honestly ...


when our concept of beauty is reduced to something that can now be manufactured (literally making beauty to something merely skindeep);

when positions and offices are handed out to just about anyone regardless of lack of qualification or merit;

when anything - be it food, music or sex - are available on demand without need of effort and without consequences;

when information is there to be cut and pasted rather than learned;

when anybody can freely express their opinions and at the same time excuse themselves from responsibility for their comments by claiming lack of expertise or knowledge on the subject;

when people prefer listening to someone because he poses no threat to their egos rather than to one who actually knows what he's talking about;

when going to new places is for purposes of posting pictures on social media rather than gain new experiences and perspectives;

when 'first class' is reduced to a mere ticket in an airplane;

when one's word, actions, achievements carry no weight or significance;

when traditions are there to be merely ridiculed;

when (in the name of social justice) people are encouraged to break laws with impunity;

when gaining applause or acceptance in social media is more valued than working at being a better person -

honestly, is this any way for a people to live?


Indexes and the Philippines

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

The year's start is a good time for studying indexes. While some would take them with the proverbial grain of salt, nevertheless, your Trade Tripper finds such statistical measures interesting. Particularly if one takes a number of them and they end up corroborating each other directly or indirectly. Besides, as is oft said: you can’t manage what you haven’t measured.

The first of the indexes for the year is the 2014 Economic Freedom Index released just over a week ago. As its name indicates, the Heritage Foundation’s study measures a country’s openness to trade, economic mobility, and prosperity.

The Philippines apparently presented a somewhat blurry picture in terms of economic freedom (see http://www.heritage.org/index/country/philippines). It is currently ranked 89 (out of 186 countries), although the same is said to be an improvement by 1.9 points. Amongst Asia-Pacific countries, the Philippines placed 16th out of 42. Overall, the Philippines is considered "slightly below the world average" or "moderately free."

However, it is in the Index’s category of "Rule of Law" that is of interest. For the Philippines: "Corruption and cronyism are rife in business and government, with a few dozen leading families holding an outsized share of wealth and political power. Judicial independence has traditionally been strong, but the rule of law is generally weak. A culture of impunity, stemming in part from a case backlog in the judicial system, hampers the fight against corruption. Delays and uncertainty negatively affect property rights."

The foregoing should be read alongside the SWS survey of Filipino businessmen, with "a lot" reporting of corruption increasing by 56% in 2013. Also interesting is the comparative with the country whose progress is most closely observed in the Philippines: Vietnam. As of 2010, Vietnam has overtaken the Philippines in terms of lessened corruption and is currently three ranks higher than the latter.

The Economic Freedom Index goes on to discuss ease of doing business or "regulatory efficiency," noting that in the Philippines "launching a business takes 15 procedures and 35 days." This should be read alongside the category Open Market: "The average tariff rate is 4.8%. Tariffs provide over 20% of government revenue. Tariff-rate quotas restrict some agricultural imports. The legal and regulatory systems may be difficult for foreign investors to navigate."

Then there is the World Economic Forum’s 2013-2014 Global Competitiveness Index (see http://reports.weforum.org/the-global-competitiveness-report-2013-2014/).

The Philippines has certainly made improvements in this regard, ranking 59 out of 148 countries. However, the data seems to indicate that it is more of a private sector achievement overriding the obstacles placed by government.

One can see this in our high scores in "business sophistication" and market size (which perhaps can be related to the fact that the Index declares our population to be at 94.9 million, with a substantial chunk of that -- it must be added -- belonging to the youth sector).

It is in the areas that government has the most responsibility that the Philippines ranks lowest: infrastructure, corruption, inefficient government bureaucracy, burdensome tax and labor regulations, and last (but certainly not the least) policy instability (which has been a peculiar Philippine flaw for the past decade and a half).

Nevertheless, the undoubted key for whatever prospects that may open to the Philippines is in education. I’ve written previously of one striking Philippine statistic and that is in the area of demographics: Filipinos 30 years old and below comprise around 70% of the population (with those below 14 years at 35%, with the median age at 22.9 years old). Those at 65 years old comprise only about 4.1%. The future of this country quite simply depends on how well that 70% is educated.

The Times Higher Education World University Rankings 2013-2014 (see http://www.timeshighereducation.co.uk/world-university-rankings/2013-14/world-ranking) declares itself to be "the only global university performance tables to judge world class universities across all of their core missions -- teaching, research, knowledge transfer and international outlook. The top universities rankings employ 13 carefully calibrated performance indicators."

