31.8.13

Morality's link to trade

is the subject of my Trade Tripper column in this weekend issue of BusinessWorld:

The past few weeks saw this column tackle trade disputes with Thailand, the continued increasing of FTAs (including the RCEP and the TPP) that the Philippines need to engage in, and the expiration of the US GSP. Even then, what your Trade Tripper is more concerned about presently is the fundamentals that lie behind trade. An example is the article we wrote on Psychology and International Trade (July 25, 2013).

The point here is that most trade discussions have to do with each country’s relationship at the border level. What goes beyond a country’s border, assuming the same doesn’t violate the principles of national treatment, is normally no longer the concern of trade officials. For how can it? I remember being amused when one Filipino businessman complained to a visiting WTO Director-General about smuggling in the Philippines. The WTO DG’s response was simple and to the point: but what has the WTO got to do with that?

A country’s ability to trade is only as good as its people’s ability to produce. A country’s capacity to enjoy the benefits of trade lies also substantially in that country’s internal structure. If a country’s workforce is less than productive, not competitive, not properly educated, then no opening up of markets will be able to help that country. In the same way that no amount of increased trade will help alleviate a country’s poor if the societal make-up of that country actually perpetuates income inequalities.

As Philippa Dee (Time to Rethink the Global Rules, East Asia Forum, August 19, 2013) writes: “The bigger trade problems are not at the border but behind it. Conceivably, there is no Doha Round settlement because it offers too little of commercial value -- it is still focused at the border. FTAs don’t do much better. They are preferential, which means they also tend to focus on tariffs and other measures, such as rules on entry of foreign investment, that operate at the border. Yet some of the biggest economic problems in Asia are caused by the poor performance of incumbent services suppliers in transport and logistics, education and health, which are often state owned. Their dominance and lack of competitiveness is a drag on economic growth and a source of structural imbalances. Their performance can be a barrier to entry into regional production networks. Their crowding out of other domestic activity, including small and medium enterprises, is a key source of growing inequality.”

But there is something even more fundamental of significance. This can be seen, albeit quite indirectly, from a reading the EU’s submission in the Seal Products case regarding the use of public morals as a defense in a trade case: “Previous panels have noted that the content of the concept of public morals ‘can vary in time and space, depending upon a range of factors, including prevailing social, cultural, ethical and religious values’ and that, for this reason, Members should be given some scope to define and apply for themselves the concepts of ‘public morals’ in their respective territories, according to their own systems and scales of values.”

The foregoing is interesting for your Trade Tripper as he considers it ironic that while local politicians and even members of our judiciary are intent in excluding public morals as a part of discussions in the public square or in a court of law, an international dispute settlement tribunal seems to have no qualms of including it in determining a case.

So the issue of morality works in both directions: international trade is indeed a force for good. As Jagdish Bhagwati, with marvelous common sense, pointed out: “slowly growing or stagnant economies cannot rescue the poor from their poverty.” More profoundly, Dylan Pahman (Localism, Globalization, and Moral Progress, Ethika Politika, July 9, 2013) puts it: “... globalization holds great moral potential that must rather be cautiously viewed as moral progress.” A sentiment shared by the Social Doctrine of the Catholic Church.

But it must also be remembered that a morally neutral country, of which the Philippines apparently seeks to become, will inevitably find itself on the losing end of the competition that international trade brings. This Charles Murray (Coming Apart, Crown Forum, 2013) and Mary Eberstadt (How the West Really Lost God, Templeton Press, 2013) amply demonstrated.

Both convincingly show that the breakdown in people’s religiosity, the traditional form of marriage, and of the family all lead to “enormous social, economic, civic, and other costs” (see Eberstadt). 2012 research does indicate that the high US divorce rates “perpetually inhibits growth of the US economy.” This is backed up by Nick Schulze (Home Economics, Aei Press, 2013), he declaring the link between “divorces and out-of-wedlock births in America” and economic well-being as indeed substantial.

As this column has long been pointing out, contrary to our politicians, policy makers, and the academes over-infatuation with their Rawlsian ideas on plurality and push for secular liberalism: religion and morality do matter.

27.8.13

Compilation on the Imbong case oral arguments (updated 28/8/13)

After two lawyers and former Senator Tatad have presented their case against RA 10354 (the Responsible Parenthood/Reproductive Health Law) in the Supreme Court, followed by Solicitor General Francis Jardeleza and Assistant Solicitor General Florin Hilbay arguing in defense of the law, numerous articles have come out offering views on the developments in the case so far. While I strongly believe that the RH Law is unconstitutional (exclusively on the grounds laid out in Pro-Life Phils.' petition, see below), I sought to make an objective a compilation as possible (particularly for the benefit of law students). Most of the articles, frankly, are nonsense and just a waste of time. This compilation seeks to limit itself to those which in my view are reasonably open-minded, have a modicum of intelligence, or at least informative. 

Marites Vitug has five excellent articles. Those here and here analyzes the first and second hearings and detailed the subtle shift in the SC Justices' positions. Equally interesting is what Ms. Vitug points out in one of her Facebook updates, "'Every statute is presumed valid ... Every presumption should be indulged in favor of the constitutionality ...' wrote SC Justice Jose Mendoza in a 2012 decision. He said that 'judicial legislation' is 'unpardonable.'" Vitug's take on the 6 August 2013 oral arguments is quite good (click here), with Solicitor General Jardeleza making the quite correct point that: "... the question is not when life begins but whether or not congress, in passing the rh law, acted in grave abuse of discretion."

