinese Taipei coming in as third-party complainants.

The case is formally lodged as Philippines -- Taxes on Distilled Spirits (docketed as DS396; with DS403 being the US complaint). Interestingly enough, when consultations for this case began in October 2009, the EC and Uruguay had just announced settlement of their own WTO case. The EC’s claim centers on the allegation that Uruguay imposed a discriminatory excise tax on imported Scotch whisky. Uruguay agreed to amend its laws, thus averting WTO litigation.

National treatment is one of two foundational principles that run through the WTO Agreements (the other being the "most favored nation" principle, more popularly known as "mfn"). Both, though appearing to be quite simple, are rather complex in application and have given rise to a large number of problems in interpretation and implementation. Figuring highly in these discussions is the term "like products," a highly complex term as well and actually the focal point of the deliberations in the three previous WTO alcoholic beverage cases involving respondents Japan, Korea, and Chile, respectively. All three cases had the EU and US as complainants and all three resulted in wins for them.

The problem with the national treatment principle is that its enforcement leaves a lot of room for varying interpretations and approaches. On the whole, such ambiguity seems to have favored those asking for implementation of the same. WTO panels (as well as free trade agreements) have applied standards such as "intent," "likeness" (or "regulatory purpose"), "necessity," and "discriminatory treatment." This fact seems to be very much on the mind of the EC when it filed its first submission last November:

"105. In the light of the above, it is useful to recall once again that the vast majority of imported products are subject to the higher tax rates whereas all (or most of) local products enjoy the lower tax rate. It has just to be pointed out that the fact that few imported products (e.g. ‘Bacardi’) may also enjoy the lower tax rate does not exclude that the measures violate Article III:2. As the Panel in Argentina -- Bovine Hides made it clear: ‘Article III:2, first sentence, is applicable to each individual import transaction.’ It is thus sufficient to establish a breach of that provision that some (or even one) imported product is taxed in excess of a like domestic product."

From the above, one can see that the EC is leaving no room for chance, essentially making (as far as I can make it out) a play for the "likeness" and "discriminatory treatment" standards. As a commentator puts it, the EC claim effectively lays "the different options for non-discrimination standards in front of the panel."

The US seems to be taking the same approach as well, staking a claim on "intent," "likeness," and "discriminatory treatment." The US (judging from its Nov. 17, 2010, opening statement) is obviously unimpressed with the Philippine submission:

"7. While the facts and the law in this dispute are quite straightforward, the Philippines has attempted, through its lengthy first submission, to add confusion and complexity. The United States will not describe in detail each of the Philippines’ attempts to complicate the facts or law before the Panel. Instead, we will respond to several of the main arguments raised by the Philippines."

"42. In its submission, the Philippines takes issue with some aspects of the U.S. evidence, but it cannot wipe away the picture they show: Philippine spirits are made and marketed specifically to compete directly with imported products. The United States has more than met the complainant’s burden of making a prima facie case on the question of ‘like product’."

"43. Regarding the second element of a case under the first sentence of Article III:2, the Philippines offered no rebuttal to the information that the United States provided confirming that imported products are taxed in excess of domestic products. As is plain from the Philippines’ law and regulations, the tax applied to brands not made from local raw materials -- namely, imports -- is from about 10 to 40 times greater per proof liter than the rate applied to domestic brands."

Clearly, it would’ve been nice to discuss how the Philippines argued back on the foregoing. But, unlike the easily available EC and US documents (Australia’s as well; their governments’ transparency is such a nice thing indeed), it’s just quite difficult to find the Philippine submissions on the Internet. If ever it was posted at all, that is.


Do the right thing: oppose RH bill

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

The disappointing (yet unsurprising) thing about the twisting of the Pope’s words on condoms by the pro-RH advocates and some newspapers (probably the same thing; but this does not include BusinessWorld) is how incredibly sloppy it was done and how easy it was for them to resort to outright lying. The Pope never said anything even remotely near to what some of the local headlines hysterically screamed -- he never said condoms are permitted even to prevent AIDS, he never said condoms are the lesser evil, and he never said anything that effected even a slight shift on Church stand on contraception.

The Pope also did not impliedly agree to the "if one can’t be good then be safe" argument in relation to the "male prostitute" example. What he merely meant was: by using the condom, there’s a "basis" for thinking that the male prostitute is beginning to think of others rather than only of himself. It’s like teenagers settling for oral sex to avoid getting pregnant or bank robbers bringing guns to scare people but without bullets to avoid the possibility of killing others. Both indicate that the subject participants are starting to think of others rather than selfishly about themselves. But is the Church recommending people engage in illicit oral sex or to rob banks with guns without bullets? No. It’s saying, for the love of God and each other, stop all such activities. Period. The Pope, reverting to his teaching role, simply illustrated the possibility of a glimmer of hope that from the dregs of sin there could be "a first step in a movement toward a different way, a more human way."

So, fine, it’s clear that the Pope did not change Church stand on condoms and contraception. But what does this have to do with the economy and trade, for which the Trade Tripper is supposed to be focused on? The simple answer: A LOT.

Contraceptives (according to international research) ruin female health, particularly causing dangers such as cancer (specifically breast cancer), stroke, and heart disease. Condoms also give a false sense of security (condoms fail at least 5% of the time), encouraging the illusion of "safe sex," thus increasing the possibility of AIDS or unwanted pregnancies (proven by international studies as well). Aside from, therefore, ruining the social fabric, contraceptives pose an imminent drain on our workforce and divert scarce government resources to attend to the damages that contraception brings.

Also, we know that our primary competitive advantage is our services sector, with the OFWs propping up our economy. Other countries, such as Japan and several European countries (and perhaps Singapore too), are having economic and social problems due to their ageing populations (i.e., not having enough healthy babies being born). Other countries, like China, are concerned about their scarcity of women. For the Philippines, having a healthy, youthful, dynamic workforce, to want to shoot itself on the foot and be like our competitor countries is idiotic.

Furthermore, we know that the best economic policy is good education. We also know that our government finances are limited. So why are we spending almost a billion pesos of our budget (as the RH bill will require) to distribute and promote contraception to our people? This is hundreds of millions that could have been better spent elsewhere, particularly on medicines, labor training, infrastructure, or -- most importantly -- education. And yet, while our government is willing to spend millions on contraception, it significantly reduced our education budget.

Finally, the RH bill goes against our Constitution. Note that there’s no law banning the private purchase of contraceptives. The Constitution does, however, prohibit discriminatory treatment against any single religion. The RH Bill discriminates against Catholics by forcing them to support (by mandatory promotion of contraceptives or through the duty to pay taxes) something they believe is immoral. The RH bill also goes against those constitutional provisions upholding the family as a cherished institution, as well as the rights of women and children.

Never mind the surveys. So what if 69% allegedly support contraception? Our government has strangely similar approval numbers considering that, in a span of only five months, it saw the worst killing of tourists in history, embarrassment in Vietnam by louts, wasted P5 million on a stupendously stupid tourism campaign, an unresolved fuel leak, peace negotiators rude to members of Congress, worsening traffic, increased terrorist warnings, Supreme Court rejection of the "Truth Commission," all topped off by this government’s obvious lack of direction.

So ignore the surveys. There’s a difference between what’s popular (or mentally incapacitated) and what’s right. Set aside religious doctrines, on definite and vital health, social, educational, labor, economic, and constitutional grounds alone, to oppose the RH bill is clearly the right thing to do.

For those reasons, Trade Tripper urges everybody to write or talk to their congressman and make them do the right thing: to vote against the RH bill.


Why we must fight the RH bill our way

Condom confused

The disappointing thing surrounding the present debate on the RH bill (and there are actually many) is how easy it is for the pro-RH side, the so-called "free thinkers", to resort to lies, misleading statements, or even intellectual laziness in expressing their positions.

Case in point is the Pope's comments on condoms. Nowhere in his interview with Peter Seewald did he indicate a shift in Church position, impliedly agree to the lesser evil argument, impliedly agree to the "if you can't be good then be safe" position, or that condoms are permissible in relation to AIDS. And yet, the pro-RH advocates make it out as if there was a major shift in Church thinking. Or worse, they use it to declare that the Church is being inconsistent or confused. All this without even bothering to get the explanations of those really well-versed on the subject or, worse, without referring to the Pope's actual words (even going to the extent of inventing words he did not even say).

The Church is not inconsistent or confused; it is the pro-RH advocates who are. To anybody who actually read Light of the World (I did), far from the Pope showing inconsistency or confusion, he actually gave a vision full of hope and optimism, as well as a clear eyed view and understanding of the human condition. This is a Pope (and a Church) that understands. And this should encourage us, Christians, to have a better understanding as well.

This article is not about the Pope's comments (better explained in other articles by far better writers than I am) but rather as to how the nature of the debate on the RH bill, I believe, is to be conducted. None of what I am about to say is original. They have been culled from teachings stretching all the way from the most modern of saints to the early Church fathers to our lord Jesus Christ. Any error is mine and should not be attributed to the Church and its truthful doctrines. The important thing that I just hope to seek to emphasize is that for those (particularly Catholics) who are against the RH bill and are for a better, humane way of life is that they should always remember the correctness of our position ... and what, more importantly, that actually means.

