The Philippine Bus and Miss Universe

(perceptive article from the 29 August 2010 Huffington Post, by Daniel Wagner):

This week two noteworthy events involving the Philippines made headlines: the botched rescue of Chinese tourists taken hostage by a disgruntled former policeman, and a botched response to a question by Miss Philippines in the finals for the Miss Universe contest. You might ask, what do these two things have in common? Separately, not much, but taken together, they represent both the peril and promise of the Philippines today.

For many years pundits have commented that the Philippines appears to be heading backwards economically and politically, while many parts of Asia barrel toward middle income status and have maturing democracies. Yes, other countries have disputed elections, other countries' leaders do questionable things, and other developing countries struggle to achieve sustainable economic growth. And, yes, there are recent examples of fresh political turmoil and economic hardship not only in Asia, but throughout the world.

The difference here is, many of the countries experiencing political instability and economic dislocation don't have the things the Philippines has: agricultural self-sufficiency, a high literacy rate, and a largely homogeneous population. One Asian country that possesses these qualities - Indonesia - has managed to transcend monumental political turmoil, turn its situation around, get on the path to democracy, stay there, and become a darling of the international investment community. The Philippines had this in the 1960s. Why can't it have it now?

When I lived in the Philippines from 2003 to 2007, I was asked, what is the difference between the Philippines and Indonesia? My answer was, "In Indonesia, they have hope." I came to the conclusion that in spite of all the things the Philippines has going for it, its people didn't demand enough of themselves, or of their government. Political apathy and a willingness to accept a low common denominator of performance have taken their toll on the psyche of the Philippine people.

Filipinos should not therefore be surprised that the Philippine police tried to negotiate with the hijacker of the Chinese tourist bus well after a reasonable period of time had passed, negotiations had failed, and the lives of the tourists were clearly in jeopardy. Police from a variety of other nations would have simply killed him at the first opportunity, regardless of the fact that he was a former colleague. This SWAT team knew how to get the results that were required, but they failed to do so. Why? Their priorities were misaligned. The safety of the hostages should have been paramount - not the fanciful notion that a man who is desperate enough to take hostages would somehow come to his senses at the height of the crisis.

The result of actions like this are unfortunately consistent with the expectations many people have of performance in other areas. Politically, the Philippines has descended into an ongoing competition between political dynasties: Marcos, Arroyo, and yes, Aquino. What I don't understand is, why do Filipinos continue to vote them in, election after election? Is it because of a lack of viable alternatives? No. Is it because of political apathy? Possibly. Or is it because they have no expectations that anything will change, regardless of who is in power? Definitely. What does this say about the country's future? Nothing good.

Which brings me to the Miss Universe contest. Miss Philippines, Maria Venus Raj, is by anyone's definition fantastically beautiful, poised, and graceful. Many believe she should have won the competition, and she deserves a lot of credit for being the first Filipina since 1999 to make it to the finals. But her flubbed response to the question of what mistake she had made in her life and what would she have done differently apparently cost her the crown. How could this 22-year-old woman, who so diligently prepared herself for that moment -- at great personal sacrifice her whole life - not have come up with a better response?

She was nervous, she said. Well, who among the finalists wasn't? Other Filipinos have said English wasn't her first language so she had difficulty coming up with the right words. Really? How come no other Philippine contestant in the Miss Universe pageant ever had an interpreter? In preparation for this event it never occurred to her or anyone around her that such a question might be asked? Had she come up with a better response, it is likely the crown would have been hers, and the Philippines would be basking in her glow. Instead, it's just another instance of a missed opportunity, and Filipinos are making excuses.

If the Philippines wants to get its act together and live up to its potential, it needs to demand more of itself. It can achieve this by stopping making excuses for its failures and ending its acceptance of the lowest common denominator. President Aquino promised to put an end to nepotism and corruption in government. The people should make sure he does this. When the police screw up a hostage rescue, the people responsible should be fired. And when a beauty queen blows an attempt to become the glory of the Philippine people, it should be recognized as such.