Ms. Vitug's account of the 13 August 2013 hearing is here. And I agree with her assessment that: "These public sessions seem to be no longer of much value to the Court. At this point, they are more theatre than anything else, showing the quality of discourse in Padre Faura, among the men and women in robes whom we thought were demigods." Indeed, the merit of this case would have been apparent to the Court by the second hearing, so one could be forgiven for seeing the subsequent hearings as pointless. Her assessment on the possible outcomes for the case after the oral arguments closed on 27 August 2013 can be found here.

In any event, Assistant Solicitor General Florin Hilbay closed off the government position on 27 August 2013, arguing that the RH Law does not violate free speech and religious rights (see here). Hilbay's answers were quite instructive for serious students of constitutional law: analytical, precise, highly contexted, subtle. While, of course, I do not agree with his arguments, Hilbay nevertheless displayed how somebody who actually knows constitutional law is supposed to answer. What I found amusing is that, perhaps exactly for that reason, it apparently went over the journalists' heads and just about most everyone who attended the hearing that only a passing report was made of the matter in the media.

Having said that, the interrogation done by the Justices were really less than impressive and will in no way contribute to building up the respect much needed for the judiciary and the rule of law. Quite frankly, the line (and manner) of questioning by Justice Roberto Abad on the second, third, fourth hearings were truly embarrassing. At one point, during the 6 August 2013 oral arguments, he may have even lost it a little, comparing the RH Law to the "Nazi holocaust" (click here).

The only saving grace for these hearings were the learned, logical, and instructive questions thrown by CJ Sereno and Justices Carpio and Leonen. A good discussion on the line of questioning undertaken by Chief Justice Sereno and Justice Leonen in the first hearing is found here, including the fact that the Supreme Court is not the forum to settle medical issues (click here). Justice Carpio's 'rebuke' of the anti-RH lawyers on jurisdictional grounds reported here.

On the CJ's deft and reasoned questioning in the second hearing, click here. CJ Sereno even took the time to lecture a pro-life lawyer on a basic feature of our constitutional law: "The solution is to get more people who think like you elected in Congress so right priorities will be set as you see fit. It is not for us to cure problems you see in Congress."

For a somewhat partisan pro-life view on the matter by Chet Espino, click here and here. Dr. Santiago Del Rosario's response, in turn, is here. Then there's Patricia Evangelista's quite polemical but superbly written piece, implicitly including a warning on the dangers of using international law terms like "genocide". She followed that up with somewhat quite sharper language here. Rina Jimenez-David follows in a similar vein here. Journalist and former Senator Francisco Tatad's constitutional analysis can be found here and here. For a perspective that doesn't even attempt to claim legal expertise, Fr. Ces Magsino's quite thoughtful and commendably highly intelligent pieces can be found here, here, and here.

Pro-lifers made an open letter to RH supporters, which resulted in an open letter in turn by RH supporters to pro-lifers.

What is strange about this is that most of the articles and opinions presently circulating in media or the public regarding this Supreme Court case were written by non-lawyers. It's strange considering that the case involves only - and is actually limited to only - technical legal matters (not economic, medical, scientific, social, or religious issues) that will form the exclusive basis for deciding whether the law is unconstitutional or not.

So, unfortunately for laymen, inasmuch as doctors, scientists, sociologists, or economists want their say in the spotlight as well, this is a Supreme Court case and the only thing that matters are the legal arguments. And clearly four years of law school training still means something. As well as passing the Bar exams. 

Lawyer Jose C. Sison has some articles on the case (see here, here, and here). But reading it one doesn't see much legal analysis, rather justifications based on Sison's strong Catholic beliefs.

So for the few actual legal analysis, there is  Oscar Tan (see here), with a discussion on the possibility that the case could be dismissed by the Supreme Court either due to lack of standing on the part of the petitioners, prematurity, or lack of justiciability. Tan's discussion on the remaining issue of this case, religious freedom, is here. His account of SolGen Jardeleza's near flawless performance in the 6 August 2013 oral arguments can be found here. Of the 20 August 2013 oral arguments and Justice Abad's somewhat confused questioning, see here. His quite devastating summing up of the case upon the close of the oral arguments is here. If viewed solely on what transpired in and what was only covered at the oral arguments, there is little one can dispute of Atty. Tan's account. 

Fr. Joaquin Bernas has his say here and here and here (the latter two making short work on the issues of speech, religion, and equal protection).

My views on why the religious freedom argument is actually a hard sell to the Court can be found here (with my early comments on it here). My analysis on the issue of "judicial restraint" is here. My take on what should have been the strongest argument against the RH Law can be found here and here. A copy of our petition can be found here.

For a not so serious take on the subject by So, What's News?, click here and here.

For audio recording on the Supreme Court hearings regarding this case, click here (for 9 July 2013), here (for 23 July 2013), here (for 6 August 2013), here (for 13 August 2013) and here (for 27 August 2013).

*************

'In Constitutional Law, the Presumption of Constitutionality of a statue or provision occurs when two possible interpretations for a statute occur - one favoring the constitution while the violating, the one that is in favor of the constitution is taken as valid.

- It is presumed that Acts made by Legislations are valid and that they do not intent to enact a law that is ultra vires to the constitution. When a situation occurs to question the validity of the law, the burden is on the petitioner to prove contra.
- Courts generally do not want to interpret the Acts unless, by way of language, they are proved to be unconstitutional.
- While interpretation, the provision which is unconstitutional should be avoided and when proved to be unconstitutional, should become void.
- A statute is constitutional till the time that it was established to be unconstitutional.
- The interpretation that creates unjust and discriminatory situation should be avoided.
- The Presumption of Constitutionality says that a court having a jurisdiction cannot invalidate a statute unless there is a gross constitutional violation in a statute.
- When an interpretation is possible that will save an Act from an unconstitutionality attack, the court should accept the affirmative interpretation that will save it to the extent possible.
- Presumption fails to operate when it is clearly shown that the statute is unconstitutional.
- When a statute is retrospective in operational, it should not be constructed to have greater retrospective operation that its language makes necessary.
- The courts should not go into the act of adding words, reading words that are not in the statute, correct or make up to the deficiency as it will lead to casus omissus.'

