China's Crimean act

my Trade Tripper column in this weekend issue of BusinessWorld:

This isn’t the first time someone is bringing this up, but what with everyone either looking at Russia’s venture into the Crimea or the whereabouts of the missing Malaysian airplane, China has been engaging in mischief (pun not intended) in the Pacific. Admittedly though and interestingly enough, the events in Ukraine do present repercussions to our part of the world.

As Donald K. Emmerson ("Eyes on Crimea, China makes its move"; Asia Times, March 17) reported: "On March 9, 2014, China made a move to end the status quo at the shoal. For the first time in 15 years, Beijing stopped Manila from delivering supplies to the Sierra Madre. The Chinese Coast Guard forced two Philippine ships to turn away."

And Chinese aggression does not end with the Philippines. Zachary Keck ("China’s Newest Maritime Dispute"; The Diplomat, March 20) observed: "China’s new drawing of its nine-dash line includes waters that Jakarta claims as its own. China has claimed Natuna waters as their territorial waters. This arbitrary claim is related to the dispute over Spratly and Paracel Islands between China and the Philippines. This dispute will have a large impact on the security of Natuna waters."

All the foregoing makes Russia’s actions seem benevolent. As Emmerson pointed out, China’s "repeated harassment of Vietnamese and Philippine ships; the assertive moves of its warships around James Shoal, which Malaysia claims, including firing weapons into the air; its announcement that any non-Chinese citizens or vessels must first ask China’s permission to fish in a zone that covers more than half of the South China Sea... and now its expulsion of Philippine supply vessels from Second Thomas Shoal. The long and ongoing record of unilateral Chinese assertions or aggressions in the South and East China Sea no longer leaves room for doubt as to Beijing’s intention."

Indeed, the question really is not "What does China want?" That much is clear. The question is: What are countries prepared to do to maintain a just peace?

And this is where the events in Ukraine become relevant to us. Because sadly, the US’ pathetically effete response to Russia’s territorial grab (following US President Obama’s serious bungling of Benghazi and the "red line" in Syria) is signaling a weakness inviting aggressive, non-international rule of law-minded countries to go nuts.

The Philippines can get a little bit of help from ASEAN. But the crucial word there is "little." In the end, ASEAN will do what it does best and that is talk. Since 2002, ASEAN members and China entered into the Declaration on the Conduct of Parties in the South China Sea, of which an implementing Joint Working Group have been meeting regularly, to no practical result. And all this time, China has been relentlessly solidifying physically its control of the disputed waters without any sign of compromise.

Little succor should also be expected from international tribunals. For the simplest of reasons. Even though the composition of the five-member arbitral tribunal that will hear the Philippine complaint is now complete and despite the ruling of the International Court of Justice in Nicaragua v Colombia, as Sourabh Gupta wrote in the EastAsia Forum ("The whole nine dashes and why the Philippines’ arbitration case against China is a bad idea"; July 28, 2013):

• "First, the Notification cannot bind China because China has optionally excluded itself from compulsory arbitration under UNCLOS;
• Second, despite what the Philippines argues, all good faith avenues to peaceful dispute resolution, including provisional arrangements of a practical nature (UNCLOS Articles 74 and 83), have not been exhausted;
• Finally, China’s nine-dash line has no international legal personality and hence cannot be consistent with or contrary to the letter of UNCLOS."

Of course, no one wants a war. But, as Michael Rubin states in his book Dancing with the Devil, the only thing countries like China will respond to is the willingness to use military force. Obama’s apologetic foreign policy, rather than effecting peace, is actually contributing to the likelihood of war. So, for the Philippines, until 2016 arrives, we can only hope that US President Obama gets a better grip on reality.

In the meantime, what can the Philippines do? To reiterate something I wrote back in 2009, the best way to deal with China and protect our national interests is by simply implementing our laws.

Firstly, it would be good to really clamp down on smuggling, including "technical smuggling." Another would be stricter application of our immigration rules. Reports of foreigners surreptitiously entering our country should be investigated and prosecuted vigorously. Considering the rising unemployment in our country, to stop the entry of illegal aliens should be a priority. Finally, our foreign and trade relations should be done not only with the view to financial gain but also to advancing human rights, labor standards, environmental protection, and democratic values. The last for the simple reason because that’s what we declared our country stands for.

