Trade in 2010

. . . is the topic of my first Trade Tripper column for the year in this Friday-Saturday issue of BusinessWorld:

And work begins ... Anyway! Considering the times, considering the elections, it is most likely that the last thing anyone wants to talk about this year is international trade. In a time when presidential candidates are reveling in their lack of qualifications (by that, I mean Noynoy), the subject of international trade, whether it be on the multilateral, regional, or bilateral level, seems to have taken the farthest back seat.

Unfortunately, no matter how some would like to ignore that fact, trade plays a necessary part of our lives. While most businessmen here are blithely and blissfully unaware that management capabilities played a significant part in the Philippine’s lowered competitiveness (as recent competitiveness reports show), more innovative (and richer) businessmen from other countries are looking outward, paradoxically at our direction. Whatever we do regarding trade, either collectively as a country or individually, after the elections is something that, ironically enough perhaps for some, has to be thought of now.

Regarding the WTO, Director-General Pascal Lamy indicated that the last week of March shall be the date for which considerable stocktaking is to be made. The point here is to conclude the Doha Round by 2010, a goal which, for this Trade Tripper, is highly dubious. As was written previously, the UK will have its elections this year to confirm whether or not David Cameron will be the next prime minister (and whether David Miliband will have the stuff to bring Labour to power in the following general elections). More significantly (despite European commentators’ statement to the contrary), the US will also be holding its mid-term elections, which will most definitely be taken as a sort of referendum on Barack Obama’s accomplishments (or more likely the lack of it).

The big news, of course, at the start of the year (courtesy of the best local business newspaper: BusinessWorld, of course) is that 2010 will see Philippine tariffs on practically all imports from the original ASEAN five drop to 0%. Add to this an assortment of products coming from China, Australia, New Zealand, Korea, and Japan. While definitely good news for consumers, businessmen here (particularly for the automotive and electronics sectors) are trying to put a brave face to an otherwise more competitive (and definitely, for the Philippines as a whole, welcome) situation. Reportedly, the likely gainers would be hog exporters and soap makers. The rest would most probably find themselves vulnerable to foreign competition, which is really all the better for the Philippines.

China, under the ASEAN-China free trade deal, should remove tariffs on 90% of goods from the Philippines. Various stages of tariff reductions are also in the works for Philippine goods exported to Japan, Australia and New Zealand, and Korea. Whether local business will actually be able to take advantage of the tariff reductions and produce as needed by demand is another matter.

Lest people forget, the Philippines is still locked in the midst of several significant trade disputes. There is DS371, formally designated as Thailand -- Customs and Fiscal Measures on Cigarettes from the Philippines. The dispute’s primary question is whether the Thai dual licensing requirement leads to discriminatory treatment against Philippine cigarette exports and thus a probable violation of the provisions of Articles 1 and 4 of the Dispute Settlement Understanding, Article XXII:1 of GATT 1994, and Article 19 of the Customs Valuation Agreement.

Then there are the two complaints we filed way back in 2002 against Australia (DS270 and DS271) due to its alleged discriminatory treatment of our fruit and vegetable exports. Interestingly enough, nobody seems to be inclined to proceed with this long-pending case, with not even a panel being formed (despite taunts hurled our way). We’re also third-party complainants in DS375/376/377-EC Measures on certain ITA Products.

Then there’s the dispute formally lodged as Philippines -- Taxes on Distilled Spirits (docketed as DS396). The EC’s complaint against the Philippines in this case centers on whether Philippine excise taxes on distilled liquor (as imposed by RA 9334) discriminate against imports and in favor of domestic products. It would be really interesting how this case turns out. As BusinessWorld previously reported, the "EU and US have jointly filed cases against three other WTO members over liquor taxes -- Chile, Japan and Korea -- all of which were decided in favor of the two major exporters, dispute archives show." This is to be read in the context of empirical studies that showed complainant countries in WTO disputes winning their cases almost 90% of the time.

And, finally, whatever happened to the competition policy bills pending in the Senate last year? One hopes it has not met the same fate as the sadly mangled (beyond intelligent usefulness) Trade Representative Office bill.

Thus, while some bafflingly insist on having brazenly unqualified people to high office, it should be remembered that although our politics focus on the local, economics -- whether we like it or not -- is international.