Better right than popular

Listen to the pro-RH group and it is easy to spot the lack of logic, the inconsistencies, the shallowness of their arguments. Once in a while, they do come up with an argument that seems, on the surface, valid. But which, on closer examination, actually supports the argument against the RH bill and contraception even more.

On the other hand, the Catholic position in this regard is substantive, unified, logical, and cohesive. It is also incredibly rational: from the perspective of health, female and children's rights, labor, trade, the economy, social sciences, and the constitution, the position of the Church is solid. And this is without even reference to the religious doctrinal arguments at its disposal. No survey or popularity rating can or should distract us from this fact.

The arguments against the RH bill have been written extensively in other articles and by other writers and we need not repeat them here. What I am merely trying to stress at this point is the strength of our position, the truth that lies at the core of Church teachings.

And the pro-RH advocates (at least those smart enough to study on the matter) know this even though they won't admit it. That is why they repeatedly exhort and congratulate themselves on their supposed efficient use of public relations and marketing to advance their agenda, and why they mock the Church for it's supposed ineptness in the PR game. But even that betrays their fundamental lack of understanding, either of the consequences of what they are saying or of the Church and it's teachings.

By their heavy reliance on PR, they do not realize that they themselves are exhibiting acts of faith, albeit not faith in a god or higher being but faith in a shallower sense, faith in a very human, very transitory, practice or creation - public relations. And by their faith in the power of PR, they essentially destroy their own arguments in which they allegedly celebrate humanity and free will. By inadvertently framing the debate on who can make a more judicious, creative use of PR, they essentially view people as controlled and acting under mere compulsions and stimuli - that with a few choice words or pictures properly timed, any person can be made to decide in a certain way.

This is precisely what the Church is arguing against, the notion that people are slaves to compulsions and desires. Instead, it is the Church that believes that people have the free will to make a choice and that they have the ability to choose the right choice. And that is why, although it must be said that public relations, advertising, marketing, etc., are all honorable occupations, all of such are merely to be viewed as instruments for the truth. And when the instrument is overriding the very purpose for which it was created, then an imbalance of priorities is there, indicating that something wrong has gone in the process. The Church is staking its position on the correctness and truth of its teachings. Not on how cool, sexy, creative it is but on it simply being the truth, which by itself is powerful enough as it is. Perhaps the case would be different if there are competing truths on the matter, whether it be the better detergent, toothpaste, or politician. Then advertising matters as it does, spin would have the relevance it might have. But this is not the case in this regard. There is one truth and it is the Church that holds it.

Truth is as truth does

Of course, there will be the howls of protest about that last sentence. But indeed Catholics should not be ashamed of that fact. While other religions, denominations, etc., are free to believe what they believe and we respect them for that, we Catholics should not shirk from proclaiming that our faith possesses the complete and actual truth. Theologians can give a better explanation than I could but let me just put it this way: if we didn't have possession of that complete and actual truth, then why believe in the Catholic faith? We believe it, we fight for it, precisely because we believe our faith is true. Other faiths may possess portions of that truth (hence a good reason for us to respect and exercise tolerance for that) but our Church teaches us that the Catholic faith solely contains that perfect truth.

Having said that, then it all becomes the more obvious how disappointing it is that fellow Catholics should be acting the way they did. While clearly it is understandable for people in certain situations to lose their temper or act in a manner less than becoming, we should perhaps reflect again on what it means to be Christian, to be Catholic, particularly in dealing with the issues that we are confronted with today.

For certainly, we are in for a fight: a fight against the RH bill, a fight against an unhealthy form of secularism, a fight against a relativism that holds no respect for values or morals. These certainly are fights worth fighting. But our faith requires us to fight these fights as Christians, as Catholics.

The way, the truth, and pro-life

It is definitely no accident that Jesus referred to his teachings as "the Way" and, in fact, the term "Christians" would only come much later after His death. This means that Jesus' teachings, the tenets of our faith, is not limited to mere church attendance on Sundays but rather for every day and every moment of our lives. The way we eat, sleep, relate to other people, dress up, study or work – these should all be guided by the points of our faith. Christianity is not a mere religion, it is a way of life. And that life is one that is bound to struggles. Jesus never promised a smooth sailing in our earthly lives but he did teach us how to give meaning to the struggles we face everyday, to give sanctification to whatever ups or downs we encounter in our daily existence. Ultimately, what Jesus taught us is a way of living a better life, not only in this Earth, but also of a way of reaching our final and true purpose: to be with God.

Translated in relation to the debate relating to the RH bill, it means that before we act or say anything, such should be done with the consideration that God is always (as it should be) in the equation. Thus, it would be of the utmost help that our instinctive first step before doing anything is to pray. Pray for guidance, to offer to Him whatever actions we will do, to pray that our actions are in line with His will, to pray for grace, in thanksgiving, and to pray that our own wretched sins be forgiven.

The last is quite important. We should have the humility to recognize that we are all sinners. That nothing much is separating us from the pro-RH advocates except for the grace granted to us by God and which we don't deserve were it not for His generosity. Having made that recognition, we should then take the time to make acts of mortification and atonement. This is vital as it opens us all the more to properly being closer to His will. It also enables us to strengthen our faith and temper our actions with humility.

After that (and only then) do we act. For we should be incredibly and utterly careful not to fall into the trap of being self-righteous, which is but another disguise for arrogance. It is simply not Christian to insult others (no matter how insulting those others may be) and definitely very un-Christian for us to wish harm on others (even if those others wish that upon us). It would be a huge waste indeed if instead of turning people towards right we instead turn them off because we ourselves turned wrong by not practicing what we preach. I confess that I myself have resorted to teasing and at times have gotten carried away with that teasing, particularly in the heat of an argument (mea culpa, mea culpa, mea maxima culpa …). But to call others as "Satanas" or to have hoped that "their mothers should have aborted them" is quite a bit over the edge. Albeit, it is quite understandable to lose one's temper in the midst of people who are apparently acting with malice and hypocrisy (pretending to join a pro-Life prayer meeting to "merely listen" while wearing shirts with slogans offensive to pro-lifers and distributing pro-RH pamphlets is not only rude but also not a very smart thing to do). And I mention this not to put undue reproach or blame. The past is past, and is only good to learn from but not to dwell in. The point here is this: we, specially from now on, when our struggle takes the point of being crucial, should always keep in mind who we are: Christians.

Yoda was right: not only is anger not good as it leads to hate (which leads to suffering), anger is also a manifestation of fear. We exhibit anger out of the fears we have. But a Christian should never have fear, should never fear anything. The reason is simple: we are God's children and God is our Father. The technical theological term for this is "Divine Filiation." But by however way you call it, in Christianity we have been called with Christ to share in his sonship and thus are able to call God as our Father. This should tell us one thing that should fill us with assurance: there's no way we can ever lose because our Father never loses because He is God.

In the context of the RH bill debate, this tells us that we should never let the fear or frustration that we might get beaten by the pro-RH people get to us because, simply put, they won't win. First of all, if the RH bill gets defeated, it did so not because of us but despite us. It was God working His will through us, His highly flawed instruments. Any victory attained was achieved by the Hand who wielded the instruments and not by the instruments themselves. If the RH bill gets passed it's because He allowed it, for reasons only He knows, but then we know that He allows things to happen because it will be to our good, because with God all is for the good, because God is good. If the RH bill is passed, let us not lose our peace because His will was done and to do His will is what we are here for. His will being done, let us be thankful, pray to understand His will better, and be happy. The point is, as children of God, we can never lose and this is our faith.

This does not mean that we do not give our best in defeating the RH bill. We should do our best for the simple reason that our acts are opportunities to be closer to God and we therefore offer our works (actually everything: our joys, sorrows, thoughts, words, etc.) to him, to praise Him, honor Him, and to give thanks to Him, and to bring, through our works, the world closer to oneness with God. We thus give our best because one simply does not offer mediocrity to God. In the same way we offer the best gifts we can give to the best of our abilities to our loved ones, then we offer the best to our ultimate love and that is God.

This means that in our efforts to combat the RH bill, it behooves us that we don't do it sloppily or half-heartedly. St. Peter tells us that we should always be ready to defend our faith. So we study well the theological and scriptural reasons why the Church teaches as it does, we study how we deliver that message, and we exhibit discipline in forwarding that message. It means that we be organized and methodical in our approach, that our arguments arise from deliberate study and research (and not mere religious motherhood statements or illogical appeals to emotions), and that we be very conscious and intelligent in the manner that we deliver and expound on our arguments. It also leads us to proceeding with perseverance, caring not who gets the credit, and that we always act with confidence. There is no reason for us to give up or be insecure for the reason that we believe that God, our Father, is guiding us and caring for us. Finally, it also means that we regularly and with great discipline read the Bible, particularly the New Testament, preferably on a daily basis. As St. Augustine said, "when we read, God talks to us." So we do this, even for short bursts during the day, regularly and with discipline, asking the Lord for the grace to appreciate His words better.

You bet your life

But the best way to fight against the RH bill is to live our faith. One of the interesting things when one reads the early accounts by pagan writers (e.g., Josephus, the Letter to Diognetus, etc.) on the first Christians is how impressed they were on the way the Christians lived their lives. For at that time, the behavior of the early Christians was quite unique: they were quite joyful and treated each other with the utmost charity and love. Joy, the ability to be cheerful even in the face of difficulties, is what truly set the Christian apart. Almost every other passage in the New Testament, from the Gospels to the Epistles to Revelations, encourages us to live our faith with joy. We are talking here not of the psychological joy brought about by hormones or drugs but the supernatural joy that comes – again, you guessed it – from the fact that we are indeed the children of God. We should be cheerful in our daily lives, in the way we treat each other, relate to each other, in how we do our work or study. We should be joyful because that is what it means to be Christian.