Daniel Wagner is Managing Director of Country Risk Solutions, a political risk consultancy based in Connecticut.


A little bit of good news

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

Lost in the midst of all the bad news was a significant event in Philippine legal history. Except for BusinessWorld, nobody reported that a WTO panel issued its report last Aug. 16, 2010, with regard to the case formally entitled "European Communities and its Member States -- Tariff Treatment of Certain Information Technology Products."

Considering that the Philippines has been taking a beating the past few weeks, what with botoxed singers, a bus that killed 41 passengers, a hostage taking that resulted in the unnecessary deaths of seven, and an embarrassing loss at the Ms. Universe pageant, the country can perhaps take small consolation in the fact that it finally won in a state-to-state dispute, albeit as third-party complainants.

The case involved complaints by the US, Japan, and Chinese Taipei (docketed as DS375, DS376 and DS377) against the EC, essentially claiming that the latter had not been respecting their commitments under the Information Technology Agreement (ITA). The EC was supposed to provide duty-free treatment to the products covered under the ITA imported from the complainant countries. The Philippines felt the same way and (as far as DS375 and DS376 are concerned) requested to join in the dispute at the consultation stage.

According to its position, the Philippines has a strong interest in the proper imposition of the ITA commitments by the EC in view of the fact that the Philippines ranks as the 10th highest information technology product supplier to the European Union. In 2005, total EU imports of such products from the Philippines reached $5.4 billion.

The Philippines submitted that it "agrees with the claims of the United States, Japan and Chinese Taipei that the measures of the European Communities and its Member States concerning flat panel displays, set top boxes with a communication function, and multifunctional machines are inconsistent with Articles II:1(a) and II:1(b) of GATT 1994. Furthermore, [the Philippines agrees] that the EC measures concerning set top boxes with a communication function are also inconsistent with Articles X:1 and X:2 of GATT 1994."

On specific points, the Philippines asserted that "the EC [imposed] customs duties on certain FPDs, STBs and MFMs instead of applying duty-free treatment on these as provided for in the EC Schedule." It was also argued that "pursuant to Article 31(1) of the Vienna Convention on the Law on Treaties, a treaty must be interpreted in the light of its object and purpose. Furthermore, as underlined by the panel in EC -- Chicken Cuts (Brazil), the relevant aspects of the WTO Agreement and the GATT 1994 provide that concessions made by WTO Members should be interpreted so as to further the general objective of the expansion of trade in goods and the substantial reduction of tariffs."

The Philippines did note that the EC suspended from Jan.1, 2005, to Dec. 31, 2008, duties on FPDs "with a diagonal measurement of the screen of 48.5 cm or less and with an aspect ratio of 4:3 or 5:4. Duties were suspended for FPDs classifiable under CN subheading 8528.21.90 (or CN subheading 8528.59.90 as of 1 January 2008)." However, "the duty suspension has now expired and has not been renewed. This implies that, as of 1 January 2009, the FPDs that benefited from the above-mentioned duty suspension are now again subject to customs duties." Nevertheless, even "if the duties were suspended again for certain types of FPDs, the Philippines is of the view that the EC would still violate Articles II:1(a) and (b) of the GATT 1994. The violation would exist because the benefit of the zero tariff is made dependent on a number of conditions and terms not set forth in the EC Schedule."

In the end, the WTO panel noted that the EC "indicated that the Commission Regulation Nos. 634/2005 and 2171/2005 would be repealed. In addition, the European Communities has indicated that Commission Regulation Nos. 517/1999 and 400/2006 would be repealed as of October 2009. However, there is no evidence properly before the Panel confirming such repeal. Therefore, the Panel has proceeded on the basis that the said measures are in force."

The panel then declared that "under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment of benefits under that agreement." Accordingly, the panel finds that "to the extent that the European Communities has acted inconsistently with Articles II:1(a), II:1(b), X:1 and X:2 of the GATT 1994, it has nullified or impaired benefits accruing to the [complaining countries] under that agreement." Consequently, it recommended that "the Dispute Settlement Body request the European Communities to bring the relevant measures into conformity with its obligations under the GATT 1994."

