Compilation on China, UNCLOS, and territorial disputes

The following are articles I've written in the past regarding our territorial dispute with China and possible dispute settlement alternatives:

> China anger management and the UN General Assembly
> ITLOS'ing China
> Scarborough, China, and ITLOS
> Spratly
> Defending Scarborough fair

My most recent article on the matter is here. Some interesting interesting reactions from international law commentators can be found here, here, and here. A good overall initial analysis from the Wall Street Journal can be found here.

In any event, it will take some time and (hopefully) more information from the DFA on the legal basis and nature of our claim. For the moment, here were my comments in Facebook: "huge decisive [albeit quite dramatic] step by the Philippines. There is a significant jurisdictional problem, particularly Article 298 of UNCLOS, yes, but it's only a problem if China decides to hide behind technicalities.

Nevertheless, I am in full agreement with the DFA's statement: "We are all for improving our economic relations with China but it should not be at the expense of surrendering our national sovereignty."

China's hunger games

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

While the rest of the world was still reeling from its Christmas celebrations, including, I might add, playing with the numerous Chinese-manufactured toys given over the holidays, ironically China’s government seemed intent on continuing its role of being the village Grinch.

Last December (see Wall Street Journal, “China’s Hunger for Fish Upsets Seas,” Dec. 28, 2012), Argentine officials captured Chinese vessels illegally fishing in the former’s territorial waters: “Argentina authorities say the Chinese ships were intercepted off Patagonia, two nautical miles inside Argentina’s 200-mile exclusive economic zone, on Monday. A federal judge is questioning the ship captains, officials said. In a statement, China’s Foreign Ministry said it is trying to verify the facts of the case. The episode comes as China’s fishing boats increasingly find themselves embroiled in both cross-border and commercial disputes. Chinese ships fish in both international waters and under bilateral fisheries agreement in the waters of other nations.”

However, it wasn’t only the Argentinians: “In an October dispute involving a Chinese vessel, South Korean coast guard escorts Chinese sailors whose boat was seized for illegal fishing.” Reasonably, “South Korea seized a Chinese boat and detained 24 sailors for allegedly illegally fishing in the Yellow Sea. Vietnam has accused Chinese fishing boats of cutting its gas-exploration cables at sea. Chinese fishing boats have also sailed around disputed islands known as Senkaku in Japan and Diaoyu -- which means ‘fishing’ in Chinese-in China, contributing to worsening relations with Tokyo.”

So it’s no surprise that China’s government will seek to continually bully the Philippines. After its unnecessarily bizarre stunt of putting images of our territory in maps found in newly issued Chinese passports, China’s government then releases new official maps that include portions of our territory. As reported by ABS-CBN: “The new maps reportedly include more than 130 islands and islets in the West Philippine Sea, including the islands and waters that other countries such as Vietnam, Brunei and Malaysia also claim as part of their territory.”

Appropriately, however, the DFA is withholding comment until further facts could be established: “The Department of Foreign Affairs (DFA) has asked its Embassy in Beijjing to verify reports that China will be publishing new maps that include the disputed territories in the West Philippine sea. ‘We sent communication to Beijing on Sunday to verify reports on the new map of China... We are getting verification as to the extent of its coverage on the West Philippine Sea before we make any further comment,” DFA spokesperson Raul Hernandez said. Hernandez said they will only plan their course of action after receiving feedback from the embassy. The new maps will reportedly not be available to the public until the end of January. But if the maps violate the sovereignty of the Philippines by including its territories in the new map, the Philippine government will file a protest.

Nevertheless, if history is any guide, there is every reason why we should feel confident that the Philippine claim will win out in the end. James Holmes, an associate professor of strategy at the US Naval War College, writing for The Diplomat (“Why Philippines Stands Up To China,” May 14, 2012), stated that indeed the “Philippines is hopelessly mismatched against China in pure military terms. But there are historical reasons why it won’t back down in the South China Sea.”

The reason given, correctly in my view, is that “diplomacy and war are interactive enterprises. Both sides -- not just the strong -- get a vote. Manila refuses to vote Beijing’s way. Military supremacy is no guarantee of victory in wartime, let alone in peacetime controversies. The strong boast advantages that bias the competition in their favor. But the weak still have options. Manila can hope to offset Beijing’s advantages, and it has every reason to try.” The Diplomat’s point: “That the weak can vanquish the strong is an idea with a long pedigree” and “good things come to those who waited,” and, thus, “there’s some precedent for Philippine leaders to hope for diplomatic success at Scarborough Shoal.”