The other aspect is that we live the life of charity, that we demonstrate our love, to those who are our friends and to those who are not yet our friends. We should not fight this fight like others do; we should not fight this fight by being like them: we should not resort to hating, to spite, to bitterness, to anger, to pride. Because again all that betrays a fear that should not be present in a Christian who should be filled with the confidence of one who is a child of God. We should fight the good fight as who we are; we should fight the good fight as Christians.

In fact, for practical and historical reasons alone, we should not be quick to judge and dismiss those who do not share our faith, even to those who appear to us to be immoral. Remember St. Augustine. We should lament their state, strive to correct them gently, but never hate. We should also note that the pro-RH people aren’t even trying to kill us (or at least I think so). So think about this and remember St. Paul (who earlier on tried to kill the first Christians and see how that turned out for him). With God's grace anything is possible. And for every ferocious opponent we meet now could be that most staunch and effective ally tomorrow.

So we treat the other side (and each other) with charity, with cheerfulness, love, provide understanding in response to their refusal or inability (so far) to understand the wonderful teachings of our faith. We do this because that is what Christians do.

Defense, our way

William Perkins once wrote, "God does not look at the excellence of the accomplishment but at the heart of the worker." In all the heat and passions involved in the debate relating to the RH bill, we Catholics should take the time to reflect on what it means to live our lives within the Christian faith. The fight against the RH bill has nothing to do with our intelligence, talents, ego, education, or credentials. We give our best but the outcome has nothing to do with winning or losing. The outcome we pray for is that God's will be done. And with that we know we cannot lose. But what this debate does give us is an opportunity to demonstrate to all the others what our faith truly means. The "free thinkers" believe that they know how to lead the sophisticated, creative, vibrant life. They have no idea what they're talking about. We know we have the better way, the "way" taught to us by Jesus. Right is on our side. That should give us the security, confidence, cheerfulness, and charity in dealing with others and with this RH debate. Definitely, as St. Peter tells us, we should always be ready to defend our faith. But with the caveat that St. Peter also provided: such defense must always be done with "respect and gentleness" (1 Pet. 3:15).


Trade with Australia and Philippine safeguards

Apparently, trade between Philippines and Australia rose because of the ASEAN-A/NZ trade agreement (click here for BusinessWorld article). This is according to Ross Bray, "Australia’s senior trade commissioner for the Philippines and Micronesia". Questions are:
- what is the value of the trade between Philippines and Australia;
- what is the extent of Australian imports to the Philippines; and
- isn’t the alleged increase Philippine exports to Australia just a return to normalcy from pre-2009 (i.e., pre-crisis) levels?

Note must be made that the reported 25% usage of Philippine exporters to Australia essentially mirrors the around 20% utilization by Philippine exporters of the AFTA.

The point is, the alleged benefits of the FTA should be further examined. And definitely all the more if a bilateral Philippine-Australia FTA is being proposed.

In other news, the Philippines was identified by the WTO as being a heavy user of safeguard measures (click here for BusinessWorld article). But this is strange when you consider that Philippine imports dropped in 2008, at record levels in 2009, and have been quite unsteady in 2010. This is the most likely period of review for the safeguards investigations. Where could the import surge have come from then? And some "expert" says it’s "legal". The interesting thing here is that neither the DTI nor the FPI deny the considerably high number (or percentage) of safeguard measures identified by the WTO as being either imposed or proceedings instituted by the Philippines. Weird. Either the domestic numbers presented to us by the government or the WTO figures is wrong. So who is giving the correct numbers? Interesting ...

Looks more that politics rather than economics is at work (and, more disturbing, sloppily thought out at that). Interesting that we haven’t received any WTO dispute query or complaint about this.


WTO win on cigarettes

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

Lost amidst the Manny Pacquiao fight and the marvelously ridiculous twisting of the Pope’s words by the pro-RH group, is the Philippine win at the WTO in case DS371, otherwise known as Thailand -- Customs and Fiscal Measures on Cigarettes from the Philippines. The case was initiated by the Philippines in February 2008, under the able stewardship of then DTI Undersecretary Tom Aquino and Assistant Secretary Tong Buencamino, and that early the case was tagged among international trade lawyers as Thai Cigarettes II (a landmark trade case during the GATT days relating to health measures). The WTO panel released its report on the case last Nov. 15, 2010 (and if you’re interested, you can view a copy of the 426 page report at http://www.wto.org/english/tratop_e/dispu_e/371r_e.pdf).

The case had to do with Thai taxes imposed on imported cigarettes, with Philippine total exports of our cigarettes significantly declining for the two years prior to the filing of the complaint. Notably, Philip Morris Philippines Manufacturing Inc.’s shipments to Thailand have been described as making up to 95% of its total exports, with the alleged cause of the slowdown said to be the Thai measures. As alleged in the Philippine complaint, the Thai government does control a major tobacco company, the Thai Tobacco Monopoly, which "is the only business entity authorized by Thai law to produce cigarettes in Thailand." The main cause of action of the Philippine complaint, therefore, is whether Thailand is violating WTO national treatment provisions.

Or, more accurately, the complaint revolved on whether violations or inconsistencies exist between the Thai measures and various provisions of the Agreement Implementing Article VII of GATT 1994 and the GATT itself. This would cover the areas of customs valuation, excise tax, health tax, TV tax, VAT regime, retail licensing requirements, and import guarantees, along with the national treatment provisions of the WTO.

An interesting aspect of the case is the Philippine allegation that "Thailand requires that tobacco and/or cigarette retailers hold separate licenses to sell domestic and imported cigarettes, respectively." The question, therefore, is how the dual licensing requirement leads to discriminatory treatment against the imported cigarettes and thus a violation of Article III.4 of the GATT.

In the end, the panel did reject Philippine claims under Article X:3(a) of the GATT, as well as Articles 4 and 7.1 of the Customs Valuation Agreement. But the panel did find that the Thais acted inconsistently with the provisions of Articles 1.1, 1.2, 1.2(a), 7.1, 7.3, 10, and 16 of the Customs Valuation Agreement; and Articles III.2 and III.4, as well as X.1, X.3(a), and X.3(b) of the GATT. The panel found also that "Thailand does not maintain or apply a general rule requiring the rejection of the transaction value and the use of the deductive valuation method."

At this point, the Thais have 10 days prior to the DSB meeting at which the panel report is to be considered with which to object to the report. Within 60 days after the date of circulation of a panel report to the members, the report shall be adopted at a DSB meeting unless the Thais (or even the Philippines in relation to the portions of its claim not considered by the panel positively) formally notify the DSB of its decision to appeal. If an appeal is made, it shall be before the Appellate Body, which may then uphold, modify or reverse the legal findings and conclusions of the panel. The appeal shall be limited to issues of law covered in the panel report and legal interpretations developed by the panel.

This is a pretty nice victory for the country, particularly considering that the livelihood of hundreds, if not thousands, of Filipino farmers were at stake. For Filipino lawyers, it also represents the first time that the country won in an international dispute at the State-to-State level (there was previously the ICSID case involving the NAIA3 contract that the Philippines also won as well but that was on a State-to-private company level dispute). Previous to DS371, the Philippines had eight previous cases at the WTO, none of which resulted in a win. So I hope I be permitted in saying that I’m quite happy to at least have a small participation in this case as then legal adviser to the Philippines.

I’ll devote articles in the future to parse through some of the more interesting analysis and findings of the panel. If and when an appeal is made, your friendly Trade Tripper shall report on that as well. For the moment, a win is a win. Although, it would be interesting to see how the other WTO case (DS396 and DS403) turns out, this time involving the EC’s and the US’ complaint that Philippine excise taxes on distilled liquor discriminate against imported whiskey.

Hopefully, the whiskey case is as well managed and argued as the cigarette case was. It would be really interesting to see if a victory drink is forthcoming.


Pope Benedict and the condom question

by Fr. Joel O. Jason, SThL

This article seeks to clarify the perceived confusion and surprise that greeted the whole Catholic as well as non-Catholic world. International as well as local journal headlines read:

“Pope says condoms are justified in fight against HIV”

“Pope says condoms are acceptable in some cases”

“Pope softens on teaching on Condoms, Aids and Contraception”

“Pope: Condom use OK for fight against AIDs”

The whole controversy started from a supposed “leaked” German interview the Pope granted to journalist Peter Seewald in an upcoming book yet to be released entitled “Light of the World: The Pope, The Church and the Signs of the Times”. For the sake of intellectual integrity, let us see what the Pope really said from this excerpt of the transcript of the interview connected with the condom question:

Here is that portion in its entirety:

From Chapter 11, “The Journeys of a Shepherd,” pages 117-119:

Peter Seewald:

On the occasion of your trip to Africa in March 2009, the Vatican’s policy on AIDs once again became the target of media criticism. Twenty-five percent of all AIDs victims around the world today are treated in Catholic facilities. In some countries, such as Lesotho, for example, the statistic is 40 percent. In Africa you stated that the Church’s traditional teaching has proven to be the only sure way to stop the spread of HIV. Critics, including critics from the Church’s own ranks, object that it is madness to forbid a high-risk population to use condoms.