The usual suspects are there: Cambridge and Oxford definitely (as well as some school called Harvard). From the Asian region, the list is filled with Japanese, Singaporean, Hong Kong, South Korean, Taiwanese, Indian, Israeli, Turkish, Saudi Arabian, and Thai schools.

And yet (although one is free to ignore the rankings for whatever excuse) not one of our schools joined the list of top universities. Not even in the "looser" Times Higher Education World Reputation Rankings, which is based on "nothing more than subjective judgment."

Which is quite disappointing considering all the fanaticism generated by the local top universities here among their students and all the basketball games and all the personality cults created by their faculty.

The foregoing, of course, should spur us to try harder. All the more when one considers this final index: Germanwatch’s 9th annual Global Climate Risk Index (http://germanwatch.org/de/7659), finding the Philippines as among those suffering worst from weather related devastation.

But then we don’t really need an index to tell us that.


Congress and trade authority

was the subject of my Trade Tripper column in the recent weekend issue of BusinessWorld:

An area of tension between the Executive and Legislative branches of government is in the area of international trade. Constitutional law is simple enough regarding that: tariff powers are with the Congress and treaties can only take effect upon concurrence by the Senate. But, as usual, what looks clear-cut on paper becomes complicated in real life, with trade being directed effectively by unelected bureaucrats and going past the country’s elected representatives.

So it is with interest -- considering the constitutional similarities between the Philippines and the US -- that your Trade Tripper read the draft “Bipartisan Congressional Trade Priorities Act of 2014’’ of the US Congress (see copy here http://www.finance.senate.gov/imo/media/doc/TPA%20bill%20text.pdf).

The bill clearly lays out the fact that trade and tariff matters are within the purview of Congress, for which the Executive acts only under proper delegation.

The bill lays out the US’ overall trade objectives, which amongst others include: obtain more open, equitable, and reciprocal market access; the reduction or elimination of barriers and distortions that are directly related to trade and investment and that decrease market opportunities for US exports; further strengthen the system of international trade and investment disciplines and procedures, including dispute settlement; to foster economic growth, raise living standards, enhance competitiveness, promote full employment and enhance the global economy; ensure that trade and environmental policies are mutually supportive and to seek to protect and preserve the environment; promote respect for worker rights and the rights of children consistent with core labor standards of the International Labor Organization.

Most admirably is the objective of the US to “ensure that trade agreements afford small businesses equal access to international markets, equitable trade benefits, and expanded export market opportunities, and provide for the reduction or elimination of trade and investment barriers that disproportionately impact small businesses.” This is a policy sadly lacking urgency for the Philippines.

Interestingly, the US president is required to notify, consult, and coordinate with the Congress in every step of the negotiations: from initiation to conclusion. This is a world apart from the system here, where Congress is usually called in only when the trade agreement needs the concurrence of the Senate, the default procedure being to consider the trade agreement as an “executive agreement” and thus purely within the purview of the Executive branch.

But such would be anomalous as treaties effectively change Philippine laws and for Congress to be kept out of the process means that the president can change or amend laws simply by entering into international agreements.

Hence, why the US bill requires the US president, at least 90 calendar days before the day on which the president enters into the trade agreement, to notify Congress of his intention to enter into the agreement and promptly thereafter publish notice of such intention in the Federal Register. Also, within 60 days after entering into the agreement, the president must submit to Congress a description of those changes to existing laws that the president considers would be required in order to bring the United States into compliance with the agreement. Quite markedly, the US president is required to make the information relating to the proposed agreement available to the public.

Should the US president fail to closely work with Congress, then the US bill allows for “procedural disapproval resolution,” This is a Congressional resolution which essentially reads as follows: “That the President has failed or refused to notify or consult in accordance with the Bipartisan Congressional Trade Priorities Act of 2014 on negotiations with respect to and, therefore, the trade authorities procedures under that Act shall not apply to any implementing bill submitted with respect to such trade agreement or agreements,” with the blank space being filled with a description of the trade agreement or agreements with respect to which the President is considered to have failed or refused to notify or consult.

The US bill would be a good study for Philippine policymakers and lawmakers. The present law authorizing the Philippine president to enter into trade agreements (Section 402 of the Tariff and Customs Code) certainly has flaws, most notably its general language.

Thus, the president can enter into a trade agreement “for the purpose of expanding foreign markets for Philippine products as a means of assistance in the economic development of the country, in overcoming domestic unemployment, in increasing the purchasing power of the Philippine peso, and in establishing and maintaining better relations between the Philippines and other countries.”

The foregoing is quite possibly an instance of undue delegation to the president. Commonsensically, for instance, any proper delegation should be only for a set period and not in perpetuity.