And if there’s still any doubters that the Philippines can succeed in this struggle should read Malcolm Gladwell’s New Yorker article “How David Beats Goliath” (http://www.newyorker.com/reporting/2009/05/11/090511fa_fact_gladwell).

The renowned writer of The Tipping Point and the Outliers noted that “underdogs win all the time, more than we continue to think.” In fact, “‘Goliath’ only wins 66 percent of the time -- which is first of all astonishing -- so 34 percent of time someone who is one-tenth the size of his opponent wins.” But what’s astonishing is that if the underdog shifts to intelligently adopting creative strategies and improvisation, the probability of the underdog winning rises exponentially to 63.6%.

So rather than picking fights with our actual allies like the US and listening to supposed intellectuals proclaiming how we’ll never win against giant China, perhaps we’d be better off thinking how we can prevail against those who seek to take what’s ours.


Lies, statistics, and indexes

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

Homer Simpson once insightfully said: “you can come up with statistics to prove anything. Forty percent of all people know that.” Or, as Disraeli more artfully (and quite purposefully) puts it: “There are three kinds of lies -- lies, damned lies, and statistics.” This article isn’t, however, a rant about numbers. Rather, it’s about the fact that, like all things in life, economic figures need to be tested and read within a proper context.

So, for claims that we’ve experienced 7.1% growth and that corruption is on the way out (after all, “kung walang corrupt, walang mahirap”), then one has to wonder how come our people seem to be feeling a whole lot poorer. Just recently, BusinessWorld reported: “A Dec. 8-11 survey found 54% of the respondents, equivalent to 10.9 million households, claiming to be poor. The result is up seven points from August’s 47% (estimated 9.5 million families) and also higher than the 52% average for 2012.”

This level of self-rated poverty is “substantially greater than the official poverty rate of 26.5% (equivalent to 23.14 million individuals) as of 2009. Self-rated food poverty was said by the SWS to have also worsened by nine points to 44% (8.9 million families) from 35% (7.2 million) in the previous survey. The figure is also higher than the full-year average of 41%.”

Perhaps it’s because it is true that “kung walang corrupt, walang mahirap.” Transparency International clarified its findings in the Corruption Perception Index that “with a score below 50, the Philippines is still classified as a highly corrupt country, belonging to the bottom 1/3 in the ranking.”

Explaining that the apparently “improved” score of 2012’s 105 compared to 129 (for 2011) and 134 (for 2010), Transparency International said that “CPI Methodology was initially designed in 1995 when data sources were still scarce. After almost 18 years, it was due for an upgrade to adapt to the growing number of sources, to make aggregate computation of scores more simple and allow accurate comparison of results from year to year. Previous methodology did not allow this and yet this was the way the public interpreted it. Therefore, ranks and scores for CPI 2012 and previous CPIs including 2011 are not comparable. A change in score from 2011 does not reflect a change in perceptions of corruption between the CPI 2011 and CPI 2012. The CPI 2012 score is different from the score on the CPI 2011, for all countries in the Index (unlike in previous years where countries’ scores showed little change from year to year). The difference in scores in most cases is driven by the change in methodology and does not reflect a change in perceptions of corruption in any given country. Therefore no conclusions can be drawn from a change in score between the CPI 2011 and the CPI 2012.”

Which essentially means that, after all that drama regarding the impeachment trial and attempts to remove certain local officials, we’re still where we are so far as corruption is concerned. If you want more information on the state of Philippine corruption, see http://www.transparency-ph.org/2012/12/understanding-the-philippines-cpi-2012-score-rank/.

Incidentally, Mr. Michael Mundo of the Makati Business Club was kind enough to send this clarification: “The World Economic Forum’s Global Competitiveness Report 2012-2013 released last September 2012 ranked the overall quality of Philippine infrastructure at no. 98 out of 144 economies from no. 113 out of 142 countries in the 2011-2012 Report and also no. 113 out of 139 countries in the 2010-2011 Report.”