A moral economy

my Trade Tripper column in this weekend issue of BusinessWorld:

The past months have seen the questioning of the free market or capitalist economic system, with many pointing giddily to the merits of socialism. While the Marxist or communist economic models have clearly been utter failures, nevertheless, due to the uncertainties of the global economic situation, the idea that government should redistribute wealth is gaining appeal. Which is unfortunate.

Any policy that admits to the idea of entitlement, that people have been victimized by the "system" and thus is owed by society itself should be rejected. Rather than encouraging people to work and meet the demands of society, a mere whiff of the notion that one is helpless, that government is there to take care of them, is all it takes for people to refuse to take accountability for their lives. It’s human nature.

Our country’s present entitlement culture certainly provides numerous disincentives to work: why work if you’ve been told by politicians and academics that you’re entitled to receive money in exchange for nothing via the Conditional Cash Transfer? Or acquire property simply by squatting in it? Or demand to receive a professional’s benefits but without the need to act professionally thanks to the Kasambahay Law?

Oh, and by the way, because you’re poor you’re excused from following the law.

This is the kind of mentality that Nathan Oppman decries. In his "Food Stamps and Stewardship" (Aug. 23, 2013, www.frcblog.com), he points that that while indeed people should care for the poor, "we should not allow that care to cause us to be blind to systematic abuses that actually hurt those the system is intended to help. Love demands that we provide for those around us, but wisdom demands that we not give to those who wantonly throw away what we are entrusting to them. Good stewardship requires honesty and honesty requires us to admit that good intentions are not enough."

Unfortunately, for many in civil society, good intentions rather than outcome are what matters. And the use of buzzwords, like "sustainability." Which is perhaps the reason why Doug King ("It’s Time to Ban the Empty Word ‘Sustainability’," Aug. 30, 2013, www.theconversation.com) wants it banned.

And hence why a paternalistic type of government is so contemptible. As Gerald J. Russello wrote (in "A Catholic Defense of Freedom," Sept. 5, 2013, www.crisismagazine.com): "A centralized state, which tells us what is good for us, and promises to provide for us, corrodes that habit of learning and exercising wise choices."

Speaking of learning, I previously pointed out that "the default excuse is to blame the lack of education for our people’s propensity to vote criminals, plunderers, or traitors into public office. But how can this be when public spending on education constitutes between 15-17% of overall expenditure and when our country’s literacy rate, particularly in the last two decades or so, hovers around the 95% mark?"

The answer to this is because education is not merely limited to rote accumulation of words and numbers. The true value of education, which we ignore completely, is the development of our citizen’s virtues. And it is the development of our people’s virtues that is crucial in determining whether our country moves forward or stagnates. The point is that, rather than give our people -- specially the youth -- a sense of entitlement, more demands on their self and their sense of responsibility should actually be made.

Of virtue, Russello writes: "... virtue was the basis for government, and liberty meant, first and foremost, government of the self before self-government as a community could occur. Those habits of virtue were only partially, if at all, able to be fostered by the state. Rather, small communities, and the family above all, were the source of those habits."

Virtue in people is what makes democratic societies work. As Michael Novak ("Democratic Capitalism," Sept. 24, 2013, www.nationalreview.com) declared: "The prospering of free societies depends on certain moral and cultural practices."

Furthermore, "the particular habits of the dynamic economy are enterprise, invention, discovery, intelligent organization, and hard intellectual (and physical) work. The institutions that nourish such virtues include: the rule of law, private corporations (especially small ones, which create most of the jobs in the economy), open and competitive markets, rights of association, rights to an inexpensive and easy incorporation in law of new businesses, respect for private property including patent and copyright laws to protect original ideas and compositions, and tax codes favorable to good habits that bear practical fruits."

