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.

A tall order for trade

Here's an article, containing portions of an interview I gave to BusinessWorld, on the effect of free trade agreements to local business:

Assimilating free trade agreements (FTA) into mainstream policy has been a work in progress for an outward-oriented nation like the Philippines--a process certainly not without its fair share of roadblocks. A paper published by the Asian Development Bank Institute (ADBI) projects the utilization rate of FTAs to double in the future. But at present, a whopping 80% of firms in the country opts against taking full advantage of them. The paper points to several reasons, chiefly a lack of updated and comprehensive information on the inner workings of these complex trade pacts among trade officials and local merchants alike.

Last July, local imports showed some midyear promise when it grew by 16.2% to $4.68 billion while exports rose by 35.9% to $4.5 billion. According to the National Statistics Office, the country clocked in a trade deficit of $173 million, a much-tapered gap next to the $713 million shortfall last year. This speaks of a strong domestic demand for consumer goods raw materials and capital goods: specifically, nearly all of the country's oil products are sourced from imports, as are most materials it uses in electronics manufacturing, ultimately amounting to over a third of the total import bill.

In the past, the 1997 Asian financial crisis--coupled by stalled progress in the Doha Development Round’s global trade negotiations--have kept the US and Europe out of the Asian trade loop. But these days, the foundations are already being laid for a bilateral Philippines-European Union FTA. Such bilateral contracts between poor and wealthy countries have been pegged by The Economist as ones that are better executed while often suffering under limiting rules of origin, but Ateneo Professor for International Economic Law Jeremy Gatdula notes that the underlying problem doesn’t rest solely on economic inequality. "In the end, whether or not [an] economy complements our own is a better standard rather than the size of that economy," he said. "An FTA results in something more than mere economics; it has an effect on how countries actually relate to each other as a whole."

In expanding their trade zones, sociocultural gaps between nations may also lead to certain economic concepts becoming lost in translation. “This is not relativism, but due to cultural or historical differences, a more precise understanding of what we're negotiating and agreeing to would definitely be needed,” Mr. Gatdula said.

But this is not to say that there’s any lack of trade struggles within one’s own region. For one, the widespread smuggling of Chinese goods has permeated nearly all Asian nations; the local shoe and vegetable industries, in particular, were dealt a serious blow. In light of these, suspicions loom over the recently-approved China-ASEAN Free Trade Area short of legalizing smuggling, to the detriment of adjacent economies.

"[It's more a matter] of taking away the reason for the smuggling. Tariffs are low enough as it is," weighs in Mr. Gatdula. In the absence of trade duties, the more pressing concern would be for vigilant customs authorities to guard against the easy entry of defective products into the country. "Historically, [barriers have] contributed to delaying or making moot any motivation on our industries to be competitive," he said. For importers, however, FTAs are something of a double-edged sword—the lowered tariffs can also mean cheaper raw materials and the drop in construction costs for finished goods may be a boon that could help steer the local economy back on a more aggressive track.

But the Ateneo professor also observed how Philippine businesses have been “incredibly stubborn in getting help,” saying that many have shunned innovative methodologies in which they feel they may have to “surrender some form of control, which is mostly imaginary anyway.” Plus, the prevalent turf mentality that persists among government offices has long limited trade agreements to be made on a piecemeal basis overseen by various agencies, impeding the development of clear-cut commerce policies in the country. “In more recent negotiations, transparency and accountability had been demonstrated to be wanting,” said Federation of Philippine Industries (FPI) president Jesus Arranza in a previous interview.

Mr. Gatdula believes that the focus should be on strengthening local institutions, particularly in creating a trade representative office. In fact, the proposal of such a centralized body is already making some headway: The FPI has actively lobbied for House Bill 5971, which, when passed, would finally see a consolidated Philippine Trade Representative Office realized. Ideally, this permanent trade negotiating office would take after those of the United States and the European Union, said Asian Development Bank (ADB) trade facilitation consultant Atty. Dorotea Lazaro, one that should offer background studies and support services following trade negotiations.