27.5.10

Stepping back, moving forward

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

(Excerpts of remarks delivered at the 7th Asian Law Institute Conference, Kuala Lumpur, Malaysia, May 25-26, 2010.) The Philippines, like any country the past two years, has not been spared the anxiety of a depreciated global economy. At the same time, neither has it been spared from indulging in exuberant optimism due to certain developments that the recent months had presented.

After reaching record lows, 2010 expects global trade growth at 9.5%. Developed-country exports should increase in volume terms by 7.5%, while developing-country exports should grow by 11%. Philippine manufactured goods exports rose by a healthy 42.3% (year-on-year) last February (with a slight .4% contraction month-on-month though). This marked a fourth consecutive month of growth.

For my part, I would like to tamper down any undue enthusiasm that developing countries may have and instead suggest that a more reflective, even cautious approach, be taken in facing the global trading system under the context of the recent difficulties just surmounted.

The paper I presented to the conference, "The Global Crisis and Suggested Philippine Responses To Protectionism," discussed three areas of concern, which I believe could be representative of the concerns (at least on a limited level) of other developing countries. These three areas are trade remedies, the creation of a trade representative office, and the development of competition policy. These areas need not be discussed again in these notes I made for today. However, I do would like to add certain related concerns that developing countries like the Philippines may need to think about in the coming days.

The first is the clear and obvious push, specially from developed economies for developing countries to engage in bilateral or regional trading arrangements (particularly, I would guess, with developed countries). This initiative should be met with caution. And, indeed, even with skepticism.

A recent working paper released by the ADBI ("FTAs and Philippine Business: Evidence from Transport, Food, and Electronics Firms") had confirmed something that only government bureaucrats long knew: that only around 20% of the companies surveyed in the Philippines had ever taken advantage of AFTA preferential rates. Aside from all previously discussed reasons is the developing countries’ private corporations capability to match competition domestically and to meet the demands of the export market. This is aside from the fact that a lot of developing-country corporations, such as in the Philippines, are still baffled by the mechanics of FTAs.

To the foregoing must be added the seeming disparity between the benefits going to richer countries as opposed to that going to poorer countries, which is affirmed in a recent UN University Working paper ("North-South vs. South-South Asian FTAS: Trends, Compatibilities, and Ways Forward"). The paper’s empirical analysis do reveal "that several incompatibilities exist between N-S and S-S FTAs in core areas including tariff liberalization, rules of origin, liberalization of services trade, compliance with World Trade Organization (WTO) notification requirements, and deep integration."

Another area that needs further stressing is competition policy. For a developing country like the Philippines, I would suggest that the focus of discussions on that area be 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. The problem of the Philippines is not the huge and competitive Philippine company that is really doing well. The probability that the concept of "natural monopolies," considering the small size of our domestic market, is applicable is with merit. The concern should be about 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.

Finally, having assisted as counsel for the Philippines in its cases before the WTO has confirmed in my mind the need for a well-established Philippine Trade Representative Office. Unfortunately, recent versions in our Congress on the matter have emphasized a necessity of reviewing pending legislation on the same. At worst, the system envisioned under House of Representative Bill versions I saw could in practice evolve in such a manner that may render the Philippine trade representative vulnerable to "policy capture" by certain narrow or specialized sectors.

In fine, rather than mechanically demanding increased tariff protection (or agreeing to rich countries’ self-serving suggestions to charge ahead and sign into every available FTA), it would be better for developing countries like the Philippines to examine their domestic laws to ensure that industries, properties, jobs, and beneficial product prices that should be for their citizens remain so. Electing experienced, trained, stable people to high government positions would not hurt as well.

20.5.10

Drinks with the TT: Tom Ripley

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

As part of my persistent ambition for the Financial Times to treat me to lunch (or breakfast or tea or anything that involves an interview and food), here is another installment of my Trade Tripper interviews. Considering that psychologically problematic people seem to be in vogue nowadays (at least in the Philippines), I’ve decided to invite Tom Ripley for drinks.