Pope Benedict:

The media coverage completely ignored the rest of the trip to Africa on account of a single statement. Someone had asked me why the Catholic Church adopts an unrealistic and ineffective position on AIDs. At that point, I really felt that I was being provoked, because the Church does more than anyone else. And I stand by that claim. Because she is the only institution that assists people up close and concretely, with prevention, education, help, counsel, and accompaniment And because she is second to none in treating so many AIDs victims, especially children with AIDs.

I had the chance to visit one of these wards and to speak with the patients. That was the real answer: The Church does more than anyone else, because she does not speak from the tribunal of the newspapers, but helps her brothers and sisters where they are actually suffering. In my remarks I was not making a general statement about the condom issue, but merely said, and this is what caused such great offense, that we cannot solve the problem by distributing condoms. Much more needs to be done (emphasis mine)
. We must stand close to the people, we must guide and help them; and we must do this both before and after they contract the disease.

As a matter of fact, you know, people can get condoms when they want them anyway. But this just goes to show that condoms alone do not resolve the question itself (emphasis mine). More needs to happen. Meanwhile, the secular realm itself has developed the so-called ABC Theory: Abstinence-Be Faithful-Condom, where the condom is understood only as a last resort, when the other two points fail to work. This means that the sheer fixation on the condom implies a banalization of sexuality, which, after all, is precisely the dangerous source of the attitude of no longer seeing sexuality as the expression of love, but only a sort of drug that people administer to themselves (Emphasis mine)
. This is why the fight against the banalization of sexuality is also a part of the struggle to ensure that sexuality is treated as a positive value and to enable it to have a positive effect on the whole of man’s being.

There may be a basis in the case of some individuals, as perhaps when a male prostitute
uses a condom, where this can be a first step in the direction of a moralization, a first assumption of responsibility, (The preceding is the only sentence the secular media focused on to reach their conclusions) on the way toward recovering an awareness that not everything is allowed and that one cannot do whatever one wants. But it is not really the way to deal with the evil of HIV infection. That can really lie only in a humanization of sexuality (Emphasis mine).

(The next question and answer was totally ignored by the secular media)

Peter Seewald:

Are you saying, then, that the Catholic Church is actually not opposed in principle to the use of condoms?

Pope Benedict:

She of course does not regard it as a real or moral solution (Emphasis mine)
, but, in this or that case, there can be nonetheless, in the intention of reducing the risk of infection, a first step in a movement toward a different way, a more human way, of living sexuality (Emphasis mine).

So with the full text in question now presented, what conclusions can we derive?

First things first. There is a principle in Biblical interpretation that goes: “A text, out of context, is pretext.”
It means that every text of the Bible should be understood in its integral context: in the unity of the whole message of a chapter, of a series of books, of the theology of the writer, and even the unity of the whole Biblical message. Taken in isolation, a text in the Bible can be reduced to a pretext, i.e., a half-truth or at worst, a misleading misinterpretation.

The headlines we read above, regarding the supposed change Benedict proposes on the
consistent sexual ethics of the Church connected with condoms and HIV, are clear examples of a text taken out of context. As you can see, Pope Benedict gave a long answer to a rather short question. I highlighted the parts that spell out clearly Benedict’s convictions as well as that of the Church’s. What some interpreters took out in isolation was that part where it says, “There may be a basis in the case of some individuals, as perhaps when a male prostitute uses a condom, where this can be a first step in the direction of a moralization, a first assumption of responsibility...”. They did not even finish the whole sentence.

With these laid out, so what now did Pope Benedict NOT say?

1. First of all, this is a personal interview. Pope Benedict is not speaking here in his capacity as the Supreme Teacher of the Catholic faith. What you find in the book is not proposed as official teaching nor pronouncement being sent out to the Catholic faithful. Some of the things we can read here can even fall in the category of personal opinions and therefore do not and cannot present themselves as official Magisterial teachings. If the Pope wants to hold out a new teaching based on his reasoned discernment as the
Successor of Peter, a personal interview is not the place to do it. Everyone who knows basic Catechism understands this, much more the Pope. And so headlines claiming, “Pope changes teaching on Condoms, Contraception and HIV”, or “Pope: Condoms OK in fight Against AIDS” are totally way out of line.
2. Nowhere in the text of Pope Benedict’s response can we find a summary justification of the morality of condom use. This is clear in the texts I highlighted. Let me highlight them once again: “...that we cannot solve the problem by distributing condoms. Much more needs to be done,” ; “...But this just goes to show that condoms alone do not resolve
the question itself” ; “ This means that the sheer fixation on the condom implies a banalization of sexuality, which, after all, is precisely the dangerous source of the attitude of no longer seeing sexuality as the expression of love, but only a sort of drug that people administer to themselves”; “...But it is not really the way to deal with the evil of HIV infection. That can really lie only in a humanization of sexuality.”

I don’t see how the quotes above translate to “Pope OKs Condom Use”. On the contrary, the above quotations reflect the consistent conviction of the Church regarding condom use vis a vis HIV/AIDs: that condoms are not the solution. If at all, they contribute to the perpetuation of the problem. Condoms can only reduce the risk of infection. And with the fatally serious threat of HIV/AIDs, risk reduction is not acceptable. Prevention is the only acceptable option. And prevention is only served by abstinence (for the unmarried) and monogamy and fidelity (for the married).

In the first place, Pope Benedict’s response was not even a direct commentary on the possible moral justification of condom use, clearly not for contraception. He was making a moral speculation on what may be going on in the heart of one (a male prostitute) who uses the condom in a homosexual or heterosexual sex act.

What did Pope Benedict intend to say?

Pope Benedict was specific in his response. He spoke of a “male prostitute” who uses a condom. What the Pope stressed was not that condom use is OK in the case of a male prostitute engaged in heterosexual or homosexual acts. He merely said that “this can be a first step in the direction of a moralization, a first assumption of responsibility...” Perhaps an analogy can help us appreciate what the Pope is saying (for this point I will modify a principle I picked up from lay moral theologian Janet Smith).

There are two robbers. One uses a real knife with a real intent to kill and harm. The other uses a plastic knife because he has no real intention of killing. He only intends to frighten and intimidate. Both men will be committing an evil act. But obviously, between the two, it is the one who employs a toy knife that shows at least a hint, a semblance, a little amount of moral responsibility which hopefully, can still mature to a real and correct kind of moral responsibility that will let him realize that robbing people is an evil option to take. Does this mean the Church will teach that it is “OK” and moral to rob people using a fake knife? No. The Church simply says that between the two, the one with the fake knife is the one that manifests a semblance of an “assumption of responsibility”, immature it may be.

The same logic can be applied to Pope Benedict’s example. Obviously, the mere fact that the person used a condom indicates a “semblance of responsibility.” One who engages in prostituted sex without a condom, shows a total absence of moral responsibility, for himself or for the other. Compared to this one, one who uses a condom at least shows a hint of “assuming a responsibility” which Benedict hopes can be a “first step in the direction of a moralization” i.e., hopefully it can develop to a more correct kind of responsibility, not in the direction of regular condom use, as secular interpreters assumed, but, as Benedict finished his sentence, (which the secular media left out), “on the way toward recovering an awareness that not everything is allowed and that one cannot do whatever one wants. But it is not really the way to deal with the evil of HIV infection. That can really lie only in a humanization of sexuality.”

As we see here, Pope Benedict is too deep a theologian and a thinker to be presented from a shallow and surface level interpretation. The Pope and the Church’s consistent ethical teachings deserve more than that. We pray that the media may also assume responsibility in reporting matters related to faith and morals. We pray that intellectual integrity and professionalism may not be sacrificed for the sake of ideology, sensationalism and paper sales.

(Fr Joel is a diocesan priest of the Archdiocese of Manila. He is currently Dean of Studies at San Carlos Seminary in Guadalupe Makati and teaches Fundamental Moral Theology, Sexuality and Integrity and Bioethics. He also heads the Commission on Family and Life of the Archdiocese of Manila)


Caution on TPP

Interesting that the government took two weeks longer to come to the same conclusions reached in my 19 November 2010 Trade Tripper column:

Conditions mute interest in trade deal

(BusinessWorld, 26 November 2010, by Jessica Hermosa)

Philippine interest in a multiparty trade pact which includes the United States has been tempered by the steep market opening commitments required by current negotiating parties, a Trade official yesterday said.

The process to be included in talks for the Trans Pacific Partnership (TPP) could also be cumbersome.

"The tone is more cautious than before," Ann Claire C. Cabochan, director of the Bureau of International Trade Relations, told reporters in a chance interview.

"We know the commitments now," Ms. Cabochan said, following the Philippines’ participation in the recent Asia Pacific Economic Cooperation summit held in Japan where the nine TPP negotiating countries were in attendance.

The nine are: Brunei, Chile, New Zealand, Singapore, Australia, Malaysia, Peru, the United States and Vietnam.

"It would have been our way of getting to the United States," Ms. Cabochan said.

"But it’s what they call a high quality free trade agreement with so many commitments. We’re constrained by our constitution."