To sum up, best to use the words of J. L. Liedl ("Want a Good Economy? Try Virtue," Sept. 4, 2013, www.ethikapolitika.org): "The dehumanizing theorems and charts of the economist have done us enough harm already... There is something metaphysical in play here, and it must be observed even when dealing with the nitty-gritty, physical practicalities of capital and labor. Virtue, more than anything else, more than economic theories or fiscal policy, is what a society needs to have a good and just economy."

ASEAN integration

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

Out of curiosity or concern, the matter of ASEAN integration in 2015 is a common topic of discussion among many businessmen and the academe. Interestingly enough, one sees people getting all worked up or bracing themselves for it without actually understanding what the thing is about. The truth about ASEAN integration, however, is more mundane than most realize.

ASEAN, while intriguing and looks good on paper, particularly in the area of trade and policy, has in reality been quite disappointing. As Joshua Kurlantzick (ASEAN’s Future and Asian Integration, November 2012) puts it: "ASEAN lags far behind its full potential. Most Western leaders and even many of Southeast Asia’s own top officials do not consider the organization capable of handling any serious economic or security challenges, including the current dispute in the South China Sea. In previous times of severe economic downturn, ASEAN members have looked to lenders outside the group for assistance."

This leads Mr. Kurlantzick to conclude: "with its current limitations in working style, staffing, and mandate, as well as the enormous political and economic disparities among its members, ASEAN is unlikely to move beyond its current status." He then goes on to enumerate seven major challenges faced by ASEAN: evading dominance by regional powers, integrating a revived and powerful Indonesia, consensus decision making, integrating new members, balancing economic disparities, strengthening the Secretariat, and becoming the center of Asian institutions.

Mr. Kurlantzick does recommend a "common ASEAN vision for future East Asian trade and economic integration." But, those looking for an European Community pattern are mistaken. As pointed out by Coraline Goron (Building an ASEAN Community by 2015, July 2011): "The ASEAN Economic Blueprint presents two main objectives: to transform ASEAN into a single market and production base and make it a competitive economic region. One should be aware, however, that despite the bold language, the ideas put forward in this document remain significantly lower than the economic integration in the EU. Notably, no custom union and no single currency are envisaged."

The truth is many of the provisions of the ASEAN integration plans are already in place: from the lowered tariffs, to increased free trade agreement (FTA) activity, to the smoothening of customs procedures. The question really is not the dangers that ASEAN integration can bring (if there are any) but rather if the Philippines itself is ready to take advantage of the same or be left again in the dust.

Your Trade Tripper has continuously pointed to one study to determine the readiness of the Philippines and that is with regard to our utilization rate of the AFTA, a trade arrangement in place since 1992. In a 2010 working paper released by the ADBI ("FTAs and Philippine Business: Evidence from Transport, Food, and Electronics Firms"), it was found that only around 20% of the companies surveyed here in the Philippines have taken advantage of the AFTA preferential rates.

This low utilization rate has never been resolved. As discussed by the ADB working paper, a lot of Philippine firms are still baffled by the mechanics of FTAs. Other reasons have to do with "delays and administrative costs and the use of export incentives other than FTA preferences."

To put it in even blunter terms, what is the point of opened markets if we don’t have the capacity to satisfy those markets? And what is the point of opening up the country for investments if the environment does not make it attractive for investors?

Looking at 2012 export numbers, for example, we shipped a volume that is less than half of Vietnam’s, less than a fourth of Malaysia’s, and less than an eight’s of Hong Kong’s. For FDI’s, the Philippines is celebrating its 3.86 (in billions US$) showing for 2013, even though the same is spectacularly short of Malaysia’s (11.7), Indonesia’s (22), Thailand’s (13), and Singapore’s (56).

We are nearly last in terms of competitiveness and ease of doing business compared to other ASEAN countries; our power, transport, productivity, and infrastructure are nothing to brag about; and the rule of law and protection of property are a concern in most major studies. Then there is traffic, with JICA (also cited by my fellow columnist Benjamin Diokno) reporting that Metro Manila traffic in 2012 cost the country an amount equal to 7% of the GDP.

Finally, what benefit could the opening up of borders be when our borders have consistently been punched through with impunity by smuggling? BizNewsAsia (March 2014) reported that the country may have suffered a possible revenue loss (in 2002-2007) of P127.075 billion due to smuggling. Bobi Tiglao (writing for another paper) estimates smuggling in 2010-2012 to have reached $19.6 billion per year.