An appeal by the EC is expected. And there are still the cigarette and whiskey cases. But for the moment, the country should savor this rare bit of good news.


Driving as fast as wheels can turn

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

Before some "feeling" lawyers accuse me of intellectual fraud, it is hereby acknowledged that the above title was taken from the song "Driving" by Everything But The Girl (from the album Language of Life), composed of the duo Ben Watt and Tracey Thorn, the latter now doing collaborative work with Massive Attack.

In any event, this article is not about EBTG but rather about one of my pet peeves: driving in the Philippines. As elegantly as I can put it, driving here sucks.

To drive in this country, particularly in Metro Manila, is a test of one’s sanity. I’m sure the lot of you have read the saying "I’m careful but you’re slow; or, I’m a quick driver but you’re a raving lunatic." However, this is simply not the case. I am pretty sure that a majority of the drivers in the Philippines should have not been issued a driver’s license in the first place.

Jeepneys and buses lead in making this country a horrible place to drive in. Jeepneys are supposedly a symbol of Filipino ingenuity. If that’s true, then this country is really in trouble.

There is nothing ingenious about the jeepney. For the first few years after the Second World War maybe but six decades after? It is a dangerous, gaudy, and dirty machine.

The drivers behind the wheel are usually no better. Most of them belong to some organization (with names all sounding like BOBOTODA or something) whose apparent purpose is to train them how to be even worse drivers. They stop at intersections during green lights, stick out in intersections during red lights (the better to obstruct pedestrians from crossing), and they always, always, stop at corners to prevent those who want to turn from doing so.

It’s no use blowing the horn or blinking the lights or calling out at these drivers. It is a matter of honor for them that they inconvenience their fellow motorists. If the light turns green and you happen to be behind a jeepney, don’t make the mistake of calling the driver’s attention to it as he will consider you questioning his manhood and will in no way want to move forward. He will move forward when he decides to, green light be damned!

Bus drivers are no better. It’s really not a lack of discipline but rather just plain psychotic. I’ve actually seen a bus in EDSA turn a full 90 degrees just to overtake a fellow bus. I’ve seen (I’m sure all of you have) passenger-filled buses race irrationally down highways. I’ve seen buses bully smaller cars by looming menacingly behind them at full speed. There should be a law imposing psychological exams on these drivers or (if there is one already) even stricter exams.

Come to think of it, perhaps a great number of motorists here do have a fragile sense of manhood.

Accelerate to overtake a slow moving vehicle and I bet you he will accelerate as well. Blow your horn for them to move to a slower lane and they will defiantly ignore you. Signal to turn and they will consider it an emasculation if you got to enter their lane ahead of them.

It is simply unthinkable in this country to be courteous and give way to your fellow motorists. I’ve actually seen jeepneys that, for the simple reason they were not able to sneak into the lane they wanted to go to (without doing the un-macho thing of signaling), accelerate closely past the "offending" vehicle in the hope of breaking off its side-view mirror. Or tricycles that actually have hard metal wires connected to their sides so as to scratch any private vehicle that would dare go alongside them.

Or perhaps motorists here just absorbed the ilustrado’s stupid sense of entitlement.

Try driving in any highway. It would be difficult for you to stay in even one lane for more than five minutes as you would be forced to keep switching lanes every few seconds. The reason is that motorists here seem to believe they have the inviolable God-given right to drive at any pace they feel like and to stop anywhere they want.

So, for example, in a three-lane highway, the outer lane will have to be avoided because it’s full of jeepneys that stop without warning, the middle lane will be occupied by some jerk who would be blissfully driving below the speed limit, and the inner lane by an even bigger jerk driving even way slower.