The TPP deal requires members to liberalize local service industries on top of slashing tariffs on goods. The Philippine constitution, however, limits or even outrightly bans foreign participation depending on the industry.

The Philippines will also have to "engage with each of the nine" negotiating countries before it can be allowed to file its formal intent, Ms. Cabochan said.

"They really want your readiness first," she said.

In a related development, Ms. Cabochan said the schedule for the review and renegotiation of the Japan-Philippines Economic Partnership Agreement (JPEPA) could be pinned down when both parties gather for a routine meeting in March.

"[The schedule] is one of the items [on the agenda of] the joint committee meeting in Japan in March," she said.

The entry of Filipino nurses into the East Asian country will be among the issues raised, she said without elaborating.

Issues on trade in goods, meanwhile, have so far been hard to identify as the global economic downturn has made it hard to monitor the true impact of the JPEPA, Ms. Cabochan said.

Snappy replies to condomics 2

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

Right off the bat, let’s get this out of the way: Pope Benedict XVI modified the Church’s stand on condoms. NO, HE DIDN’T. This is quite clear when one reads the actual remarks of the Pope in his interview with Peter Seewald. He even asserts that the "fixation on the condom implies a banalization of sexuality." I suggest people read the commentaries of Janet Smith or George Weigel (available in the Internet) for a complete explanation of the Pope’s remarks.

However, let me just zero in on this: the Pope’s given example was in relation to "male prostitutes," who one can reasonably say mainly ply in homosexual activities. The use of the condom in relation to that immoral act is obviously not for contraceptive purposes. And it’s precisely that contraceptive function that the Church is against.

So, it means that the Pope justifies condom use to stop AIDS
. No. As the Pope clearly said "we cannot solve the problem by distributing condoms."

But it’s ridiculous to believe that popes don’t make mistakes or commit sins
. Of course it’s ridiculous. Popes are humans too. They do make mistakes. It’s only when the Pope speaks under his authority of "infallibility" (given under very specific conditions and only with regard to matters of morals or faith) that no mistakes are said to be made (e.g., the prohibition on contraceptives). And, yes, pope’s do sin. Note that popes actually go to confession regularly. They must be asking forgiveness for sins; otherwise, they’re just making a mockery of the sacrament of confession. That’s why we should all be humble, avoiding self-righteousness, because, except for Mother Mary and Jesus, we are all merely sinners trying (hopefully) our best.

Excommunication reveals the Church’s intolerance
. Wrong. Excommunication is a technical canon law matter (coming in various forms and exercised rarely) but essentially means Church recognition that somebody, by his own acts, separated himself from the community of the faithful. In short, the Church didn’t kick anybody out, it merely recognized that one voluntary placed himself out. It’s like the LTO not granting a driver’s license because you’re blind. The LTO’s refusal didn’t make you blind, it merely recognized that fact. So, it’s therefore logical for an excommunicant not to receive the sacraments because he obviously turned his back on the Church. It’s like breaking up with your spouse but still demanding sex. It cheapens the whole thing. For lack of space, let me just say, however, that the concept and process of excommunication is designed to wean the excommunicant back and the Church will welcome him with open arms. But the sincere decision to come back (like the decision to part with the Church) lies with the individual.

The Church is intolerant for filing criminal charges
. No. The Church, like everybody else, has every right to avail of the rights that the law provides. Furthermore, while the Church is indeed merciful, it also advocates for justice. Which means accountability for any wrongdoing. Mercy without justice is not a loving mercy as it encourages repeated wrongs. That’s why God, who is infinitely merciful, also requires accountability ("He will come again to judge the living and the dead"). So, for example, if somebody disrupts a Mass in a church, in a manner contrary to our criminal laws, it is but just that accountability for it be made (particularly if the transgressor is not even sorry for the acts he did). We must remember that in a Mass, God is present. Any act of disrespect made during a Mass is not only a disrespect to the priest or to us but also to God. Ask the Muslims how they would feel if somebody does an act of disrespect in a mosque. Or even a family member if somebody does something boorish in a family celebration. Forgiveness? Definitely. But justice too.

Contraceptives protect female health
. No. They harm it. Various research institutions (including the International Agency for Research on Cancer, a research arm of the World Health Organization) and medical journals already attributed (particularly to oral contraceptives) dangers such as cancer (specifically breast cancer), stroke, and heart disease.

Better condoms than AIDS or abortions later
. No. Research upon research has already shown that resort to contraceptives (condoms in particular) has actually resulted in the increase of AIDS, unwanted pregnancies, or abortions. The reason is simple: rather than make people behave better, condoms give a false sense of security, encouraging the illusion of "safe sex." But condoms fail at least 5% of the time. Say you have 100,000 condom users, 5,000 of them are highly vulnerable to AIDS or unwanted pregnancies. And imagine what 5,000 AIDS carriers can do. Let us also emphasize this point: the perils of cancer, stroke, heart disease, AIDS, and unwanted pregnancies are there regardless of whether you’re a Catholic or not.

Have fun defending the faith. Although, as St. Peter says, do it with "respect and gentleness."



is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

As reported by BusinessWorld, APEC leaders have decided to accelerate activities on developing free trade deals. As provided in its communiqué, APEC "believe[s] that a Free Trade Area of the Asia Pacific (FTAAP) should be pursued ... by developing and building on ongoing regional undertakings, such as Association of Southeast Asian Nations+3, ASEAN+6, and the Trans-Pacific Partnership, among others."

The foregoing immediately followed the so-called "first ever TPP summit" held at the APEC sidelines. The TPP has Singapore, New Zealand, Chile, and Brunei as members, with the US, Australia, Peru, Vietnam, and Malaysia in negotiations to join, while Japan and Korea are mulling over whether to indeed join or not. The TPP’s goal is to eliminate all tariffs by 2015. The Philippines has also been encouraged by certain sectors to join the TPP.

As anybody who’s read this column would know, I’m not exactly the biggest fan of FTAs. They’re difficult to follow, bureaucratically a nightmare, and promise benefits that in reality have yet to be met. For a country in which only a handful (at best) actually understand the operation of the rules of origin, sovereignty and its implications, dispute settlement and the problems of forum-shopping, classification and valuation rules, sanitary and phytosanitary measures, and technical barriers to trade (plus the all important issue of smuggling), our enthusiasm for FTAs is truly baffling.

And recent studies have not done anything to assuage my wariness of FTAs. A working paper released by the ADBI ("FTAs and Philippine Business: Evidence from Transport, Food, and Electronics Firms") found that only around 20% of the companies surveyed here in the Philippines have taken advantage of the AFTA preferential rates (pretty much the same figure that your friendly Trade Tripper suspect all these years). As discussed by the ADB working paper, a lot of Philippine firms are still baffled by the mechanics of FTAs. Other reasons have to do with "delays and administrative costs and the use of export incentives other than FTA preferences." Also, "arbitrary classification of product origin, product exclusions, and the confidentiality of information required in origin applications, [as well as] small margins of preference and non-tariff barriers employed by FTA partners." Finally, a UN University Working paper confirmed the disparity in benefits between rich and poor countries partnering up in FTA’s.

Besides, going back to the TPP, if Australia, Japan, and Korea do join, with their adeptness in protecting their agricultural sectors, how would such benefit the Philippines, struggling as it is with its agricultural products? Our agri sector contracted by 2.62% in January to September, with all the DA could be confident about is ending the year with "at least zero" growth.

As for the FTAAP, it is a free trade agreement that is far more complex and ambitious than the Philippines has ever seen. And a very good reason to be cautious about it can be summed up in one word: JPEPA. Up to now, it is still unclear whether JPEPA actually brought the benefits it promised. And note that this is an agreement that opened up our domestic market to Japanese steel, auto parts, and electronics at low or zero tariffs. This is in exchange for our nurses being able to work in Japan. Reportedly, however, the Japanese made their domestic rules (not covered under JPEPA) so stringent that so far only one Filipina nurse was able to get employment there (apparently, the Indonesians fared better, as they allegedly had two nurses able to work in Japan). So much for balanced trade.

Or perhaps the Indonesians are just being smarter than us over this. Their trade minister, Mari Pangestu, declared that their priority, rather than the FTAs, is to wrap up Doha. And her reasoning is so simple and correct that it’s a mystery why we can’t think the same: "At the moment, the deadlock or problems that we face in negotiating the WTO is the same as what you are going to face in FTAAP negotiations or TPP negotiations, and maybe even more because TPP is what’s called a very comprehensive or high-standard trade agreement. So if you cannot solve it in the WTO, it will be difficult to solve it in FTAAP or TPP. So for a smallish country like Indonesia with limited resources for negotiations, let’s prioritize the multilateral negotiations first."

Spot on. With all the currency and capital inflow issues, the uncertainty that a jobless US economic recovery brings and a China that showed a willingness to stop vital mineral exports to a trading partner for political ends, to make one’s country’s life more complicated by FTAs is inexplicable.

Besides, if WTO DG Lamy is correct, Doha could be a done deal by next year. This time, he may well be right and our country should focus on that rather than mucking around with FTAs. That and on building more efficient Philippine trade institutions (i.e., the Philippine Trade Representative Office) and capabilities.