The point is that there’s nothing to be worried about when it comes to ASEAN integration. The real issue is our readiness to take advantage of it. Which is ironic considering that the idea to accelerate integration from 2020 to 2015 came about during the ASEAN 2007 meeting in Cebu.

The internet as human right

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

Anybody working in an office, studying in school, or corresponding or reading from home -- in short: everybody -- would readily accept that the internet is hooked up to our lives. To a perceptibly uncomfortable degree. Lack of water? Late newspapers? Not a problem. But no or slow internet access? People are immediately up in arms. However, to what extent can citizens indeed demand internet access? And what is government’s responsibility in this regard?

These questions came up with OpenSignal’s (http://opensignal.com/) recent survey showing the respective countries’ broadband speed. Apparently, six million users volunteered data from all over the world, with the result that the Philippines came "in the slowest of our qualifying countries." The Philippines also came last with regard to time and speed on LTE (Long Term Evolution).

Note that the Philippine Constitution has certain provisions that could be said to relate to internet access. Thus, the Constitution provides that the State "shall give priority to education, science and technology"; that "no law shall be passed abridging the freedom of speech, of expression, or of the press"; and that "the right of the people to information on matters of public concern shall be recognized."

That access to the internet has indeed come to the level of a "right" was raised in a UN Report (by the Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, Frank La Rue, May 16, 2011): "While blocking and filtering measures deny users access to specific content on the Internet, States have also taken measures to cut off access to the Internet entirely. The Special Rapporteur considers cutting off users from internet access, regardless of the justification provided, including on the grounds of violating intellectual property rights law, to be disproportionate and thus a violation of article 19, paragraph 3, of the International Covenant on Civil and Political Rights."

The Report, therefore, called on "all States to ensure that Internet access is maintained at all times, including during times of political unrest. In particular, the Special Rapporteur urges States to repeal or amend existing intellectual copyright laws which permit users to be disconnected from Internet access, and to refrain from adopting such laws."

There is a difference, though, between not blocking the internet and actually providing access to the internet. If the latter, then an argument could indeed be made that the slow broadband speeds and such other lack of access for Filipinos could be a violation of human rights.

This is Nilay Patel’s point (The Verge, "The Internet is Fucked," Feb. 25): "Over the course of the past 20 years, the idea of networking all the world’s computers has gone from a research science pipe dream to a necessary condition of economic and social development, from government and university labs to kitchen tables and city streets. We are all travelers now, desperate souls searching for a signal to connect us all."

In the end, Mr. Patel declares that the "the internet is a utility" and that "internet access isn’t a luxury or a choice if you live and participate in the modern economy, it’s a requirement."

Neil Eustaquio, a 4th year student of the Ateneo Law School, agrees: "The internet is a public good fundamental for the full realization of human rights."

I had the privilege of helping Mr. Eustaquio (who also holds a Master’s Degree in Management from the University of Asia and the Pacific) in his thesis "Right To Intenet As International Human Right." Quite frankly, I now find his conclusions (I previously took the conservative view, i.e., that the right to the internet is limited to merely not blocking access) astute and prescient.

As Mr. Eustaquio wrote: "The Right to Internet is a human right. This statement finds its basis in the premise that the Right to Internet: (1) emanates from the human right to freedom of opinion and expression, the human right to information, the human right to peaceful assembly, the human right to development, the human right to participate in cultural life, and the human right to education; (2) is necessary in today’s world to respect, protect, and fulfill the said human rights; and (3) has been implicitly and explicitly recognized as a human right in various international documents."

The right to the internet is not absolute. As Mr. Eustaquio pointed out: "Some valid limitations to the Right to Internet on the basis of international criminal law include limitations on speech that constitute: (a) direct and public incitement to genocide; (b) incitement to discrimination, hostility, and violence; (c) incitement to terrorism; (d) and child pornography. Other grounds for limitations include: (a) cybersecurity; (b) computer-related fraud and forgery; and (c) copyright and related rights."