The venue was Georges and Marie’s bar-tabac in Villeperce-sur-Seine, which I’ve chosen for the convenience of my guest (who lives a mere walking distance away) and for my own personal safety. After all, this is a guy who, as of last count, killed nine people (and indirectly caused the deaths of four) and each time getting away scot-free. The mere fact that I’m writing about it and him still not getting caught is a testament to his extraordinary cunning and, well, talents.

The bar-tabac was getting noisier so I moved over to a quieter area near the window. The clientele, mostly drivers and workmen having their after work tumblers of pastis, were arguing politics, Sarkozy, and how le bleu will likely be found wanting in the coming World Cup. The motorcycle video game is still there, as well as a flat screen TV set tuned in to football. And there, just entering the door, taking off his scarf, is Tom Ripley.

Impeccably dressed, Ripley however is the type of guy who could stand next to you and you wouldn’t even notice he’s there. A remarkably commonplace face, with a bland deferential expression to go with it. He quietly walks up to me and we shake hands. We both order a café cognac and settle back. He offers me a Gauloises. I waive it off but told him to go ahead. Naturellement, this being France.

I ask him about Heloisé. He smiles: "She’s fine. She’s in Morocco now traveling with her friend Noëlle." But weren’t you in Morocco before already? I ask. "Yes," he answers, "but you know how Heloisé is. And besides, we wanted to go back because our last trip was kind of interrupted by some unpleasant people." He’s referring to the Pritchard couple, who, incidentally, would be both found dead, drowned in a pond inside their own home. So what are you doing here? Well, my three weeks was up, Heloisé wanted to stay, and something came up which compelled me to go back to Belle Ombre." I’m not going to ask what.

I asked him about his relationship with (the now deceased) Patricia Highsmith. "We never really mingled a lot," he said, leaning back and taking a drag from his cigarette. "We talked over the phone, exchanged some letters, and she just had the talent to make something of the somewhat boring events that I happened to come upon." Apparently, she found you a fascinating character, I said, and would continually talk about you to her friends. Ripley nods his assent: "It’s interesting how people get fascinated by my troubles."

In fact, people find Ripley so interesting that movies have been made about him. "Yeah, I know," he perks up, "and not all very good. Matt Damon I’d rather forget, Alain Delon is OK, John Malkovich is fine. Although I must say that Jonathan Kent is frightening, it’s like looking at a mirror." He chuckles and waves to Marie behind the bar.

It has always been assumed that Ripley is a serial killing psychopath. He dispatches his victims coolly, meticulously, and, except for Dickie Greenleaf’s murder, normally feels no remorse about the deaths. The violence he causes is shocking not really for its brutality (murdering either through beatings or strangling) but more for how casually he does it. His ability to lie and act his way out of tight spots is remarkable, to the point that one sometimes get to think he actually believes his lies. Strangely, though Ripley could unperturbedly slaughter people, for some reason he couldn’t stand the sound of live lobster being cooked in a pot.

Nevertheless, despite it all, I have to (guiltily) confess that I sometimes find Ripley saner than a lot of people I know. His amorality seems to outrage only the self-righteous, repressed, or hypocritical. And it must be said about Ripley that he would go to extreme lengths to reason with his victims and, in the end, it is their neurosis that actually does them in. Indeed, perhaps we label Ripley a monster because, unlike most people, this elegant suave polite killer who spends most of his days gardening and dabbling in art, and who simply wants to be left alone, gets away with it.

Ripley stands up to leave. I commend him for seeming to age quite gracefully. He grins, "I’m certainly wiser now, more patient."

And more talented? I add, getting the bill, just happy to have survived.