Indeed, as the 2012-2013 Global Competitiveness Report itself declares that, despite “positive trends, many weaknesses remain to be addressed. The country’s infrastructure is still in a dire state, particularly with respect to sea (120th) and air transport (112th), with little or no progress achieved to date. Furthermore, various market inefficiencies and rigidities continue, most notably in the labor market (103rd).”

The problem areas, if one can call it that, includes diversion of public funds, government regulations (particularly the bureaucratic nightmares involved in starting a business), dispute settlement, and science research and innovations. Also needing greater attention are deaths relating to tuberculosis and malaria. Which makes it really shameful why we’re so intent in pouring billions into contraceptives when many Filipinos are still dying, in this day and age, from such old diseases.

Finally, the Philippines ranked 97th (out of 177 countries) in the recent Heritage Foundation’s Economic Freedom Index (see http://www.heritage.org/index/country/philippines), putting the country in the “mostly unfree” category. Significantly, aside from pointing out that “heavy bureaucracy discourages dynamic growth in investment,” the Index noted that the “judiciary remains susceptible to political interference and does not provide strong and transparent enforcement of the law, undermining prospects for long-term economic development.”

But, as Princeton’s Robert George puts it: “limited government, economic growth, rule of law, and the preservation of democratic self-government” -- cannot be maintained “while letting the institution of the family erode and collapse.”

So much for the wisdom of the RH law.


Manufacturing competitiveness

is my Trade Tripper column from the recent Friday-Saturday issue of BusinessWorld:

Amid news of massacres, fiscal and moral cliffs, and people getting worked up in a frenzy over supposedly misbehaving executives or professors caught in YouTube (without bothering first about the context of the events seen only on video), a quite significant piece of news went relatively unnoticed.

BusinessWorld reported on the second day of the year (“Weaker trade expected to continue this year) that: “Foreign trade of the Philippines and a number of other Asia-Pacific economies are expected to stay weak this year, a report from the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) said. In its Asia-Pacific Trade and Investment Report 2012 released on Dec. 14, the UNESCAP noted the weakening economy in China, in addition to the European Union, would affect the growth of exports in developing countries in the region.” Accordingly, the “Philippines was expected to record 10.1% export growth in 2012 but only 4.3% growth in 2013, according to the report. Imports were expected to rise by 4.3% for 2012 and only 2.3% in 2013.”

Ironically, this unfortunate piece of news almost comes at the same time that the 2013 Global Manufacturing Competitiveness Index (a collaboration between Deloitte Touche Tohmatsu Ltd. and the US Council on Competitiveness; get copy at http://www.deloitte.com/assets/Dcom-Global/Local%20Assets/Documents/Manufacturing/dttl_2013%20Global%20Manufacturing%20Competitiveness%20Index_11_15_12.pdf) came out.

The irony comes from the fact that the Index details a set of insights that, for some bizarre reason and as we shall see, we seem intent on running away from. Thus, “As we enter 2013, much is up for grabs. With the recent restrained growth in China coupled with imminent leadership changes, a delicate and precarious recovery teetering in the US, a dark cloud over much of the euro zone, trade wars in South America, an ongoing malaise in Japan, and the percolating but elusive rise of India, the competitiveness of each nation’s manufacturing innovation ecosystem will continue to be a focus area for policy makers, business leaders and much of society.”

One undoubted key to economic development is manufacturing. “As goes manufacturing, so goes the nation,” so says the Index. There is a veritable “strong association between manufacturing gross domestic product (GDP) and the real (overall) GDP of a nation. The strength of the relationship appears to be especially true for emerging economy nations. Developed nations are grouped together over this time period, with slow manufacturing GDP compound annual growth rate (CAGR) and equally slow overall real GDP CAGR. While emerging economies, driving higher manufacturing GDP growth (CAGR), were experiencing much stronger growth in overall real GDP (CAGR). This association appears to hold whether manufacturing GDP as a percent of total GDP is high (i.e., over 30%) or much lower (i.e., less than 16%). In other words, higher manufacturing growth, whether representing a large or small portion of the economy, drives higher total real GDP growth overall.”

Significantly, however, an interesting driver for competitiveness is infrastructure: “Research reveals that ongoing investments in infrastructure results in long-term economic benefit. Specifically, a recent estimate by the United States Congressional Budget Office suggests that every dollar of infrastructure spending generates an additional 60 cents in economic activity (for a total increase to GDP of $1.60). This multiplier effect bodes well for India, which recently announced plans to invest $$1 trillion on infrastructure through 2017.” Unfortunately, according to the World Economic Forum World Competitiveness Report 2012, the Philippines fails dismally in terms of infrastructure. This the DPWH admits: out of 139 countries studied for public infrastructure, the Philippines ranked 113th.

