is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
Kent Brockman of KBBL-TV News once famously declared: "Democracy simply doesn’t work." But then his comment should be taken with a grain of salt. Firstly, because Brockman was saying that under duress as the Earth was about to be hit by Bart’s comet. Another more obvious reason is that Kent Brockman is a character from the Simpson’s.
I got reminded of that immortal quote quite inadvertently by a seminar recently conducted at Ateneo in Rockwell. It had something to do with human rights being sacrificed at the "altar" of "free trade." Considering its venue, the seminar was somewhat quirky because Ateneo Law School has in its faculty two international trade lawyers who were both previously Bar examiners for political and international law. Neither of which were asked to speak at the seminar. But I digress. The real point is that Kent Brockman’s (as well as Homer Simpson’s) logic seems to be very much in play here. And equally as wrong.
As we all know life has its inevitable ups and downs. Unfortunately for trade these days every day is a Monday. To the glee particularly of those who’ve never been fans of trade anyway. But as with democracy, while trade is obviously not perfect, nevertheless, no rational, sane alternative to it exists. And as if on cue, reports come out that the Philippine economy slowed in the first quarter. One reason? The slowdown in international trade. And why the slowdown in world trade? Most likely because, as the WTO, OECD, and UNCTAD report suggests, the: "G20 governments have introduced more trade barriers, including export restrictions, in the past six months than in previous periods since the financial crisis began xxx Although measures to lower trade barriers are also accelerating, new import restrictive measures taken by G20 economies over the period October 2010 to April 2011 cover around 0.6% of total G20 imports which is also an increase over the previous six months (0.3%). Export restrictions are also on the rise. This adds to the cumulative total of world trade affected by new restrictions since the crisis began. Despite the positive forecasts for 2011, the outlook for world trade remains clouded by a number of significant risk factors in addition to the recent natural disasters in Japan. Sovereign debt problems, rising prices for food and other primary commodities, and unrest in major oil exporting countries generate uncertainties for the near future."
How does the foregoing relate to human rights? Human rights deal with individual dignity, reasonable standards of living, employment and proper work conditions, education, the right to information and access to media, protection of the environment, healthcare, maternity rights and benefits, security of life and property, and so on. All that requires money. And international trade, despite the occasional hiccups, has proven very adept at boosting the economies of countries in the world. Not to mention the transparency that the multilateral trading system brings. No protectionist rhetoric will ever be able to deny that fact. As WTO Director-General Pascal Lamy more elegantly puts it: "The opening of markets creates efficiency, stimulates growth and helps spur development, thereby contributing to the implementation of the fundamental human rights that are social and economic rights. One could almost claim that trade is human rights in practice!"
The OECD posits that a "10% increase in trade is associated with a 4% rise in per capita income; an ‘open’ foreign direct investment climate could be expected to yield a 3/4% increase in OECD area GDP per capita; lower regulatory barriers to competition could result in a 2-3% increase in OECD area GDP per capita; full tariff liberalization in agriculture and industrial goods could increase global welfare a further 100 billion USD."
The problem with the Philippines is not that we trade, it’s that we don’t trade enough to be able to override our problem of profound inequality. Because whatever benefits the Philippines may have had from trade were prevented from reaching our poor and instead were selfishly gobbled up by our oligarchic elite. US Secretary of State Hillary Clinton was spot-on when she declared that the Philippine problem lies in the fact that "the elite in business and politics basically call the shots, and there’s not much room for someone who’s hardworking, but not connected."
Hence, one sees 40% of Filipino kids below 5 years old being severely undernourished, with an estimated 8.1 million families (around 43% of the population) self-rating themselves as "poor." More objective numbers aren’t better. An ADB study ("Poverty in the Philippines") reported that the number of poor Filipinos increased to 27.6 million. The World Bank found "the overall incidence of poverty" upped to 32.9%.
If we want to uphold human rights, we should encourage greater trade coupled with "solid social policies to redistribute wealth" (to borrow Lamy’s words). As Jagdish Bhagwati, with marvelous common sense, pointed out: "slowly growing or stagnant economies cannot rescue the poor from their poverty."