The president’s trade authority under Section 402 has certainly been criticized, most cogently by Justice Florentino Feliciano (see his paper “Deconstruction Of Constitutional Limitations And The Tariff Regime Of The Philippines: The Strange Persistence Of A Martial Law Syndrome”).

Unfortunately, present drafts of Congress’ Customs and Tariff Modernization Act absolutely overlook this matter.


The difference facilitation makes

was the subject of my Trade Tripper column in the past weekend's issue of BusinessWorld:

As your Trade Tripper hinted in last week’s column (“Facilitating Bali,” Jan. 3), the significance of the Bali Package, circling around trade facilitation, remains a huge area of inquiry. And one specific legitimate query is what exactly does trade facilitation bring, particularly for a developing country like the Philippines? So far, it’s hard to come up with concrete positive responses.

And indeed asked that while the Trade Facilitation Agreement looks good on paper (for a copy see https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN13/39.pdf), in reality what is its relevance? The Philippines could make the necessary customs improvements on its own, without the need of an international multilateral agreement tying it up to other countries. After all, by doing it unilaterally, no country can sue the Philippines under the World Trade Organization (WTO) dispute settlement system, assuming something in our customs rules do not come up to par in that country’s view.

Neither do we need a trade facilitation agreement for improving trade with other countries as most of our major trading partners are richer countries anyway with quite developed and transparent customs procedures. In fact, most of the provisions contained in the Trade Facilitation Agreement are conceivably implemented already by these developed countries, leaving it only to the poorer countries (like the Philippines) to shoulder the additional burden of accelerating the upgrade of their customs procedures (which, as I said, could be better done unilaterally). Talk about differential treatment.

The only conceivable customs regulations problem (due to language issues) would be China (and perhaps, Japan). But both are parties with the Philippines in regional trade deals (ASEAN-China, JPEPA, and ASEAN-Japan), of which trade facilitation is included.

Of the latter issue, it must also be said that the Trade Facilitation Agreement essentially contains the same provisions as the Revised Kyoto Convention on the Simplification and Harmonization of Customs Procedures (for a copy see http://www.wcoomd.org/en/topics/facilitation/instrument-and-tools/conventions/pf_revised_kyoto_conv/kyoto_new.aspx), which was effected in 2006. The only possible added value that the Trade Facilitation Agreement brings is that it allows countries to sue each other under the WTO dispute settlement system. How that could possibly be for the benefit of the Philippines remains a mystery.

Although, on the other hand, the Trade Facilitation Agreement does declare that developed countries are entitled to “assistance and support for capacity building,” with capacity building being defined as “technical, financial, or any other mutually agreed form of assistance.”

Quite interestingly and relevantly, International Business Law Adviser reported on Japan’s “24-hour advance manifest rule,” taking effect on March 10, which “requires all inbound cargo carriers to submit complete manifests a full 24 hours before leaving their ports of departure. The rule has since been widely adopted by countries all over the world.”

Under the said Rule, “notice of all containerized freight bound for Japan must be transmitted at least 24 hours before cargo is loaded onto vessels to the Nippon Automated Cargo and Port Consolidated System (NACCS), the Japanese government agency responsible for the country’s import/export and customs clearance services.” The information that must be included: “type of cargo; names of trading parties; route; schedule; and identification of the vessel and container. The regulation applies to all containerized cargo intended for delivery into a Japan port. Empty containers, break bulk cargo, and Foreign Remaining on Board (FROB) cargo are all exempt from this rule.” The penalties, in this case, are tough: “Shippers that fail to comply with JP24 will face tough penalties, including a fine of approximately $5,000 that must be sent before cargo reaches Japanese ports. Other penalties for noncompliance may include up to one year of jail time with hard labor.”

Additionally to that mentioned, further technical areas that need deeper examination include customs risk management procedures, duty drawback, and rules of origin compliance.

Another thing about the Trade Facilitation Agreement is that the same needs to be approved by each individual WTO member governmen before it becomes effective. With US President Barack Obama still without a Trade Promotion Authority (and with upcoming mid-term Congressional elections this year that the Republicans are poised to gain advantages in), expert opinions are varied as to how the US will legally accept the Bali Package.