Going back to the Index, other drivers of growth would be “the economic, trade, financial and tax system of a nation.” Furthermore, for a country that seems to put little value in the rule of law, this was also noted by the Index: “the legal and regulatory systems in developed nations more than twice as strong as those in emerging nations, primarily as a result of stability and clarity within their legal and regulatory environments.”

But the biggest driver of competitiveness and economic growth is, you guessed it, a country’s people: “Talent-driven innovation drives manufacturing competitiveness... executives again cited talent-driven innovation as the most important driver of a country’s ability to compete.” Thus, nothing was more important “than the quality, availability and productivity of a nation’s workforce helping them drive their innovation and growth agendas.”

If ever denseness is preventing people from acknowledging the fact that RA 10354 (or the RH Law) is a completely unintelligent idea: “Demographics, more specifically aging populations, will have a significant impact on market attractiveness over the coming decades, with some nations like Japan, and even China, despite its large population, significantly inhibited by their aging populations and others, including the US with favorable population age demographics gaining the upper hand as time passes.”

Indeed, in case we missed the point, the Index pointedly emphasizes: “the availability of high quality human talent will always remain in the top set of competitiveness drivers.”


2013: sex, trade, and elections

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

By any measure, 2012 was not the best of years for rationality or sanity. It was the year of emotion trumping information, hysteria over analysis, and the “ah basta!” mania beating back every kind of logic or reasoning possible. The upside of all that is, with such rock bottom crappiness there’s really no way to go but up.

But one never knows. As with any form of addiction, our present adoration for insanity would probably have to hit rock bottom before any form of progress is made. In any event, taking for instance the passage of the RH Law, it doesn’t take a genius to know that divorce, same-sex marriage, and euthanasia will definitely follow.

Unfortunately, the pro-life movement continues to fight yesterday’s wars. The country has changed: Filipinos 30 years old and below comprise 70% of the population (with those below 14 years at 35%, with the median age at 22.9 years). Those at 65 years old comprise only about 4.1%. And yet pro-life advocates insist in crafting a message designed for that 4.1%. Which is irrational. Be honest: nobody wants to hear an old guy (or woman) give a lecture as to why younger people should control their sex lives.

Of course, lawyers will be falling all over themselves in filing petitions in the Supreme Court against the RH Law. But you know what’s worse than lawyers not resorting to natural law against RA 10354? It’s those lawyers who argue on natural law without actually knowing anything about it.

In any event, Mark Judge (writing for the Daily Caller, “America has changed, but God hasn’t,” Nov. 7, 2012) says it best with a description of a country whose decline mirrors ours: “The truth is that America is now a leftist country. It’s Rachel Maddow and Jeremiah Wright’s country. You know that divorced fortysomething female neighbor of yours? The one who’s not half as bright as she thinks she is, and doesn’t know much about Libya or the national debt, but watches Katie Couric’s new show and just kind of didn’t like Romney because she, well, just kind of didn’t like him? America is now her country. It’s Dingbatville.”

Unfortunately, the world goes on and won’t wait for us to wake from our mental stupor. The Trans-Pacific Partnership is on the table. And while the Philippines, correctly, has expressed no hurry in signing on to it, as the TPP imposes certain conditions, a lot requiring constitutional amendments, as well as measures that for a still developing country like the Philippines, would simply not make sense, a coherent trade policy to meet the changed landscape is still not existing.

People have most certainly given up on Doha. But a “Global Recovery Round” is a dodgy proposition at best. It merely shifts emphasis on developing country needs to assisting the world’s leading economies get back on their feet. It seems to be working on the quite convenient theory that the rich countries continued economic dominance is necessary for developing countries to prosper, which is fallacious.

Doha’s death thus presents two hits against developing countries. It comes at a time of, as reported by the WTO last September, “slowing global output growth [that] has led WTO economists to downgrade their 2012 forecast for world trade expansion to 2.5% from 3.7% and to scale back their 2013 estimate to 4.5% from 5.6%.” Furthermore, it must be remembered that the entire point of Doha was to ensure equality of opportunity for them after the lopsided Uruguay Round of agreements. Doha -- which is actually the Doha Development Round -- was launched with hopes of putting more poor country friendly provisions, particularly in relation to tariffs for industrial goods and the lowering of subsidies for agricultural products.