All this time, assuming that these idiots can be avoided (as they usually drive in tandem), you would then have to deal with young executive types who think they’re from the movie The Fast and the Furious, deranged motorcycle drivers on 125cc bikes imagining they’re on Moto GP, and morons in pompously dark-tinted SUVs driving between two lanes.

Want to know what’s wrong with our society? Take a drive.


WTO ruling to benefit RP

(taken from the 18 August 2010 issue of BusinessWorld)

A World Trade Organization panel has ordered the European Union to eliminate tariffs on several imported electronic products, a move Philippine experts hailed as a gain for local industry.

The panel issued its decision yesterday, upholding complaints raised by the United States, Japan and Taiwan that EU duties on three products -- flat panel monitors, multi-function fax machines, and TV set top boxes -- were inconsistent with the Information Technology Agreement which requires zero tariffs on high-tech goods.

The report will become a Dispute Settlement Body ruling in 60 days unless a consensus rejects it or parties appeal the decision, based on WTO procedural rules.

"Having found that the European Communities has acted inconsistently... we recommend that the Dispute Settlement Body request the European Communities to bring the relevant measures into conformity with its obligations...," the report states.

The decision’s publication yesterday moves forward a dispute which was first raised in early 2008 when the three complainants requested talks with the EU to settle the matter.

The EU argued that the disputed products were not covered by the treaty as technological modifications made them far removed from the original definition of electronics qualified for zero tariffs.

The consultations failed and a WTO panel was later established, with the Philippines signing on along with other countries as third party participants.

The Philippines cited its strong interest in the case, claiming it was the 10th largest electronics supplier to the EU, an executive summary of the Philippines statement which was included in the panel report’s annex showed. Last year, electronic components accounted for roughly two-thirds of the Philippines total export sales to the world, official data show.

The country argued that whether or not the EU was correct to classify the disputed products into headings that were exempt from the trade treaty, the end result was still one that violated trade rules.

"With this report, hopefully there will be better opportunities for the electronics industry here. We’re looking forward to working with the EU in ensuring their new rules will be consistent with WTO [commitments]," Jeremy I. Gatdula, one of the lawyers that assisted the Philippine delegation, said in a telephone interview yesterday.

"We should take this as an indicator that the WTO does work in favor of Philippine businesses. Firms should be more comfortable working within the WTO system," Mr. Gatdula added.

The Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) likewise lauded the development.

"We supported the [complainants] in this case. It’s good for us because there are companies in the Philippines who are into those [product] lines," SEIPI President Ernesto B. Santiago said in a text message yesterday.

He was unable to quantify the added boost the ruling would lend to export sales, saying only that the decision "opens up a barrier to free trade with the EU."

The group expects industry export sales to grow by 25-30% this year after declining by more than a fifth to $22.173 billion in 2009.

The United States Trade Representative Office, for its part, tagged the development as a "victory for US technology manufacturers and workers," especially as global exports of these three products were worth a hefty $44 billion last year.

* * * *
For a copy of the panel report in European Communities and its Member States — Tariff Treatment of Certain Information Technology Products” (DS375, DS376 and DS377) , click here.


Supreme Court supremely right

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

The interesting thing about the case of Vinuya vs. Executive Secretary is its demonstration of how a mob mentality works. People keep huffing and puff ing, making shrill emotional remarks, not even allowing things like ... oh, the law and accurate information to get in their way. In the end, however, is one inescapable fact: the Supreme Court was right in its April 28, 2010, decision.

Truth is, any alleged plagiarism in this case is beside the point and best decided in a separate proceeding. The supposed plagiarized statements do not relate to the main issue of the decision and doesn’t even form part of the rationale for it. The alleged plagiarization had to do with a discussion on the nature of jus cogens. However, the main question for this case is: can the Philippines be compelled by its citizens to sue Japan for any injuries done by the latter to Filipinos? The answer is no and this the Supreme Court correctly ruled.