Trade unsiloing as metrics synergy

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

The reports alleging our government’s insistence in not dwelling into our trading partners’ currency fray again belies the lack of intellectual design singularly contemplated regarding the orchestration of policy. This is despite the fact that most countries, our major trading partners included, have indicated with clarity their considerations. And the fact that we are fence-sitting perhaps explains why we are perceptively depreciating in other countries’ investment positioning (apart from our continuing lack of competitiveness and unmanageable red tape).

In any event, the 2010 G20 Report on Trade Measures makes pertinent points, finding that "governments have continued to exercise restraint over the imposition of new trade restrictions. The number of new measures imposed by G20 countries is still increasing, but more slowly than in the past and with a welcome decline so far this year in the initiation of new trade remedy actions (anti-dumping duties, countervailing measures and safeguards)."

This reminds us of an analogy that illustrates the proper employment of trade remedies, contingent on certain multipolar levels, whether it be in the formative, normative, or substantive sense. The toolbox analogy is commonly employed, particularly when defining the use of such mechanisms. Nevertheless, the analogy, while presenting in a certain sense a syllogism of available devices within which such rights, liabilities, and obligations are to be recognized, all of which it must be considered still fall within the parameters and restrictions laid down by general conceptions of what we consider to be sovereignty in its internal and external sense.

This inevitably comes to mind when one is considered to make a studied judgment on the rationality of the recourse to trade remedies under the WTO. The system does indicate an allomerism in the sphere of adjudication. Considerably, any trade policy should employ the synergy that is found beyond the "clinical isolation" concept, as well as the findings of the WTO panel for US -- AD/CVD on Products from China (DS379): "the status of the [International Law Commission’s Draft Articles on Responsibility of States for Internationally Wrongful Acts], and in particular whether as China argues we must as a matter of law interpret the provisions of the SCM Agreement at issue in conformity with language and concepts in certain provisions of the Draft Articles."

The multiplicity of choices available to states in the formulation of policy, therefore, does not rest at a binary level. The probabilities of the choices have arisen due in most part to the conceptual, as well as practical, implications brought about by the sovereignty characteristics of states. Claude Barfield of the American Enterprise Institute made an interesting point in his article "Overreach at the WTO": "Alternately, the WTO could adopt a variation of the so-called ‘political issue’ doctrine developed by the U.S. Supreme Court (which is meant) to provide a means for the judiciary to avoid decisions that have deeply divisive political ramifications...."

Which reverts us yet again to trade remedies. Dukgeun Ahn and William J. Moon’s argument for a new approach to causation standards, the "Cost of Production" test, is fascinating: "an additional tool that can be used as complement to Elasticity/ Partial Equilibrium Model. We propose the following hypotheses: Hypothesis 1 (H1) If the price of imports is less than the domestic marginal cost of production, we should see an immediate decline in production that is attributable to import surge. Hypothesis 2 (H2) If the price of imports is greater than the domestic marginal cost of production but lower than the domestic average cost of production, we should not observe immediate decline in production that is attributable to import surge; instead, we should expect decline sometime in the future. Hypothesis 3 (H3) If the import price is greater than the domestic average cost of production, we should not see an immediate nor future decline that is attributable to import increase."

In the end, the context of sovereignty and the horizontal restraints imposed by realpolitik will define, in a categorical if not conclusive sense, the outcome of policy formulation. Nevertheless, the probability that there would be a shift to a principle based or value based system has to be contemplated in the interpretation of the system, if not the rules, as well.

Hopefully, our trade officials will be cognizant of this urgent need for right-sizing and knowledge based acquisition of trade policy, taking a 30,000-foot view and unsiloing its mentality in the process. With such, a process-flow analysis that gives a definite value-add to trade and economic bottom- lines will come into play. This is not to reinvent the wheel. Rather, it is through the correct utilization of dynamic metrics, with integrated efficiencies, that could eventually result in a deliverable consisting of finance and trade driven economic synergistic interfaces. Plug-and-play paradigms notwithstanding, a 24/7 commitment to this should not necessarily lead to a turn-key solution. The crucial factor is whether our government is on board, as part of the solution and not the problem’s cause.


China crisis and wishful thinking

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

A few weeks ago I mentioned the Sept. 24, 2010, joint statement between ASEAN and the US reaffirming "the importance of regional peace and stability, maritime security, unimpeded commerce, and freedom of navigation, in accordance with relevant universally agreed principles of international law, including the United Nations Convention on the Law of the Sea (UNCLOS) and other international maritime law, and the peaceful settlement of disputes."

As I wrote then, what could possibly be wrong with such a logical to-the-point-of-mundane statement? Nothing. But, as reported by the Canadian Press, China reacted, again predictably hysterically, that "China claims sovereignty over the entire sea and all the island groups within it."

It’s an interesting game that China is playing, appearing to be the victim while simultaneously asserting its role as Asia’s resident bully. And the attitude has seemingly spilled beyond its government. A few months ago, a Chinese trawler intentionally rammed itself into Japanese coastguard ships while within disputed waters. The position taken by China was not meant to be conciliatory. Chinese Foreign Ministry spokeswoman Jiang Yu, in an incredible display of undiplomatic-speak that would make our Malacañang’s Vietnam delegation spokestwits proud, dismissed Japan’s statements outright by saying that "it is futile to play tricks by deceiving the world and international public opinion" and that "Japan’s sophistry is untenable." Actually, all that Japan said was for China to remain "calm."

Sadly, in the end, Japan caved in. Setting aside national pride, Japan released the members of the trawler, including the captain that allegedly ordered the deliberate ramming into the Japanese vessels. The triumphant moment of China was not a pretty sight: the released captain glowing defiance upon arriving in a Fujian Province airport and Japan left to looking weak. Interestingly, Japanese prosecutors chose to acquit the Chinese captain on grounds of lack of premeditation. How a ship can ram not one but two vessels without premeditation is incredible. Most commentators instead credit the release due to the energy of China’s shrill reaction and to the amount of business that China bludgeons Japan’s businessmen with. This was vividly illustrated when Chinese exporters allegedly started siding with its government by withholding shipments of minerals needed by Japan’s electronics industry.

While pragmatists may claim that between the group of rocks that is the Senkaku islands and the amount of business that Japan stands to lose, the release of the Chinese sailors was a good call, such is a profound mistake.Japan undutifully gave the world a dilemma, something that will haunt it for a longer time to come. It gives China confidence as to its methods. Emphatically, it places the Philippines, which is disputing the Kalayaan and Scarborough Shoal with China, in a very difficult position. Unfortunately, part of the difficulty is self-inflicted, particularly when the Philippines decided to acquiesce to China’s vehemence and labeled the disputed group of islands as outside our baselines, categorizing them instead as a "regime of islands" under Philippine jurisdiction. The Philippines has no reason to be satisfied with its legal cleverness: China racheted up its claim to the islands anyway by calling it a "core national interest."

The Philippines should view its relationship with China with greater objectivity, not allowing itself to be dazzled by the money and business that is being dangled by China or to be awed by its supposed power. There is something unsettling in the way China employs its muscle, betraying perhaps a lack of maturity or even an insecurity, which is really bizarre to say of a country that is quite proud of its old civilization. Nevertheless, that is that and the Philippines should ensure that its longer-term interests are maintained, alongside its short-term interests. Part of this is maintaining our friendship and ties to those countries that have more or less proven their allegiance with us in one way or another.

Obviously, one of these countries is the US and the latter is clearly trying to get its grip on what China’s true ambitions are. The problem becomes more acute considering China’s insistence in maintaining its quite low-valued currency. American legislators are gearing up to go to a currency and trade dispute with China. The public seems supportive of this but, unfortunately, the Obama administration is seemingly oblivious to the danger, like Japan, of it being made to look weak in the face of Chinese clatter. This is made all the more frustrating if one considers David Frum’s view (writing for CNN.com) that the "recession was made in China ... [with China manipulating] its banking system so the accumulated surplus dollars never get spent ... and because the Chinese had so many dollars, they lent the dollars very, very cheaply," leading to "an American debt binge."

We really need better, sustained, and deeper thinking with regard to this. Twits and PSP addicts simply won’t cut it. Otherwise, as a friend of mine would say: ergo sum dim sum.


Competition policy, yet again

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

Back to trade: BusinessWorld recently reported that "foreign business groups want Congress to tread with caution as it works on drafting an antitrust law, saying a badly crafted measure could restrict business instead of upholding fair competition. In a letter to the House of Representatives trade and industry committee dated Oct. 13, the American and European chambers said definitions of monopolies needed to be further narrowed, as should criteria for unfair price fixing, since provisions in current bills were too vague.’

"Most of the bills have drawn up criteria that would likely result in too many companies being labeled monopolist or holding a dominant position. The standards should be both rigorous and clearly drawn,’ the two groups said. ‘Otherwise, many companies ... will have the further burden of complying with new restrictions on monopolistic behavior.’"

They have a point, though I’m not sure if the rationale or purpose is exactly the same. As I wrote in an article last year, what Filipinos should be concerned about is the possibility of foreign corporations sneaking up in acquiring Filipino companies or influence to the point that monopoly powers are exercised from beyond Philippine jurisdiction, constricting Filipino entrepreneurial efforts and damaging local consumer interests. The question is how to enable competition to work for the interests of the country.