24.8.13

US GSP RIP?

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

Last 31 July 2013, something significant passed by with nary a whimper from our part of the world. While we were so worked up on a pork barrel scam that has yet to see evidence actually being presented in a court of law and a national basketball team that ended up with the silver, the US GSP -- that actually meant billions of dollars for the country -- expired.

As readers of this column will have known, the GSP (or the Generalized System of Preferences) serves as an exemption from the WTO obligation of mfn (or “most favored nation”) by giving lower tariffs for poorer countries (usually those which are classified as “least developed countries”). The three biggest providers of the GSP are the US, Japan, and the EU. And, as stated above, the US GSP expired as of the first minute of this month, with the prospects of a renewal as concrete as US President Obama’s foreign policy.

According to the US government Web site, the US remains “among the Philippines’ top trading partners, and it traditionally has been the Philippines’ largest foreign investor. The Philippines has been among the largest beneficiaries of the Generalized System of Preferences program for developing countries, which provides preferential duty-free access to the US market. Key exports to the United States are semiconductor devices and computer peripherals, automobile parts, electric machinery, textiles and garments, wheat and animal feeds, and coconut oil. In addition to other goods, the Philippines imports raw and semi-processed materials for the manufacture of semiconductors, electronics and electrical machinery, transport equipment, and cereals and cereal preparations.”

When Deputy US Trade Representative, Ambassador Demetrios Marantis, visited Manila last February, he declared that the “US-Philippines trade relationship is incredibly important to us. The Obama administration’s goal is to strengthen and improve our trading relationship, not only to enhance our nations’ prosperity.” Which makes all the more the Philippines’ difficulties in getting into the TPP and now the GSP’s passing harder to comprehend.

Note that to qualify for GSP benefits means having to conform to certain US desires. As stated by the Coalition for GSP, a “developing country is not eligible for GSP benefits if:

• It is a country dominated or controlled by international communism (e.g., China);
• It is a member of the European Union;
• It is part of a commodity cartel that limits international supply or raises prices to “an unreasonable level” and that causes “serious disruption” of the world economy;
• It has seized property of US citizens or corporations without just compensation;
• It aids or abets any individual or group that has committed an act of international terrorism;
• It is not taking steps to afford internationally recognized worker rights to workers; and
• It has not implemented its commitments to eliminate the worst forms of child labor.”

Unfortunately, even before the GSP expired, the Philippines’ status as a beneficiary was already running into difficulties due to allegations of worker rights’ violations. Back in 2007, the International Labor Rights Forum filed a petition against the Philippines questioning the country’s designation as a beneficiary under the US Trade Act of 1974. The ILRF accused the Philippine government of failing “to take steps to afford its workers ‘internationally recognized worker rights’ as required under” US law, including claims that “labor leaders and organizers in the Philippines are subject to widespread, systematic abuses, including murder, disappearances, torture, violence, intimidation harassment, and arbitrary arrests. Furthermore, the Philippine government continues to implement labor laws and regulations intended to deprive workers of their rights to organize.”

Whatever the merits of that complaint, the foregoing is highly unfortunate as the Philippines (judging by the US Census data) exports around $1.2 billion to the US, amounting to almost 13% of total imports among US GSP beneficiary countries, and with an estimated tariff savings (translation: lower selling prices for Philippine products and hence greater export competitiveness) of $48.6 million.

There were supposedly hearings (as well as deadlines for submissions) held last March and April for the Philippines to address its labor issues concerns with the GSP Program of the Office of the United States Trade Representative. The outcome of those hearings is still awaited. A transcript of the hearings should be available at <http://www.regulations.gov>, while the GSP regulations can be seen at <http://www.ustr.gov/trade-topics/trade-development/preference-programs/generalized-system-preference-gsp/gsp-program-inf>.

The loss of the GSP is certainly lamentable. It deprived the Philippines an additional path for competitiveness growth, all the more disconcerting when one considers that African or Caribbean exports have the advantage of the African Growth & Opportunity Act or the Caribbean Basin Initiative (which allows their products to continue entering the US duty free).

All in all, the list of challenges facing Philippine trade is unquestionably growing. But the supremely asinine thing is this: worse than an ill-conceived US trade policy is an ill-conceived trade policy halfheartedly carried out by the US. For a country presumably wanting to maintain its sole superpower status, such flip-flopping is unbecoming.

19.8.13

On selfies

Came across this thoughtful article on what may be the most popular activity today: selfies. But it does come with a price. As Olympia Nelson wrote:

"If social media only caused narcissism, it wouldn't be the worst thing. Instagram and Facebook are social networks that not only breed narcissistic tendencies but transform relations into a sexual rat race."

But it's the unoriginality, the lack of any creativity, the impulse to conform (sexually, politically, or whatever) that makes even this simple act of self-indulgence go from bad to worse: "Everyone likes receiving compliments and it makes us feel awesome that our own appearance can provide us with an ego boost. But what kind of photos produce an epidemic of 'likes?' Nothing with too much creativity but hip, titty and kiss. It's the true scourge of the selfie."

In the end, one can't help but agree with Nelson's insight of the selfy being "a neurotic impulse, not a happy one." And, we have to note, this narcissism has nothing to do with gender: guys are as apt to engage in this narcissistic, self-indulgent sort of behavior as girls. Hence, there's Anthony Weiner in the US; while in this country there's this endless array of couples shooting videos of themselves having sex (so many, in fact, one wonders already why they even bother considering the practice already seems so pedestrian).