The jus cogens issue is, frankly, almost unnecessary. The decision could have been made without it. The Supreme Court already clearly considered the "comfort women" program of the Japanese as an "unimaginable horror," causing "unmitigated misery" to its victims. Jus cogens, a technical term in international law, essentially denotes a norm from which no derogation can be made. Some parties argue that the prohibition on sexual slavery is jus cogens (as well as erga omnes, the obvert of jus cogens, which means binding to all). The problem is, the Supreme Court got taken in by the jus cogens red herring and dwelt extensively on it. Even then, the Supreme Court made a quite reasonable (albeit arguable) assertion that there seems to be lack of definite proof that sexual slavery is indeed jus cogens under international law (and self-serving lawyer’s declarations or book quotations are not proof). After all, one can’t expect the Supreme Court to declare something jus cogens just because an activist lawyer says so. Something of actual substance is needed, like jurisprudence or treaty provisions. It is here where the alleged plagiarism took place.

As the Supreme Court explained (patiently, in my view) to the parties in its ruling: yes, there is such a thing as jus cogens, but where is the authority that says the ban on sexually slavery is one? Even the International Law Commission, according to the Supreme Court, seems to leave it to time and practice to determine what constitutes jus cogens.

However, all that discussion is futile. Because whether or not the prohibition on sexual slavery is jus cogens (and, frankly, I agree it is), the fact still remains that the Philippine government cannot be compelled by anybody to sue another state. International law does not consider the "comfort women" to be the ones harmed by Japan but the Philippines. Thus, the right to sue belongs not to the comfort women but to the Philippines. To this must be coupled the fact that, under international law, although states have the right to hold to account those who harmed their citizens, nevertheless, they have no duty to protect them.

Again, the alleged plagiarism revolved around the question on the nature of jus cogens. Indeed, even the comment that I’ve read from one of the authors allegedly plagiarized, Evan Criddle, focuses merely on his argument that the prohibition against sexual slavery is jus cogens: "Speaking for myself, the most troubling aspect of the court’s jus cogens discussion is that it implies that the prohibitions against crimes against humanity, sexual slavery, and torture are not jus cogens norms. Our article emphatically asserts the opposite." But as we’ve seen, whether the sexual slavery ban is jus cogens is really a lesser concern when viewed under the context of the actual issue of the case and that is the Philippines’ unquestionable sovereign right to decide whether or not to sue another state.

Some parties point to the ILC’s Draft Statute on State Responsibility (of which my teacher, James Crawford, led in its drafting and even allowed us his students to comment on his work) as basis for their argument that the Philippines can indeed be compelled to sue Japan. But even a grade school student reading the same can see that such is not true. Article 48 alone is replete with clearly optional phrasing like "entitled to invoke" or "may claim from the responsible State." And let’s not forget, it’s a "draft" statute. The point here is that the right to sue obviously includes the right not to sue (kaya nga siya "right" eh).

So, rather than hyperventilating self-righteously as some lawyers’ groups are doing, some self-restraint is clearly in order. Rather than making confused idiotic statements like "supreme theft" or "intellectual fraud" in "order to mislead and deceive" people, those commenting on this subject should exhibit a little more respect for our Supreme Court. And a clearer, more informed thinking about public international law.


RP win at the WTO

(from BusinessWorld 9 August 2010)

GENEVA -- The Philippines has welcomed a ruling by the World Trade Organization on its complaint over Thai taxes on imported cigarettes, suggesting that Manila has won the dispute with its southeast Asian neighbor.

The case turns on "customs valuation" -- the value put by customs officials on imports which can differ from that declared by the importer, and is often a source of trade disputes.

Manuel Teehankee, Philippine ambassador to the WTO, declined to comment specifically on the outcome of the case or even say whether Manila had won, because the ruling is still confidential while the WTO panel’s report is translated into the trade body’s official languages.

But Mr. Teehankee said in a statement: "The Philippines is satisfied with the findings and rulings of the panel which strengthen the rules-based multilateral trading system, and addresses Philippine concerns regarding the treatment by the Thai government of Philippine cigarettes exports."