Competition policy, in its simplest form, primarily deals with the state of competition internally, that is, with regard to the state of competition within a country’s borders. However, what Philippine policymakers and lawmakers should consciously focus on, considering the present economic situation, is competition policy viewed from an international perspective, particularly when monopolies or cartels reach across borders and where price-fixing is done not within a single country but in a number of such. This is a highly complex but profoundly significant matter that needs to be recognized.

Interestingly enough, this news regarding renewed interest in competition laws was followed by news regarding the open-skies policy, as reported by BusinessWorld: "Cabinet officials have recommended adoption of an open-skies policy and President Benigno C. Aquino III is open to considering the proposal. ‘We recommended it to the President and he wants to see a road map of the full implementation of the liberalization of civil air policy,’ Tourism Secretary Alberto A. Lim told BusinessWorld during the weekend. Approval, Mr. Lim said in a phone interview, will streamline the process for foreign airlines wanting to increase seat capacity. ‘The consequence [of easing policy] is that instead of the government panels having to negotiate increase in capacity, foreign airlines may apply for a waiver or an air service agreement with the CAB (Civil Aeronautics Board),’ Mr. Lim said." This requires better thinking.

Local carriers are against the open-skies policy. And they very well should. We must emphasize really that, constitutionally, no ban on monopolies definitively exists and even more with regard to the probability of a regional or international monopoly. Article XII, Section 19 (along with Section 10) of the Constitution does provide that the "State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed." (italics supplied) This could serve as justification for a company succeeding through merit in an industry that encourages a "natural monopoly," defined by Wiki (yes, I know) as occurring "when, due to the economies of scale of a particular industry, the maximum efficiency of production and distribution is realized through a single supplier."

The probability that the concept of "natural monopolies," considering the small size of our domestic market, is applicable is with merit. If anything, therefore, Filipinos should perhaps be supportive of an even larger Filipino conglomerate. A San Miguel Corp., for example, despite its size and reach, could not really be considered as possessing monopoly power due to the nature and threat presented by its external (i.e., foreign) competition.

What Filipinos must be concerned about instead is the possibility of foreign corporations sneaking up in acquiring Filipino companies or influence to the point that monopoly powers are exercised from beyond Philippine jurisdiction, constricting Filipino entrepreneurial efforts and damaging local consumer interests. The problem faced by Philippine regulators in this regard (aside from the fact that there is no central antitrust body existing) is that local laws on the matter are either outdated, ambiguous, or narrow in scope.

In any event, competition policy is not bereft of opportunities for amusement. Last year’s Senate Bill 3197 (Competition Act of 2009) made use of the term "historic accident," which is curious for a law that should be forward looking. However, the funny thing here is that three domestic industries which are under varying degrees of trade remedy protection from the government -- if trade remedy petitions data are accurate, the local ceramics industry has around 50% local market share, float glass (85%), and soap raw materials such as STPP (90%) -- are, apparently, "monopolies."


Snappy replies to condomic arguments

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

One problem with the public debate involving pro-choice advocates is that it’s difficult to grasp their logic due to their making assertions that tend to be scatterbrained, misleading, or -- worse -- fictional. This article is intended to help Catholic and pro-life advocates easily rebut some of the more common arguments raised by condom supporters.

The Church has no business dealing in government matters. False. Everybody has a right, a duty even, to engage in matters dealing with government. The pro-choice advocates misunderstand the concept of Church and State separation. Note that the Constitution’s preamble, as well as the oaths of office of public officials, all invoke God. The Supreme Court also recognizes the right to advocate one’s religious views.

The Catholic Church’s position on contraception has changed and is evolving. Untrue. Ever since Onan used a primitive form of contraception (see Genesis), the Church’s teaching has been consistent. So from scripture, to the Church fathers (e.g., Barnabas, St. Basil), to Sts. Augustine and Aquinas, to Popes Pius XI and John Paul II, the Church’s position has been unwavering.

The contraception ban was merely invented by priests. No. It is a truth, as per our faith, revealed through scripture and by the Holy Spirit. As much as they’d like to, the priests can’t compromise because one can’t compromise on truth.

Pope Paul VI improperly ignored the 1963 Pontifical Birth Control Commission. Not true. The Church is not a democracy. In matters of faith, it boils down to one vote: the Pope’s (if you don’t like that setup, complain to the guy who made it: Jesus Christ). The Commission’s function is purely advisory. Pope Paul VI simply decided, with the Holy Spirit’s guidance, that nothing in the Commission’s findings justified deviating from the Church’s established doctrine.

People have the right to their own bodies. True. You also have the right to smell other people’s butts and act like a dog but that wouldn’t be sane. However, for Catholics, the belief is that God owns your bodies and the Church is simply pointing out that there’s a better way to exercise your rights. The Church won’t coerce you to not act stupid (Like how? Pull a gun?).

The Church is against the right to choose. No. It’s saying there’s a better choice. The problem with pro-choice is that it worships choice without even bothering (or being misleading) in guiding you how to properly use the right to choose.

The RH Bill merely allows choice. No. One reason why the RH Bill is offensive is that it forces Catholics to support (through its compulsory implementation without consideration of conscience, as well as the duty to pay taxes) something they believe is immoral. Note that contraceptives are not illegal. If the pro-contraception group is really concerned for the welfare of the poor (albeit in a misguided way), nothing is stopping them from donating contraceptives instead of demanding public funds. That’s better than violating the constitutional rights of the Church.

You can be a good Catholic while knowingly fighting the Church’s teachings. No you can’t. The simple reason is that the Church’s teachings are unified and inter-related. You cannot pick and choose the teachings you like and those you don’t. If you do, you are in essence creating your own religion. Again, the Church won’t force you to obey. You’re free to leave. But it’s hypocritical and flaky to say you’re a good Catholic but be against the Church.

Contraception helps solve poverty. No, it doesn’t. That’s ridiculous. And that’s the point. Our population isn’t exploding and its present size is due more to increased life expectancy than more babies. Experts have long pinpointed our social system that fosters unequal wealth distribution as the reason for poverty (i.e., the rich get richer and the poor get poorer) and not really the population. The Church prefers solving the root of the inequality rather than spreading condoms around.

Contraception effectively prevents AIDS. Then how come the Philippines, which has a low rate of condom use, has one of the world’s lowest HIV infection rate? Whereas countries with high condom use register higher HIV cases? The same goes for teenage pregnancy numbers. Again, the Church is pointing to a better, more fundamental way; focusing on the cause and not the symptom.

The Catholic Church hates sex. No. The Church values sex and does not want it cheapened. Contraception, because it does not fulfill the two purposes of sex (love and procreation), cheapens sex and, consequently, cheapens the person too. And if the person is cheapened, society suffers.

The Catholic Church makes no allowance for people’s individual consciences. It does. The Church merely emphasizes that before you rely on your conscience get the guidance first of the Bible, Holy Tradition, and the Church. Why? Because of man’s capacity for self-deception. Anybody who repeatedly tried to diet or quit smoking knows this.

Have fun defending the faith.


The trouble with priests

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

... is that they don’t have sex. Or so some people say. It’s as if they’d be believable only if they haven’t taken the vows of celibacy. But we’ll get back to that later. Right now, what I do find interesting is: do people actually believe they’ll get laid more if they have a condom in their pockets? After all, condoms would only come into play when the deal’s already sealed. It’s bizarre to think one’s chances would increase by waiving a condom around. So that little fantasy in some people’s heads, like: "What’s up?" "This condom’s what’s up!" "No way!" "Yes way!" "Kalurkey naman." "Sex tayo?" "Um ... ok! [wink]" "Suit up!" That scenario? Ain’t happening. Dood, try to know the difference between porn and reality.

I guess a little review of the premises is in order. People keep bringing up the fact that the clergy, as they deal with matters of faith, should keep out of areas that have more to do with reason (i.e., science, government). That’s ridiculous. People should realize that everything we do involves an element of faith. Merely getting up in the morning is already an act of faith. Science itself involves a whole amount of faith for it to work. It involves believing in work one has no opportunity to personally verify, trusting data generated by people one has never met. Every scientist does this, though they may not admit it. So when pro-choice people bring up statistics of population explosions, they’re committing an act of faith.

Having said that, is population a problem? We’ve already seen the spectacle of conflicting numbers from the newspapers. To paraphrase Homer Simpson, 41% of people know that numbers could be made up to support one’s position (I made the 41% up). But just look around you: the days when couples have 10 kids are long gone. Married friends and co-workers would nowadays have 1-2 kids tops. The population is certainly not exploding. It’s just that people (mostly older ones) are taking longer to die. If that irritates you then blame medical science, not the Church. Besides, when you have Europe, Singapore, and Japan worrying about their aging populations, China anxious that it doesn’t have enough women, and here we are celebrating our diaspora and the OFW’s, population control should be the least of our concerns.

What about poverty? Again, there are lots of studies regarding this. But look: our government says our economy is up. If true, that means the country is earning. How come poverty is increasing? Because of what economists call "inequality of income distribution." Which means that, because of our flawed system of government, though the country is gaining income, the distribution of the wealth is skewed in favor of the elite. They get richer while the poor get poorer. That’s why we’ve been saying that the cause of the country’s ills are the freakin’ elite. Unless it’s the elite who use the condoms, making themselves extinct, I don’t see how contraception can help poverty.