This reminds me of three articles I wrote, noting down the seeming self-obsession of people nowadays. Somehow, it's convincing me I may be prescient. Or something like it.

The first was written in 2010, Everybody's a Rockstar:

"Everybody’s a rockstar nowadays. People that normally would have no claim to fame (or notoriety) would find their faces (and complete range of poses) on the Internet. Being ill informed, unread, or without any semblance of writing skills? Doesn’t stop them from airing their views extensively on Facebook."

The resulting danger of a culture encouraging (even rewarding) intellectually lazy people is something related to what James Surowiecki wrote about. Interestingly (and ironically), the author of The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations actually discards the idea of an infallible crowd and instead bolsters an idea we all already know: a deliberate and studied decision by an informed people will always be better than one made out of the emotional unthinking actions of the many. Our history is replete with the latter. Surowiecki talks about crowds that made very bad decisions because the individual members of the crowd were not thinking, letting their own judgment be determined by those around them, to the point that a bandwagon is produced but of which everyone is simply imitating and conforming to the sloppy or emotionally impaired thinking of others (or of those sufficiently loud enough to let their positions known). The tragedy in such situations of “irrational’ crowds is that any good, studied, and learned thinking by individuals become lost, discarded, or - worse - attacked. In this regard, Andrew Keen’s The Cult of the Amateur: How Today’s Internet Is Killing Our Culture would be good to read.

Which leads to the second article - The Anti-Intellectual State:

"But indeed, the reason for this anti-intellectual bias lies with our 'intellectuals' themselves. I mean: do we even have real intellectuals? There’s this well-known management professor (later government official) who lectured constantly against oligarchs only to spinelessly end up covering for their corruption. A columnist happily namedrops Rawls or Chomsky for no useful purpose except to release hot air. He once analyzed a recently elected public official (acknowledged of humble origins) and weirdly concluded, due to etymological reasons, that he’s an 'ilustrado.' Even assuming that’s correct, what was the point? Then there’s this economist whose idea of public debate is to screech and scream against those who dissent from her views. It’s ridiculous to lecture as if one is the fount of infallible knowledge when, after all those years spent in government or academe giving economic advice, the Philippines is still in its economic quagmire.

Intellectuals are there to encourage the greater populace to think critically and objectively, to think calmly and methodically, to discuss politely, to like thinking (and learning), and to think for a purpose. Not paralyze people into inaction or scream loads of esoteric data in order to shut them up. In the end, our people have no respect for intellectuals (as well as politicians) because those who pretend to being it are merely into one huge ego trip and treat being an intellectual as a performance for people’s entertainment. They serve no purpose other than as a diversion during coffee breaks or cocktails. Intellectuals should exhort people to unify their actions with their thoughts, demand responsibility and accountability, all rooted in realistic and doable considerations. Above all, intellectuals should practice what they preach. Otherwise, they’re just encouraging the country to be basket cases like them."

The third article I referred to was written just a few months ago, Me, Myself, and I:

"While indeed the democratization of information, the full utilization of the wisdom of crowds, and the greater participation of the public in the marketplace of ideas is ostensibly beneficial, not so if it leads people to sloppiness in thought.

Writer and Cambridge lecturer (never mind Oxford) Edward de Bono certainly thinks so. In an interview with news.com.au, he said: 'There is danger on the internet and social media... that you do not have to think to be very dangerous. Social media causes laziness, that we feel will get more information and do not need to have his own ideas. We got the idea from someone else, we do not need to look at the data, we only see what others have to say.'"

In the end, we (specially the parents) either face up to this problem now. Or pay for it later:

"Which makes me think: what effect does this instant celebrity (or whatever it is) have on the population? Without the need to acquire the skills, humility, and patience garnered from the constant supervision by one’s superior, the burden of redoing repeatedly a piece of work until it’s properly done, without the need of honing craftsmanship, researching and verifying the credibility of sources, the constant nagging and disciplining by an elder whether a work has logic and methodical train of thought, how does that affect the development of their character? When all they have to do, by way of example, is copy and paste obscure articles on the internet, Google and Wiki their way through research, then publish their works to the admiration of their peers who wouldn’t know any better? What’s the point of hard work and a demanding experienced mentor if one can be an instant star on the internet or reality TV anyway?

Makes me miss the days when you have guys like Michael Jordan (although there’s still Kobe Bryant). Guys who listen to their coach (even when they don’t like what they’re hearing), guys who became great not because they were creative but because they repeatedly did (without complaining) the simple basic stuff over and over and over again until they got it right. And, most importantly, guys who understand that they are part of a team or institution, with a history and tradition, which are far more important than their individual sense of self, ego, or feelings."

17.8.13

Smoking out Thai cigs

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

As readers of this column will know, the Philippines got a well-deserved win in 2011 at the WTO in the dispute Thailand -- Customs and Fiscal Measures on Cigarettes from the Philippines (docketed as DS371). That case had to do with Thai taxes imposed on imported cigarettes, with Philippine total exports of our cigarettes significantly declining for the two years prior to the filing of the complaint. Clearly, the outcome of the case was quite important considering that the livelihood of thousands of Filipino farmers was at stake.

The WTO panel, in its report last Nov. 15, 2010 (a copy of the 426 page report can be viewed at https://docs.wto.org/dol2fe/Pages/FE_Search/DDFDocuments/107523/Q/WT/DS/371R.pdf), found that the Thais acted inconsistently with the provisions of Articles 1.1, 1.2, 1.2 (a), 7.1, 7.3, 10, and 16 of the Customs Valuation Agreement; and Articles III.2 and III.4, as well as X.1, X.3 (a), and X.3 (b) of the GATT.