No comment was immediately available from Thailand’s WTO mission in Geneva.

If the panel report indeed favors the Philippines, it will -- as with those for other disputes -- likely require Thailand to reverse measures that are inconsistent with the World Trade Organization’s rules, Jeremy I. Gatdula, Ateneo Law School professor for international economic law, said in a telephone interview yesterday.

A timeframe for correcting the trade measures will be up to the two parties to work out, said Mr. Gatdula who was one of the lawyers that provided assistance to the Philippine team.

"As far as we are concerned, we believe our position is meritorious," Mr. Gatdula said.

"Anyway, we should look at disputes more positively as a way of managing relations rather than just creating hostility.

"[A panel decision] will allow us to move forward with our relations with Thailand which has been a great trading partner," he added.

Mr. Teehankee said a series of customs valuation and domestic taxation measures starting in 2006 had undermined the competitiveness of imported cigarettes against those produced by the state-controlled Thailand Tobacco Monopoly.

This hurt Philippine exporters such as the local operation of Philip Morris International as well as tobacco growers in the archipelago.

Thai customs stopped accepting the transaction value declared by importers and set their own higher valuation as a basis for import duties. They also calculated a higher value-added tax for imported cigarettes, Philippine officials said.

The Philippines complained to Thailand that these measures were discriminatory and broke international trade rules.

After consultations between the two states to resolve the matter the WTO set up a panel in 2008 to rule on the dispute.

The report, which has been issued confidentially to the two parties, will be published in a few weeks, after which both sides have 60 days in which to appeal. --
Reuters with a report from Jessica Anne D. Hermosa


ICJ rules on Mindanao

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

No, it did not. It never did and never has. And contrary to the rubbish that some parties are spouting around in the media, the International Court of Justice’s July 22, 2010, advisory opinion (formally titled "Accordance with International Law of the Unilateral Declaration of Independence by the Provisional Institutions of Self-Government of Kosovo -- Request for Advisory Opinion") has no bearing whatsoever on the Philippines.

It is a very specific case involving a very specific question relating to quite specific circumstances involving specific parties. Add to this the fact that rulings or opinions issued by the ICJ, like most international tribunals, are applicable only to the parties to that case and only for that case. There is no rule of "precedent" in international law, at least unlike the way our Supreme Court establishes precedent. And, for the record, the Philippines had no formal participation in the Kosovo Advisory Opinion (interestingly enough, two of my teachers, Daniel Bethlehem and James Crawford, were there representing the UK, as well as two others who at one time or another lectured in Cambridge: Malcolm Shaw and Sir Robert Jennings, as counsels for Serbia).

That the Advisory Opinion revolved around a very particular question forwarded to it by the UN’s General Assembly was made quite clear by the ICJ: "the question is narrow and specific; it asks for the Court’s opinion on whether or not the declaration of independence is in accordance with international law. It does not ask about the legal consequences of that declaration. In particular, it does not ask whether or not Kosovo has achieved statehood. Nor does it ask about the validity or legal effects of the recognition of Kosovo by those States which have recognized it as an independent State." The ICJ also points out that the purpose of the advisory opinion was merely to "enable organs of the United Nations and other authorized bodies to obtain opinions from the Court which will assist them in the future exercise of their functions. The Court cannot determine what steps the General Assembly may wish to take after receiving the Court’s opinion or what effect that opinion may have in relation to those steps." It must be emphasized that Kosovo’s unilateral declaration was done within very distinctive parameters provided by the Security Council (by way of its resolution 1244 [1999], as well as the Constitutional Framework).

The question itself is stated as follows: "Is the unilateral declaration of independence by the Provisional Institutions of Self-Government of Kosovo in accordance with international law?" In approaching this question, the ICJ focused on the "clearly formulated" wording of the question. It did not say that such "unilateral declaration" was encouraged or sanctioned under international law; nor did it agree that Kosovo was moving correctly within any alleged right of secession.