Philosophers may probably have something to say about the logic of making a thing a "right" simply because it became a necessity. On my part, I’d like to paraphrase John Henry Newman: we have rights because we have duties.

Philippine values and trade

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

Along with discussions on the veracity of our economic numbers and of the reality of rising unemployment, the matter of trade policy is equally important. Unfortunately, international trade has lost the allure it had almost a decade ago and any conversation on the matter admittedly -- even for your Trade Tripper -- has become quite boring. But it need not be so.

The formulation of a proper (and publicly knowable) trade policy remains a vital concern. It’s obviously a significant tool for economic development for the Philippines. However, properly considered, it also is a valuable instrument for advancing foreign policy. And that foreign policy, also properly considered, should include the values that the Philippines allegedly professes.

US Trade Representative Michael Froman seemingly expressed the same thoughts in his recent speech at the Center for American Progress. In "A Values-Driven Trade Policy," Mr. Froman stated that the US will "focus on trade policy’s role in furthering three of our core values: Standing up for workers, protecting the environment, and promoting widely shared innovation."

One way of doing that is through its present trade negotiations. Regarding workers’ rights for example, in the negotiations relating to the "TPP (Trans-Pacific Partnership) we are seeking to include disciplines requiring adherence to fundamental labor rights, including the right to organize and collectively bargain, and protections from child and forced labor and employment discrimination."

On the environment: "Our values also tell us that the future global economy should be more sustainable than it is today." "Here, too, trade has an important role to play and, through TPP and T-TIP (Transatlantic Trade and Investment Partnership), as well as the WTO (World Trade Organization), the United States has taken the lead in advancing this agenda.

"We are working to set the world’s highest standards in the environment chapters of our trade agreements."

And, most tellingly: "our position as the world’s oldest democracy and most innovative economy, calls for us to cultivate global norms rooted in promoting commerce, scientific progress and the freedom of expression -- norms reflected in our Constitution that encourage innovation and creation."

That, I believe, is the correct view to trade. Anyone who supports the idea of free and fair markets knows the inherently democratic spirit underlying market transactions: one essentially votes through ones wallet.

That is why for an enlightened citizenry, assuming the choices are there in terms of quality and price, one will refuse to buy products that involved labor violations, animal cruelty, exploitation of women, or endangers the environment.

And yet, by reasons of pure pragmatism or greed, what apparently is the right thing to do at the citizen level is ignored at the State level.

In which case, what does it say of us then to declare that our goal as a people is to "build a just and humane society, and establish a government that shall embody our ideals and aspirations, promote the common good, conserve and develop our patrimony, and secure to ourselves and our posterity, the blessings of independence and democracy under the rule of law and a regime of truth, justice, freedom, love, equality, and peace" when that same society and government turns away from those ideals in dealing with other countries for commercial and economic reasons (i.e., money)?

To cut it short: what does that say of us as a country when we forget the democratic rights we say we stand for simply because we want China’s money?

Yes. China is one of our three top export and import partners. And, yes, the volume of trade is huge (with the balance of trade usually in favor of the Philippines). And this does not count the direct investment we get or could get from China.

But in doing so we turn a blind eye to the fact that China remains (at least according to Amnesty International and Human Rights Watch) a continued violator of fundamental international human rights, particularly of speech and religion. It continues to disregard international norms relating to worker rights (Apple, for instance, had to fire one of its Chinese suppliers in January 2013 after finding it violated rules on child laborers). It has persistently continued to impose population planning policies that violate women’s rights.

Oh. And China insists in taking parts of our territory away from us.

Now, I’m not saying we stop trading with China. What I’m saying is that our trade partnership with China (as well as other countries, like Myanmar) could be utilized to lead to a more meaningful relationship based on mutual respect. And that respect should include China giving due consideration for our values and interests, which are substantially shared by the rest of the world.

As Samuel Gregg wrote (in Constitutions, Culture, and the Economy), a country’s constitution expresses "fundamental principles that a society considers valuable enough to merit special protection. In this sense, constitutions (like all laws) perform a pedagogical function."

So should our trade agreements (which, technically, are "laws") embody the fundamental principles and values of our people.