Thailand, predictably, appealed to the Appellate Body, with Thailand complaining about the panel’s findings under Article III:2, Article III:4, and Article X:3 (b) of the GATT 1994. The AB, however, in its Report dated June 17, 2011, essentially upheld all of the panel’s key findings and, thus, handed an overwhelming victory for the Philippines. A copy of the AB report can be found in http://www.wto.org/english/tratop_e/dispu_e/371abr_e.pdf.

The win was a highly welcome contrast to the country’s bizarre loss in Philippines -- Taxes on Distilled Spirits (docketed as DS396 and DS403). At that time, I wrote that the Thai cigarettes case should “quiet local critics of the WTO: say what they will, it cannot be denied that without the WTO’s highly efficient dispute settlement system, the country would not have been able to protect its interests as well as it did.”

That was then. The Thais, unfortunately, have managed to exploit an inherent and significant structural weakness in the WTO dispute settlement system and that is with regard to enforcing compliance with the panel (or AB) rulings. In our case, as reported by BusinessWorld on July 29, 2013 (Lack of Thai action scored), “The Philippines is disappointed with Thailand’s apparent procrastination over the implementation of a World Trade Organization (WTO) cigarette tax ruling. ‘While Thailand has made strides in implementing a number of measures, full compliance that adheres to WTO rules is yet to be realized,’ a Trade department statement yesterday quoted Assistant Secretary Ceferino S. Rodolfo as saying. ‘[B]ilateral engagements hoped to achieve this and it is, therefore, a disappointment for the Philippines that the information committed during the bilateral meetings has yet to be completely provided,’ Mr. Rodolfo added.”

The Thais, in turn, were reported to have declared that “Thailand will continue to discuss any technical issues arising out of these discussions with the Philippines and, as appropriate, with private stakeholders.” In short: dribble.

Compliance has always been the problem area for an otherwise impeccable dispute settlement system. Interestingly, the two biggest users of the WTO dispute system, the EU and the US, have been quite disengenous in that regard. The EU (see A Conflict of Institutions? The EU and GATT/WTO Dispute Adjudication; Christina L. Davis, 12 March 2007) has the Hormones case, while the US (see EU Fact Sheet) has the Foreign Sales Corp. case as a prime example. This issue of Thai’s non-compliance is expected.

In any event, as my University of Asia and the Pacific colleague George Manzano said in the BusinessWorld article, “the options available to the Philippines included requesting compensation, arbitration or retaliation.”

However, even that demands more intricate calculation: as Asim Imdad Ali points out (see Non-Compliance and Ultimate Remedies Under the WTO Dispute Settlement System, Journal of Public and International Affairs, 2003), “if a member does not comply, final enforcement remains problematic. The WTO authorizes countermeasures to be taken by individual states. These retaliatory provisions, however, fail on many counts: on effectiveness; on defeating the foundational principles of the WTO, such as free trade; by causing ‘double-injury’ to those who win the case; on being ‘the epitome of mercantilism’; and lastly, on favoring a power-based system and undermining the rule-based system of adjudication. Arguably, the WTO has the best dispute settlement system of any international organization. Nevertheless, the WTO does not have the best compliance system.”

Unfortunately, the seeming prevailing view within the WTO itself does not encourage censure of those delaying compliance: “The current design of the WTO’s dispute settlement mechanism, by operating temporarily as a system of ‘breach and pay,’ fulfills a crucial role as a systemic safety valve for rare scenarios where WTO members find it impossible to comply with the DSB’s recommendations and rulings within the ‘reasonable period of time’ as determined according to Article 21.3 of the DSU.” (Toleration of Temporary Non-Compliance: The Systemic Safety Valve of WTO Dispute Settlement Revisited, Claus Zimmerman, Trade, Law and Development, 2011).

So we’ll really have to do some deep and fast thinking if we are to truly protect our national interest.

10.8.13

A question of restraint

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

Contrary to what most people (including law students) think, the Supreme Court is not the branch of government entrusted with “defending” the Constitution, much less “protecting” the Constitution against the other two branches of government (i.e., the legislative and the executive) and ensuring freedom.

That job actually lies with all the branches of government: Congress is supposed to make laws it knows to be constitutional, the Executive is supposed to apply laws it knows to be constitutional and apply it in a constitutional manner. Ultimately, however, it is the people themselves, through a mature political culture, that is responsible for ensuring that the Constitution is upheld, freedom is ensured, and dictatorships prevented.

As far as the Supreme Court is concerned, what the Constitution actually says is that “judicial power shall be vested” in the Supreme Court and for it to decide cases, usually on appeal, “in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.” Even the “grave abuse” clause does not give carte blanche and must be read in context.

The myth that the Supreme Court is the ultimate defender of the Constitution lies in the thinking that since the members of the Supreme Court are “not political” individuals (they are unelected after all), they are thus free from the passions of the time or of the need to seek popularity. But such argument is neither here nor there. The reason is simple: Supreme Court justices are people too.

In reality (and this in no way is intended to denigrate the members of the Supreme Court), people appointed to the SC are political and necessarily so. Otherwise they wouldn’t get themselves to be appointed in the first place. And the person appointed to the SC would logically, to varying degrees, share in the political beliefs and persuasions of the appointing power. That is just human nature.

But there are even more profound reasons to disregard the idea that the Supreme Court is like a parent wading in to correct legislative or executive childishness. Because, believe it or not, even justices of the SC will make mistakes. They will do so even on points of law or engage in erroneous reasoning because that’s what humans do. Witness the Dred Scott and Roe vs Wade cases in the US, while locally the Manila Hotel and Imelda Marcos cases come to mind.