As the ICJ itself puts it: "the General Assembly has asked whether the declaration of independence was ’in accordance with’ international law. The answer to that question turns on whether or not the applicable international law prohibited the declaration of independence. x x x The Court is not required by the question it has been asked to take a position on whether international law conferred a positive entitlement on Kosovo unilaterally to declare its independence or, a fortiori, on whether international law generally confers an entitlement on entities situated within a State unilaterally to break away from it. Indeed, it is entirely possible for a particular act such as a unilateral declaration of independence not to be in violation of international law without necessarily constituting the exercise of a right conferred by it."

The ICJ, therefore, made no new declaration regarding self-determination: "the international law of self-determination developed in such a way as to create a right to independence for the peoples of non-self-governing territories and peoples subject to alien subjugation, domination and exploitation." Definitively, the ICJ considered "that it is not necessary to resolve these questions in the present case. x x x Debates regarding the extent of the right of self-determination and the existence of any right of ’remedial secession’, however, concern the right to separate from a State. As the Court has already noted, and as almost all participants agreed, that issue is beyond the scope of the question posed by the General Assembly."

As it stands -- and ignoring nonsense like making distinctions between "traditional" and "modern" international law (there is only "international law") -- international law makes it clear that the right to self-determination does not allow an ethnic or religious group to secede or otherwise carve out its own territory to become an independent State.

In the end, the ICJ merely said that Kosovo’s unilateral declaration "did not violate general international law." Nothing more, nothing less. Such has no bearing on the Philippines. And the Philippines is free to do what it can to protect its national interests, which clearly includes maintaining its territorial integrity.

RP not ruling out pact with Taiwan

(BusinessWorld, 6 August 2010):

The Philippines is not ruling out talks for a free trade pact with Taiwan even as the country only recognizes the government in Beijing under a one-China policy, a Trade official yesterday said.

Stronger ties with the territory, which already accounts for a large part of the Philippines’ export sales and foreign direct investment, would be ideal especially as Singapore itself is looking at forging a deal with Taiwan, Trade Assistant Secretary Ramon Vicente T. Kabigting said.

"Certainly there is a one-China policy but we have always recognized that Taiwan is among our top trade partners and investors," Mr. Kabigting told reporters in a chance interview.

Taiwan -- regarded by China as a breakaway province -- was the Philippines’ 13th largest source of net foreign direct investments in 2009, accounting for $1.34 million according to central bank data.

The island was likewise the Philippines’ 13th largest export market last year, accounting for $1.324 billion or 3.5% of total export sales.

Mr. Kabigting further noted that Singapore had announced it was exploring possibilities for a trade pact with Taiwan, which last June signed the Economic Cooperation Framework Agreement with China.

"Developments like that can only make it easier for us to consider similar possibilities," Mr. Kabigting said.

"It makes compelling economic sense to have closer ties with Taiwan."

The National Economic and Development Authority (NEDA) under the previous administration previously announced that the government was studying the forging of a trade deal with Taiwan in an effort to keep up with China.

Otherwise Taiwanese companies, lured by the newly minted trade pact between Taipei and Beijing, could move investments into China, the NEDA said, threatening investments based here and also the jobs of Filipino workers employed in Taiwanese factories.

The Taipei Economic and Cultural Office, Taiwan’s representative arm in the Philippines, said it would be approaching the new administration to discuss the matter.

Sought for comment, Ateneo international economics law professor Jeremy I. Gatdula yesterday said the Philippines was free to enter into a trade deal with Taiwan despite the one-China policy

"Taiwan is a sovereign [sic. it should be 'separate' - jemy] customs territory under the World Trade Organization so there’s no reason why, legally speaking, [the Philippines can’t forge a trade pact]," Mr. Gatdula said in a telephone interview.

"China should be considered a reasonable country."

The Philippine Institute for Development Studies -- a government think tank -- is already studying the matter, its president Josef T. Yap yesterday said.

"We are in the process of initiating background studies on this issue," Mr. Yap said in an e-mail.