Besides, if our government’s mentality is impaired then poverty will always be a problem, contraception or not. Everybody knows that the best economic policy is better education. Instead, the government slashes education’s budget, while doubling the pork for politicians and spending at least P50 million a year for Malacañang to hire ... wait for it ... three spokesmen.

Back to priests, I’ve heard feminists applaud the insults hurled at them as rightful payback. Payback for what? For stopping them from having sex? How on earth could the priests have done that? Pull a gun and shout: "Stop that sex!"? I know priests nag endlessly from the pulpit but that’s it. But that’s their job. That’s why they’re called "father," literally the heads of the spiritual family. Parents nag. And there’s no sane parent around who’d say to their kids: "fine, here’s condoms, get sex." Truth is, if people want to screw around, the priests can’t do anything about it. But it’s unreasonable to demand that they stop preaching. As inappropriate as telling your parents to shut the f*%# up. Pero isipin mo na lang, kung tinatamaan ka sa sinabi ng mga pari, may ibig sabihin iyon (kung sa tingin mo tama ka bakit ka affected?).

Finally, so what if priests don’t have sex? It doesn’t make them wrong. I doubt if any of your doctors actually had the heart attack or hernia that they get consulted with. Or if your lawyers also committed the alleged violations you approached them for (although one can’t be too sure about lawyers).

The point is: lighten up, read up. How can you make informed choices if you’re not informed? Pro-choice is not a choice. It’s a slogan. To shout "choice!" for the sake of choice is shallow because it only leaves unanswered the question: choose what then? Truth be told, there is a smart choice and it doesn’t come in rubber.


The flaky ally

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

The WTO recently finished and released the findings of its 10th trade policy and practice review of the US. The report essentially concluded that the “U.S. trade and investment regimes are among the most open in the world, and have remained so throughout the period under review. Like most other WTO Members, the United States very largely resisted pressures to respond to the global economic recession by tightening restrictions on imports. The restraint shown by the United States helped forestall a worldwide slide into protectionism. Border measures such as tariffs and quantitative restrictions have remained broadly unchanged.”

The findings are actually mostly expected. Present trade policies essentially saw the continuation of the Bush trade policies, with occasional declarations from the Obama administration regarding the need to ensure that trade partners comply with their trading commitments. And it must be remembered that the US is indeed battling the effects of a recession and a potential next one.

So it comes as a bit of a surprise that the ASEAN made a quite public complaint about the US regarding its trade policies. In a statement made at the WTO, ASEAN urged "the United States to undertake substantial tariff reductions across the board in both agriculture and nonagricultural market access negotiations," and to "avoid any form of support [provided by the US Farm Act] that could distort trade, particularly given that the United States is one of the world’s leading agricultural producers, and hence has the potential to effect world prices and international trade."

According to a report by BusinessWorld, ASEAN’s beef hinges on “high US tariffs on garments and crops, trade distorting subsidies favoring American agriculture and ‘frequent recourse’ to antidumping probes.” This is again a bit off considering that the “recourse” by the US to trade remedy proceedings were actually no higher than previous years and definitely not within the peak of its usage in 2007.

Granted, ASEAN “counts the US as its second largest export market in 2009 after the European Union, accounting for nearly a tenth of the region’s $810-billion exports to the world;” with the Philippines likewise considering “the United States a key market, having cornered roughly 16.32% of export sales from January to July this year, official data show.”

But I suspect the real reason for this show of belligerence against the US is to make up for the statement it issued with the latter last 24 September 2010. In that joint statement, ASEAN and the US reaffirmed “the importance of regional peace and stability, maritime security, unimpeded commerce, and freedom of navigation, in accordance with relevant universally agreed principles of international law, including the United Nations Convention on the Law of the Sea (UNCLOS) and other international maritime law, and the peaceful settlement of disputes.”

Of course, one could ask what could possible be wrong with such a logical to the point of mundane statement? Tell that to China. As reported by the Canadian Press, China reacted, again predictably hysterically, that “China claims sovereignty over the entire sea and all the island groups within it and regards any U.S. involvement in the disputes as unwelcome interference. Foreign Ministry spokesman Jiang Yu said the disputes were a matter only for China and the countries directly involved. Countries without claims in the region should stay out, she said. ‘Words or acts that play up tensions in the region and concoct conflicts and provocations in relations between countries in the region are against the common wish of the countries in the region to seek peace and development,’ Jiang said.”

So ASEAN chastises the US to mollify (the constantly hurt feelings of) China. What is disturbing about this is that our president went along with it, considering that he was just recently and generously hosted by the US, even coming home with a check for US$434 million dollars assistance in relation to the Millennium Development Goals. I realize that there is such a thing as real politik but we also have to consider that if the Philippines can’t determine who its friends are and have the spine to stand by them, it betray its lack of character.

So perhaps it’s quite understandable for the US, after having rebuffed Philippine overtures for a bilateral FTA (remember that our government quite rashly and impulsively publicly rejected the US’ prior invitation for it back in 2003), to now act coy regarding our interest in joining the Trans-Pacific Partnership. When we met assistant US Trade Representative for Southeast Asia and the Pacific Barbara Weisel, the message essentially was for the Philippines to think hard if it really wants to join the TPP, with our country expected to undergo "significant legal reforms … strong intellectual property rights system and opening the services sector completely, with very few exceptions."

The point here is that, while flakiness seems to be prized right now among our people, outside our country one pays a price for it.


Nestor Mata column

When a columnist like Nestor Mata starts quoting me, I guess it's time I really straighten up and take my job more seriously:

No more ‘mystique’!

The ‘Mystique’ that President Noynoy Aquino’s yellow T-shirt wearing image-makers built around him has been blown away in less than 100 days since he took office.

Even the frenzied attempt of his chief mouthpiece to give Aquino a "passing mark" for keeping "on track" his avowed promises on poverty alleviation and abolition of corruption has been dismissed as nothing but words, words, words! Deeds, not words, are what count, as we have always been repeatedly reminded.

It’ll take more than words to convince the people that Aquino has achieved anything at all in such a short time. That worked for the election, but now that he’s president he needs to produce results!

What are Aquino and his political acolytes trying to do? Fool the public? They may have fooled the voters once, but they can’t fool them a second time. The public is older and wiser than what they think!


When Aquino was in New York last week, he tried to do the same verbal trick once more in his maiden address before the 65th General Assembly of the United Nations. It was a speech that a disappointed political commentator, who used to sing paeans to him, called as "quite a little naïve."

An opinionator in another newspaper noted that Aquino, so pretentiously, "lectured the world on how to combat poverty…" and encouraged (his audience) "to harness the energies of dialogue, solidarity and communal responsibility, so that a global people power toward equitable progress may be achieved…My people have shown that, united, nothing is impossible. We called it People Power."

Noynoy, the political observer noted, "definitely is not one for letting facts or reality guide his actions!"

Indeed, Aquino and his speechwriters failed to say, or more likely, were ignorant of the facts that the Asian Development Bank has reported that the number of poor Filipinos increased to 27.6 million, while the World Bank pegged the overall incidence of poverty to an increased 32.9%.

And, sadly, he was not even aware that his own Cabinet official has admitted that the country is not likely to meet a commitment to halve poverty levels by 2015, or just one year before he steps down the presidency in 2016.

Perhaps, to his relief, and that of his retinue of officials led by his foreign affairs secretary, just a handful of delegates present when he delivered (which I described in this column Thursday) his fustian or pretentious and bombastic speech that day.


Oh yes, the day before his UN speech, Aquino received a check for $434 million from the U.S. financed Millenniun Challenge Corporation, which, by the way, was actually negotiated by then President Gloria Macapagal Arroyo.

Aquino kept quiet when US Secretary of State Hillary Clinton, after handing over that check intended to address poverty in this country, declared, very frankly, "…let’s be very honest here. Too many (Filipinos) feel that they cannot prosper in their own country. Too many of them feel that the elite in business and politics basically call the shots, and there’s not much for someone who’s hardworking, but not connected. Too many of them believe that even if they get the best education they can, that there won’t be an opportunity for them, and so they take that education and help someone else’s economy, even often here in the United States."

The business elite in the President’s official entourage were painfully quiet because they knew that "the elite in business and politics" Hillary referred to, were indeed wrecking the country for many, many decades now.

Strangely, Aquino responded by saying, "In the presidential palace in Manila, there’s a painting titled ‘Blood Compact’ (a masterpiece by Juan Luna). It portrays the first treaty of friendship between a Filipino ruler and the representative of a foreign power."

Quite strange, indeed, because Aquino and his wordsmiths, apparently, didn’t know the historical fact that the "Blood Compact" led to the invasion of our country by the Spanish conquistadors.

And still more strange, Aquino told Clinton that "we are two nations bound by a shared commitment to the same ideals of life, liberty and the pursuit of happiness."

These remarks of the President must have bewildered Hillary, as did Filipino writer Jemy Gatdula, who asked: "What constitution or history book does he and his speechwriters read?"

Yes, indeed, "in politics, as elsewhere, intelligence and virtue are no guarantee of electoral supremacy!" These were the words of Al Gore when he lost the American presidency to Bush the Younger.

How true! Just like Noynoy Aquino, ‘di ba?

If true, then the vaunted Noynoy "mystique" was a mistake, after all!


Quote of the Day … "A leader knows the way, goes the way, and shows the way!" --- Anon.