Incidentally, the foregoing also illustrates the dangers of adhering to the “living constitution” theory, by which judicial activism and judicial legislation are usually justified.

Another thing about being human is the inclination to impose one’s will on others. Not even Supreme Court justices are immune from this. The danger of any individual or group succumbing to the temptation of becoming tyrannical due to a surfeit of powers is always there.

So we devised mechanisms to prevent the judiciary from imposing their own beliefs on others, usually by what is called “judicial legislation,” the same way we devised mechanisms to put a restraint on the Congress and the president. We call these mechanisms collectively the system of “checks and balances.” And we also created an objective standard or norm that is external to and independent of all of us and that is what we call the “rule of law.”

The rule of law requires everyone to always act within the constitutionally prescribed limits of their authority. The rule of law demands that judges always remember that it is not their function to legislate for that is the job of the legislative branch (and, to a lesser, delegated, extent, the executive branch).

Rather, the true, actual duty of the judiciary is to objectively and impartially apply the law as mandated by the people through the Constitution. The judicial branch has no authority whatsoever to substitute their judgment or discretion in lieu of Congress’. To do so would be an usurpation of authority no matter how noble the intention. In the end, all it accomplishes is to encourage not only the tyrannical imposition of that long discredited policy of the ends justifying the means but also of giving license to tyranny itself.

As one legal commentator puts it, “the unchecked power to do good is unavoidably also the unchecked power to do evil.”

The best security against bad laws is not to ask the Supreme Court to act outside their mandate, it’s to elect better individuals to the legislature and the presidency. Thomas Jefferson, writing more than 200 years ago, said it best: “I know no safe depository of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power.” 

For more on this, read <http://www.jemygatdula.blogspot.com/2013/08/law-morality-and-judicial-restraint.html>.

3.8.13

Law, morality, and judicial restraint

Contrary to what most people (including law students) think, the Supreme Court is not the branch of government entrusted with "defending" the Constitution, much less defending the Constitution against the other two branches of government (i.e., the legislative and the executive) and ensuring freedom. In fact, no provision in the Constitution even says that.

That job actually lies with all the branches of government: it is Congress' duty to make laws it knows to be Constitutional, the Executive is supposed to apply laws it knows to be constitutional and apply it in a constitutional manner. Ultimately, however, it is the people themselves, through a mature political culture, that is responsible for ensuring that the Constitution is upheld, freedom reigns, and dictatorships are prevented.

The realities of judicial power and the rule of law

As far as the Supreme Court is concerned, what the Constitution actually and simply says is that "judicial power shall be vested" in the Supreme Court and for it to decide cases, usually on appeal, "in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question" (see Article VIII).

The myth that the Supreme Court is the ultimate defender of the Constitution lies in the thinking that since the members of the Supreme Court are "not political" individuals (they are unelected, after all), they are thus free from the passions of the time or from the need to seek popularity and will always act in manner best for the country. But such argument is neither here nor there. The reason is simple: Supreme Court justices are people too.

In reality (and this in no way is intended to denigrate the members of the Supreme Court), people appointed to the SC are political and necessarily so. Otherwise they wouldn't get themselves to be appointed in the first place. Anybody who thinks that an isolated academic brilliantly doing his work in the loneliness of his study has a chance of being appointed to the SC is hopelessly naive. And the person appointed to the SC would naturally, to varying degrees, share in and have similarities to the political beliefs and persuasions of the one doing the appointing. That is just human nature.

But there are even more profound reasons to disregard the belief that the Supreme Court is the defender of the Constitution, like a parent wading in to correct the childishness of the legislative and the executive branches. Because to actually believe that the justices of the SC will not make errors is again the height of naivete. They will make mistakes even on points of law or engage in erroneous reasoning because that's what humans do. Witness the Dred Scott and Roe vs Wade cases in the US, while locally the Manila Hotel and Imelda Marcos cases come to mind.

And another thing that humans do is to have the inclination to impose one's will on others. And not even Supreme Court justices are immune from this. The danger of any individual or group succumbing to the temptation of becoming tyrannical due to a surfeit of powers is always there.

So we devised mechanisms to prevent justices of the Supreme Court from imposing their own beliefs and their own will on others, the same way we devised mechanisms to put a restraint on the Executive and Legislative branches. We call those mechanisms collectively the system of "checks and balances". We did that because of the belief that more than the intelligence, beliefs, values, morality, faith, and persuasions of the individuals that make up government, there is always the danger that these individuals will fall into error or unwittingly succumb to the temptation of being despots. And, thus, we created an objective standard or norm that is external to and independent of those individuals (including the SC justices and even us) and that is what we call the "rule of law".

The rule of law requires that judges (including Supreme Court justices) always act within the constitutionally prescribed limits of their authority. The rule of law demands that judges always remember that it is not their function to legislate for that is the job of the legislative branch (and, to a lesser, delegated, extent, the executive branch).

Rather, the true, actual duty of the judiciary is to objectively and impartially apply the law as mandated by the people through the Constitution. The judicial branch has no authority whatsoever to substitute their judgment or discretion in lieu of Congress'. To do so would be tantamount to an usurpation of authority, no matter how noble the intention. In the end, all it accomplishes is to encourage not only the tyrannical imposition of that long discredited policy of the ends justifying the means but also to give license to tyranny itself.

This is what James Madison, one of the fathers of the US Constitution (upon which our own Constitution is modeled), meant when he referred to this "policy of supplying, by opposite and rival interests, the defect of better motives" (see Federalist No. 51). This is so because if "men were angels, no government would be necessary".