Interestingly, as BusinessWorld recently reported (“Weaker trade expected to continue this year; Jan. 2, 2013): “The Philippines was noted [in the United Nations Economic and Social Commission for Asia and the Pacific’s Asia-Pacific Trade and Investment Report 2012] as having five ‘almost certainly discriminatory’ measures against ‘trade freedom’ but was said to be affected more by 92 measures from partner-countries.”

This reminds me of our unilateral trade retaliation measure provided for under Section 304 of the Tariff and Customs Code. In salient part, it provides that the President can declare additional duties in an amount not exceeding 100% ad valorem upon article of any foreign country whenever he shall find that such country discriminates against the commerce of the Philippines, directly or indirectly, in such manner as to place the commerce of the Philippines at a disadvantage compared with the commerce of any foreign country.

Other countries, particularly the US, have expressed concern regarding the continued existence of our Section 304. Which is a bit disingenuous considering the US still has the Super 301 in their statute books.

And if you disagree with anything I wrote here, then you sir are worse than Hitler.

Anyway, again: Happy New Year.


RH Law goes to the SC

As expected, RA 10354 (the RH Law) goes before the Supreme Court. Here's an article by a blogger worth reading, with some good points on the petition filed (see here). Another is this quite strong and well argued editorial from the Inquirer (see here). Although I must say that one thing should be clarified: all arguments before the SC are secular arguments, even one involving religious freedoms.

Anyway, the problem with a religious liberties argument (Article III.5 of the Constitution) is that it presents an inconsistency with the previous and repeated arguments made by the Catholic Church or the pro-life movement. Note that the central argument by the Church was not that contraception violates doctrine or theology (like not eating meat on Fridays during Lent or not taking communion within one hour of eating a meal) and the proscription thereof applies only to Catholics. No. The Church has long argued that contraception violates natural law and thus its non-use applies to everyone.

Furthermore, a religious liberties argument, by design, merely seeks an exemption from the application of the law. Finally, in addressing such argument, the SC is simply tasked with weighing conflicting rights, all the while within the context of Congress having made a judgment call on policy.

Procedural, cultural, equal protection, free expression, etc. arguments (either Articles II, III, or VI of the Constitution) all, in this case, when one considers jurisprudential history (including foreign ones), leave great doubt as to whether they are of sufficient depth for the SC to overturn an RH Law. At best, they (including religious liberties arguments) are merely alternative arguments.

Which leaves natural law. By the way, natural law, for the uninitiated, is a 'secular' and (very technical) legal argument. But for natural law to be argued, one has to present arguments addressing the issue relating to 'is' and 'ought', the kind and essence of natural law, the origin and hierarchy of rights, the function of the judiciary (as opposed to the legislature) in accepting natural law, and how natural law precisely relates to contraception.

Having said that, natural law effectively presented remains the strongest argument against the RH Law. However, in the rush to file cases in the Supreme Court and for who knows what reason, it is being abandoned at the time when it is most precisely needed.

A very interesting thing about this Supreme Court case to get rid of the RH Law is that it will pit the 'originalists' school of thought, which seeks adherence to the original intent of the Constitution (note that our Constitution is one definitely 'pro-life' by wording and design) against the 'living constitution' lawyers, who believes in stretching (actually discarding) the actual wording of the Constitution to suit their own positions. In this case, to justify the constitutionality of the RH Law.

As can be seen, much is at stake in this RH Law case and it's not just the constitutionality of the RH Law alone. A ruling in this case could very well lay down foundational precedents on the interpretation of our constitution, the place of natural law within our legal system, the hierarchy and nature of rights, the application of international law within our legal system, and the limits or extent of legislative and judicial discretion.

This is simply one of those cases that could determine the direction of the country for decades to come. The need therefore for a very well considered and deliberate legal strategy that presents a substantive intellectual consistency and cohesion is clear.

It's interesting to see how the petitioners in an RH Law case argues through such complexity. Hopefully, they express their positions clearly. In any event, I'm confident the SC will correctly appreciate the arguments presented by the parties and rule on this case as it should.