Georges and Marie's bar-tabac
2 x cafe cognac

Total (including service charge) €8.40

13.5.10

Of Ilustrado and the elections

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

Well, that was disappointing. Before the elections, one could be forgiven for suspecting that people here have an aversion to self-made wealth, success, ambition, sense of loyalty, restraint, and psychological stability. Now we know we actually hate those traits! I’m not going to pretend otherwise: even considering the fact that 60% of Filipino voters rejected the man who will assume the presidency, the election results are still deplorable, not least because we cavalierly disregarded achievements in business or intellect, or academic distinction for mere connections and sentiment. Try telling kids to study and work hard in this country from now on.

Two days before the elections the New York Times came out with an article about Miguel Syjuco, a young Filipino expatriate who won the Man Asian Literary Award for his remarkably clever book "Ilustrado." The interesting thing about this is that "Ilustrado" has been around for years, with the author even admitting difficulty in getting his book published in the Philippines. More interestingly is the fact that, of the several articles written locally about the book, most (if not all) dwelt on Syjuco’s efforts to write the book -- to the point of ignoring the book itself.

The reason may have to do with the book’s plot and theme: the body of Filipino author Crispin Salvador is found in the Hudson River. With his death goes missing the sole manuscript of his final work. That manuscript, it turns out, deals with the crimes and shenanigans of (guess what) the Philippine elite, that small number of Filipinos who rule (and, unfortunately, continue to rule) over this sad, degenerating, deteriorating country of ours. "Ilustrado" is, therefore, a detective story, with the book’s lead character investigating Salvador’s death by looking at the latter’s previous writings. Along the way, one gets glimpses of Filipino history through the characters’ experiences and perceptions.

As this column never tires pointing out, ours is one long history of never learning our lessons: first under the Spanish, Americans, and Japanese, and, now, under the elite. Of that long unchecked rule by those families who, despite siding with the Spanish against the Katipunan, intrigued against Apolinario Mabini, embezzled Katipunan funds, collaborated with the Americans, collaborated with the Japanese, war profiteering, corruption over the US Army surplus, parity rights, currency manipulation, import licensing schemes, exploitation of People Power and Edsa Dos, behest loans, government coddling of favored companies or "kamaganaks," energy problems, a weak economy, the Doña Paz sinking, the Mendiola massacre, bungled land reform, Roppongi, Big Bird, missing sequestered assets, missing agricultural funds, NBN-ZTE, the MILF-MOA and the (almost but still possible) dismemberment of our Republic’s territory, are still bafflingly in power with the support of a great number of our people.

As Syjuco himself says in the New York Times’s piece: "’My family, my friends, my colleagues -- we are the elites,’ he said. ’We are a wealthy, beautiful country, and we’ve screwed it up so badly. The majority of wealth is controlled by a minority. And we don’t know when enough is enough. The elite don’t want one mansion; they want three.’"

That is the story of "Ilustrado" that members of the ruling class, those who control the media, would want you to gloss over: of how the elite has screwed the country and continue to do so. Syjuco himself says that looking at the elite’s past crimes "may not necessarily be what’s needed." I respectfully disagree. We have to know. Because, as Fr. Horacio dela Costa once wrote: "Those who know their history are bound to surpass it."

Because, right now, we are merely continually repeating the history of a country who would not vote for a man who pulled himself up from poverty, despite having no rich family connections, by sheer grit, determination, and ability to take insults from the ruling class. This is the history of a people who would not vote for a Bar topnotcher, Harvard grad, and the country’s youngest Defense secretary. This is a country that would not vote for a senator, former mayor, and lawyer; of an agricultural country who would not vote for an agriculturalist; or a commerce graduate and pastor; or a governance advocate and professor. This is a country that will not vote for a Lincoln, a Mandela, or an Obama even if they landed right in the middle of EDSA simply because they’re self-made successful men.

Instead, this country will happily vote for some guy who, we know merely as the son of two politician parents and whom foreigners find agreeable.

So for the next few days (or six years), try to please remember why our country is screwed up. Why not knowing our history will make us bound to repeat it. Why, aside from reciting Rudyard Kipling’s "If," you should buy "Ilustrado" (available at Fully Booked). Read it and ask yourself of the last elections: "What have we done?"