Even more directly, Thomas Jefferson, another father of the US Constitution, had this to say: "to consider the judges as the ultimate arbiters of all constitutional questionsa very dangerous doctrine indeed, and one which would place us under the despotism of an oligarchy.  Our judges are as honest as other men, and not more so.  They have, with others, the same passions for party, for power, and the privilege of their corps." As to whether the Constitution empowered the Supreme Court as the ultimate arbiter of constitutionality, Jefferson pointedly writes: "The Constitution has erected no such single tribunal, knowing that to whatever hands confided, with the corruptions of time and party, its members would become despots.  It has more wisely made all the departments co-equal and co-sovereign within themselves."

The need for judicial restraint

However, all mechanisms and systems will never be perfect. And hence the reason why it is necessary that the people themselves in government respect the limits of their own power even if the wording of the laws seemingly does not provide a check on them. This combination of ambiguity in judicial rules and individual responsibility has given rise to the concepts of "judicial restraint" and "judicial activism".

Judicial activism is a type of judicial practice or thought essentially related to the "living constitution" theory, that rulings can be made by the justices based on personal or political considerations and even going beyond the specific words of the Constitution. This has been defended on the notion that the Constitution as drafted may not have anticipated certain situations contemplated in some later cases before the justices. Another defense of judicial activism is that ostensible reasons of justice call for the Supreme Court to overturn the political will of the Congress.

Admittedly, there are many people here in the Philippines, from both sides of the political fence, that actually welcome or even call for judicial activism. At first glance, it does seem a realistic, even "compassionate" way of dealing with issues. By pushing aside legal technicality restrictions and deciding in accordance with the "wisdom" of the justices does seem to make judicial activism an attractive option.

That is, until one realizes that the Dred Scott (refusing equal rights for black people), Roe vs Wade (legalizing abortion), Planned Parenthood vs Casey (overturning a law banning contraceptives to non-married couples), Perry vs Schwarzenegger (overturning California law banning gay marriage). All such cases created rights or restrictions that can be found nowhere in the US Constitution and based primarily on the justices personal ideology (like in Roe) or political consideration (like in Dred). As one legal commentator puts it, "the unchecked power to do good is unavoidably also the unchecked power to do evil."

Hence, the need for us to take a second at judicial restraint. Judicial restraint, as the name implies, encourages justices and judges to restrain the use of their judicial power by referring strictly to the expressed powers contained in the Constitution or other laws, and to refuse to strike down laws except if the same are obviously or on the face of it unconstitutional.

Judicial restraint calls on judges and justices to look closely at the law and not create rights or restrictions that are not found in the express wording of the Constitution or the law itself. It also calls for the judiciary to give high respect to stare decisis or the rule of precedence. There are many reasons for this. Prudence is one. But one prime reason is the iniquitous giving of paramount powers to unelected lawyers over and above that of the elected 250 plus members of the House of Representatives, 24 members of the Senate, and the president. Particularly when such powers are not even present in the Constitution (as discussed above).

Justice and morality

The point here is that, when very complicated issues of morality and law are now front and center in public discussions (even the issue of morality has crept into WTO disputes, see here), the temptation for judges and justices to impose their own personal beliefs and morals into legal disputes will be there and sometimes overwhelmingly so.

But members of the judiciary and Supreme Court justices above all must recognize and exercise the self-discipline, as much as they (or even the public) may believe themselves more learned, widely read, more wise than the politicians that inhabit the Congress or Malacanang, to rule only within the strict confines of the authority granted to them by the express words of the Constitution and to not substitute their discretion for the discretion granted by the people directly (through the Constitution and by exercising the right of suffrage) to the Congress or the president.

If therefore there can be found no express provision in the Constitution that is categorically conflicting with a law or measure by the Congress or the Executive, then the constitutionality of the law or measure must be upheld. If certain provisions in the Constitution are open to interpretation, then the interpretation that would result in upholding the constitutionality of the measure or law must be the one resorted to.

This is so even if Article VIII, Section 1, gives our Supreme Court the power to look into "grave abuses of discretion." For one, no constitutional expert or even members of the Constitutional Commission would argue that such provision gives the Supreme Court carte blanche to do whatever it wants. Furthermore, such provision must be read within the context of the whole Constitution (and, to a lesser degree, along with precedence and constitutional history).

To do otherwise would be to invite judicial tyranny or despotism. As we quoted above: "the unchecked power to do good is unavoidably also the unchecked power to do evil." The Supreme Court simply cannot be made as the mechanism to overturn laws or measures that although misguided or even stupid yet nevertheless are not expressly proscribed by the Constitution. There is a huge difference between knowing what is right and wrong from what is legal. And the Supreme Court justices have been constitutionally mandated to look only at what is legal. To ask them to make determinations on right and wrong is simply too much an awesome responsibility to place on 15 lawyers.

That is why St. Thomas More himself was made to say in A Man For All Seasons, "The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate," and so even the Devil should be allowed to run away free "until he broke the law!" And to ram the point home: "Yes, I'd give the devil the benefit of the law, for my own safety's sake." Unfortunately, many lawyers (and laymen) miss this point, mistaking laws that they disagree with, even if such is admittedly foolish, misguided, or unwise, to be actually illegal as well.

I am not saying that our Supreme Court is prohibited from discussing and even ruling on issues of morality. Far from it. Morality and objective moral standards definitely do have roles within our constitutional system. But if the Supreme Court is to rule on moral issues or perhaps recognize such moral standards, then such must be done only insofar as it is allowed and framed within the expressly written provisions of the Constitution.