Finally, in relation to the matter of country approval is the issue of overlapping provisions with other WTO texts. This was actually brought up cogently in the International Economic Law and Policy Blog by C.Raghavan: “rather than presenting to Members specific amendment to each of the provisions of GATT 1994, and pre-shipment inspection agreement, and have each of it ratified or accepted by two-thirds majority of membership, the Bali decision requires the TF as such to be presented to Members for acceptance or approval to be made a part of Annex 1A of the Marrakesh Treaty. How valid would such a procedure be under public international law? And what would it mean in terms of rights and obligations, taking note of the over-riding interpretative note to Annex IA”.

More on the Bali Package in succeeding columns.


Facilitating Bali

my Trade Tripper column for this weekend issue of BusinessWorld:

The big news, of course, for 2013 so far as trade is concerned was Bali. But after all the triumphalism has died down, it would be good really to see what the significance of that Bali package really is. The most apparent is that it buys time. In keeping with the “bicycle theory” of international trade, the Bali Package keeps the negotiations moving along in the hope something turns up in the future.

The contents, though, seem impressive. It essentially consists of 10 past agreements made at separate previous Ministerial Conferences and covers the areas of food security, cotton, and preferential treatment for poorer countries. It also contains provisions on the lowering of tariffs and agricultural subsidies, the inclusion of which nearly derailed the proceedings. Agriculture and provisions for the least developed countries were considered among the “early harvest” areas of a Bali Package.

It is, however, in the area of trade facilitation that Bali is hoping to make its mark. “Trade facilitation” is essentially the easing of customs rules in a country, so that the same will not serve as a hindrance to trade. By having a uniform set of standards for customs rules, so the theory goes, a country will need to improve its customs procedures or, otherwise, not use the same to discriminate against imports.

As the World Trade Organization (WTO) itself put it: “The new trade rules that the Agreement introduces are aimed at streamlining customs and port procedures. WTO Members have committed to implement new rules of trade that will bring streamlined and more transparent customs rules and procedures for traders.” An important aspect is greater customs transparency, making publicly available information relating to import/export procedures, duty rates and taxes, customs fees and charges, and penalties and appeal procedures.

It also seeks to establish inquiry points to address questions by governments and traders, provide an opportunity to review and comment before rules enter into force, provide advance rulings on issues raised by traders, streamline procedures to reduce times and costs, post-clearance audits, E-payments of fees, risk management to reduce physical inspection of entering cargo, expedited release of air shipments, and improved procedures for perishable goods.

The foregoing looks good but when you really think about it, what is the point? The Philippines could make all these improvements on its own, without the need of an international multilateral agreement that binds it up to other countries. Neither does it need the same really for improving trade with other countries as most of its major trading partners are richer countries anyway with quite developed and transparent customs procedures. The only problem perhaps (due to language issues) would be China (and conceivably, Japan). But both are parties to the Philippines in regional trade deals (ASEAN-China, JPEPA, and ASEAN-Japan), of which trade facilitation has already been included.

The World Customs Organization (WCO), for its part, seemed quite (ironically) restrained in its welcome of the Bali Package: “The Dublin Resolution, which was issued at the conclusion of the Policy Commission meeting in Dublin, Ireland on 11 December 2013, welcomes the WTO Agreement On Trade Facilitation (the “Trade Facilitation Agreement”), as embodied in the Bali Package’s Ministerial Decision, adopted at the WTO’s Ninth Ministerial Conference in Bali, Indonesia from 3 to 7 December 2013, under the framework of the Doha Development Agenda. The Dublin Resolution emphasizes the commitment of the WCO to the efficient implementation of the Trade Facilitation Agreement. The WCO Secretary General, Kunio Mikuriya, said that he was very pleased with the timely and affirmative action of Policy Commission, which reflects the determination to drive forward the global Customs trade facilitation agenda.”

Another thing that dampens any enthusiasm I have for Bali is that, even assuming its contents really are a big step forward, the same needs to be approved by each individual WTO member governments before it becomes effective. In that regard, that India has an upcoming general election this year and with US President Barack Obama still without a Trade Promotion Authority (and with mid-term Congressional elections coming in 2014 that the Republicans are poised to gain advantages in) may even lead to possible delays in any eventual actual application of the Bali Package.

On the latter, though, points have been raised which trade lawyers may find quite interesting. Cato’s Bill Watson says no TPP is needed. From the IELP Blog: “Basically, his point is that Congress can, if it wants to, vote up or down on a completed trade deal even without fast track, so mucking up the process with fast track now doesn’t really add anything.” An argument analyzed further by trade lawyer Ted Posner: “As long as the executive confers informally with the legislature first, and doesn’t push too far, it will maintain the ability to expand international law on its own through sole executive agreements, including as amendments to congressional-executive agreements.”

Your Trade Tripper will look more closely into the Bali Package in succeeding columns.