And never forget who supported whom.

6.5.10

Of Villar and the WTO's drinking problem

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

At the outset, let it be known that the country is obviously immersed in serious matters and we clearly need a serious leader. Really, would you trust somebody who never had to work for a living in his life, much less had to fight for it, to be the president of our Republic? In these trying times, this crucial time in our nation’s history, we need a psychologically stable, experienced, and capable leader.

We have previously put people in office based on the emotions and passions of the moment and let’s all remember how that turned out: daily blackouts, a falling economy, massacred farmers in Mendiola, increased kidnappings and terrorist attacks, secessionist movements, corruption by relatives and so-called "kamaganaks," and even a president marching to the Senate to ask that US bases be allowed to stay in the country. Do we really want that all over again? Maawa naman kayo sa bayan -- don’t vote with your emotions or sentiment. Don’t vote for some untested spoiled rich kid. Don’t vote merely to vindicate a person or a family. Don’t vote for them. Vote for your country. Vote Villar.

Having said that, focused as we are in the elections, it still must be remembered that the Philippines is in the middle of two significant trade disputes at the WTO. DS371, formally designated as Thailand -- Customs and Fiscal Measures on Cigarettes from the Philippines, and DS396 or Philippines -- Taxes on Distilled Spirits.

DS371 (which includes allegations of Thai discrimination against our cigarettes) involves 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. The report on this should be out anytime soon.

Meanwhile, in the midst of Pascal Lamy’s call for a "cocktail approach" to the Doha dilemma, DS396 involves the EC’s complaint that Philippine excise taxes on distilled liquor (as imposed by RA 9334) discriminate against imports and favors domestic products. In essence, the EC centers its complaint on Republic Act No. 9334 -- An Act Increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products. Allegedly, the excise tax law imposes considerably lower rates for distilled spirits that are made from indigenous materials, making it contrary to WTO rules.

Also, as expected (considering that the US joined last year’s consultations on the matter), last April 20, 2010, the DSB agreed to the United States’ request for a panel (for the complaint docketed as DS403). In its Request for Panel dated March 29, 2010, the US alleges that the "Philippines taxes distilled spirits at rates that differ depending on the product from which the spirit is distilled. Distilled spirits produced from certain materials that are typically produced in the Philippines are taxed at a low rate. Other distilled spirits are taxed at significantly higher rates (for example at a rate that is approximately from 10 to 40 times higher than the rate for the domestic product). The tax rate also depends on whether the product from which the spirit is distilled is produced commercially in the country where it is processed into distilled spirits." Thusly, according to the US, "Philippine measures appear to be inconsistent with the first and second sentences of Article III:2 of the GATT 1994."

In instances where more than one WTO member requests the establishment of a panel related to the same matter, a single panel may be established to examine these complaints taking into account the rights of all members concerned. Single panels are actually encouraged to examine such complaints whenever feasible. Nevertheless, such panel shall organize its examination and present its findings to the DSB as if separate panels examined the complaint. The written submissions by each of the complainants shall be made available to the other complainants, and each complainant shall have the right to be present when the other complainants make their arguments. When a dispute is between a developing country member and a developed country member the panel shall, if the developing country member so requests, include at least one panelist from a developing country member. As reported by the WTO, "The US, the Philippines and the EU agreed that the panel established on 19 January 2010 to review the EU complaint on the same issue will also examine the US complaint."

Also, as in the case of DS396, several countries (including China, India, and Thailand), have indicated interest in the case as "third parties." A third party is any WTO member having a substantial interest in a dispute. It could eventually morph into a complainant in its own right and in such case the dispute shall be referred to the original panel wherever possible.

All this just emphasizes the following undisputable facts: we are in serious situations that have serious consequences, faced against serious foreign countries. Vote, therefore, for a serious, capable, experienced, purposeful, and stable leader. Vote for your country. Vote Villar.