In other words, if petitioners come to the Supreme Court hoping for a ruling touching on or arguing about moral issues then they must cite concrete (perhaps even specific) constitutional or legal grounds, not mere implications or personal reading of the Constitution, that would authorize the Supreme Court to rule on such. It would be highly unintelligent for any petitioner to the Supreme Court to expect a ruling that he or she wants simply because his/her heart is pure. If a petitioner fails or cannot pinpoint specifically what part of the Constitution that would authorize the Supreme Court to rule on moral issues or even identify the moral standard contained in our constitutional system, then the Supreme Court must dismiss the case and the blame for that exclusively falls on the petitioner for lack of familiarity with the Constitution.

Government by the people

To be rid of or correct bad (as differentiated from unconstitutional) laws, one cannot merely delegate responsibility for such to the Supreme Court. Matters of national interest and policy are too important matters to be left to their judgment. To paraphrase US Justice Antonin Scalia, a staunch Catholic and pro-lifer: why in the world would you leave it in the hands of 15 lawyers?

No. The best security against bad or misguided laws or measures is simply for the people of the Philippines to elect better people to the legislature and the presidency. If we believe that certain laws we have at present are lacking in wisdom, the remedy is not to demand the Supreme Court to violate their constitutional mandate. The remedy is for us the people to bite the bullet, endure, learn our lessons, make sure that those who made the bad laws are held accountable by voting them out of office, and mature politically.

Thomas Jefferson, writing more than 200 years ago to discourage judicial activism, said it best: "I know no safe depository of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power."

************

Some recommended materials on judicial restraint are:

-The Impact of Judicial Activism on the Moral Character of Citizens (by Ilya Shapiro, Fred Smith)
- Natural Law and the Constitution Revisited (by Robert P. George)
- Judicial Restraint in the Pursuit of Justice (by Aileen Kavanagh)
- Oliver Wendell Holmes, Jr., Legal Theory, and Judicial Restraint (by Frederic R. Kellogg)
- Letter to William Charles Jarvis (Thomas Jefferson)

2.8.13

TPP. RCEP. WTF?? LOL!

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

In the olden days it used to be that a trade lawyer had to grapple with only one set of initials: WTO. Of course, if you’re in Europe you add EU, in the States it was NAFTA, and if you’re from the Philippines you also had the AFTA. But all that is gone now. What with the moribund Doha Round and leftist groups celebrating the comatose state of the WTO, international trade has become a far more confusing, difficult place.

All who follow this column knows that your friendly neighborhood “Trade Tripper” has never been a big fan of FTAs. And try as he might encouraged all to work for and support Doha and for forward movement for the WTO. To no avail. The anti-trade types got what they wanted, to the disadvantage and detriment of our economy.

As I wrote many, many times previously, FTAs are never easy. Increasing their number merely results in an incredibly complex international trading system. Considering that local businessmen have continuously raised concerns regarding the Philippines’ capacity to keep up with its multilateral trading commitments, this obviously would be multiplied in view of the proliferation of FTAs. This complexity can be seen on the surface alone: the rules of origin, dispute settlement jurisdictions, non-tariff subjects such as market access and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, and (as always) the issue of smuggling. And the foregoing doesn’t even approximate the intricate effects that global finance has on trade.

Now, the Philippines need to confront this word: “adverse selection.” It refers -- roughly -- to a situation where a wrong decision is made due to the asymmetric information or even possession of wrong information by the parties. Adverse selection usually comes with another concept, “moral hazard”: which is the undue taking of risks and even repeating hazardous behavior due to the fact that the costs or potential costs or damages will be borne by others anyway.

The reason I say this is that the Philippines, despite most of its citizens not even aware of the existence of these negotiations, sooner or later would need to make a decision: to go with the Trans-Pacific Partnership or the Regional Comprehensive Economic Partnership?

The TPP is an expanded version of the 2005 Trans-Pacific Strategic Economic Partnership Agreement and currently includes as parties or potential parties Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Japan and China are also considering or being considered for TPP membership.

The TPP, however, is not without controversy: the negotiations have been so secretive that even US members of Congress complain about being in the dark regarding the contents thereof. This is interesting because US President Barack Obama will need to have the good graces of Congress anyway considering that he has to have trade promotion authority to enter the US into the TPP.

In any event, the secrecy resulted in many criticisms about the TPP the validity of which is hard to evaluate. Thus, comments have been made about the TPP’s damaging effects on medicine prices, on intellectual property interests, and non-tariff matters such as environmental and labor rights. Most interesting is the criticism that the TPP empowers multinational corporations to the extent of allowing them to sue States directly (overriding State immunity).

The RCEP, on the other hand, is a proposed FTA between the ASEAN members (Philippines, Indonesia, Malaysia, Singapore, Thailand, Brunei, Burma, Cambodia, Laos, Vietnam) and Australia, China, India, Japan, South Korea, and New Zealand. It was seen as combining two prior trade proposals: the East Asian Free Trade Agreement (that had ASEAN, China, Japan and South Korea) and the Comprehensive Economic Partnership (same line-up as EAFTA but with the addition of Australia, India and New Zealand). Like the TPP, it is seen to be an FTA of high standards and comprehensiveness, including provisions that make for deeper integration between the parties. Expected to be concluded by 2015, the RCEP also has the added benefit of having an “open accession clause,” whereby participation by a country can come at a later date at the option of that country.

Both the TPP and the RCEP claim to provide stability and momentum for international trade. Both also claim to remove the problems that a “noodle bowl” of trade agreements brings. However, such assertions need further examination, particularly as to how the depth and complexity of the said agreements will allow full Philippine utilization and benefit, considering that up to now we haven’t even come close to attaining the rewards promised by AFTA.

But the more important consideration for us perhaps lies beyond merely trade and the bigger picture: the TPP has the US in it (and perhaps Japan) but not China, while the RCEP has both China and Japan but not the US.

And anybody who believes that both the TPP and RCEP can survive together is simply living in a fool’s paradise.