jemy gatdula blog

Impeaching dishonesty

2012-02-09T05:26:00.001-08:00

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

At the least, the impeachment trial highlighted a disconcerting trend in Philippine society: our tolerance with dishonesty. Such is exemplified in two instances: the first had to do with the Supreme Court’s clerk of court refusing to bring out the disputed SALN’s by saying she didn’t bring them along to the Senate (when she actually did) and the second had to do with members of the House prosecution team denying that they publicly claimed CJ Justice Renato Corona has "45 properties" despite the fact that video clips and numerous witnesses saw them clearly doing so.

Doubtless, the court clerk and the House prosecutors have reasons for making the statements that they did. But such is beside the point. And frankly irrelevant. If one’s word can’t be taken at face value, society loses a basic component necessary for its proper functioning and that is "trust." It must be noted, though, that this behavior of placing minimal value in honesty cuts across social or political classes. Household helpers have no qualms declaring commitment to the houses they are serving but all the while knowing they will abandon that household that very evening. I know of faculty professors, even priests, who think it their God-given right to back out of commitments already made simply because something more favorable to them came up. One COO of a multinational firm thinks nothing of cravenly taking credit for revenues generated by his partner. Of course, we also know of that famous "promise" made by a president not to run again. Although in fairness, equally despicable (actually traitorous) were her Cabinet officials who declared (even sang) their commitment to her administration while simultaneously plotting her downfall.

The problem with all this dishonesty stems from our toleration of the same. It’s hard to pinpoint where or how or when this type of behavior steeped into our society. However, what is clear is that this must be stopped. As law professor Tamar Frankel (author of the book Trust and Honesty: America’s Business Culture at a Crossroad; Oxford University Press) says, if people "expect dishonesty, they might accept and even justify it. This expectation is dangerous. People may protect themselves from fraud by suspecting everyone they do not know well. They may cease to interact with others or start copying dishonest people who seem to be successful. The price of both reactions is devastating to our economy and well-being."

The foregoing point regarding the economic costs of dishonesty, as well as the benefits of truth telling, were amply corroborated by Rick Hayes-Roth in his research paper "The Value of Truth Telling" (2011), which pointed out:

"Several scholars have suggested that honesty, honor, fairness and other traditional values play a vital role in making capitalism and democracy function (Fukuyama 1995; Zak 2008). Others have recognized that capitalism and democracy reward greed and reinforce antisocial manipulators (Hayes-Roth 2011a). Some believe that enterprises can reconstruct themselves profitably around the principles of integrity and honoring one’s word (Jensen 2011). Our research complements their work by showing how lies materially harm business prospects, making it possible to increase value through truth telling. In the Internet Age, both harmful and salutary information flow at increasing rates, amplifying the latent value of truth (Hayes-Roth 2011c). Promiscuous customers have little loyalty to vendors and shun untrustworthy ones as too risky. The Internet will soon offer improved mechanisms to identify liars and truth-tellers and to filter out untrustworthy messages automatically. Businesses and other organizations will need to seize the opportunities to significantly improve their truthfulness quotients. Quantitative measurements of the value of truth telling will help management steer in a positive direction."

As Hayes-Roth bluntly concludes, "democracy and modern civilization might be at risk if citizens either give up on knowing what’s true or can’t easily separate credible information from propaganda and other types of misinformation."

As usual, the job of ensuring society stays honest lies with each and every citizen. As professor Frankel says: "The first step is to be aware of the change. The second is to recognize the harm of this change and the danger that it will become our permanent culture. The third is trying to restore the balance between morality and law and the justice of the market. The most important part is enforcement: not the police and not even the leadership can make the change. It is each and every one of us that must make it and demand it of each other. Keep the ‘realistic cynics’ away and isolated. Do not allow them to contaminate us."

So, while a Freedom of Information law may be important, more necessary, as professor Frankel insightfully says, is for people to reject "as symbols of success" any "con artists and charlatans," both of which we have a lot of nowadays.

We have to start realizing our words are who we are. If our words mean nothing, it’s likely because we think of ourselves the same.

’tini time!

2012-02-02T05:05:00.000-08:00

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

After those articles about our frustrating loss at the WTO relating to excise taxes on distilled spirits, I’d like to take a moment to pay tribute to one of those real, truly exalted, achievements of mankind and that is: the martini. Oh, "what it does for the soul!" as Evelyn Waugh was once said to have exclaimed. And who can blame him? And I am in complete agreement with James Thurber: "One martini is all right. Two are too many, and three are not enough."

The ridiculous thing about this so supremely sublime is how simple it actually is. Or perhaps that’s the secret. Truly great things, things of genius, are actually simple. It’s only the blockhead who can make simple things seem complex. But the real great intellects are the ones who can make even the most complex of matters seem simple. As you can see, talk about martini and instantly it leads one to profundity. Which of course depends on what one means by "profound."

The classic martini is the only true martini: a goodly gin, a tiny dollop of vermouth, ice, stir, into a chilled martini glass. And that’s it. The question now is the matter of the lemon peel and the olive. Purists of either side of the great martini religious schism say discard the peel and just have olive. The olive would then give that olive-y, salty flavor over an otherwise crisp drink. Others believe in twisting a lemon peel on top of the martini to impart that citrusy flavor, not to mention the scent. Me, being a true Catholic and thus quite universal in outlook, would rather have it both: a single olive, with a large lemon peel.

The true origins of martini is as mysterious as God’s ways: the most commonly accepted version is that the martini is derived from the Martinez cocktail, allegedly mixed by bartender Julio Richelieu, which consists of vermouth, gin, bitters, ice, and a twist of lemon. Then there’s the tale of Jerry Thomas, a famous 19th century bartender in San Francisco. Another story involved John D. Rockefeller, who got enamored with this drink at the old Knickerbocker Hotel way back when and served by head Knickerbocker bartender Martini di Arma di Taggia. Or the martini could simply have come from a brand of vermouth commonly used for it: Martini and Rosso. Whatever version you believe, there is one commonality in all of them: a martini must have gin and vermouth.

Which leads to the topic that makes most martini purists foam at the mouth: vodka. Simply put, a vodka martini is not a martini. It is a vodka martini. And perhaps the only reason why vodka martini has the eminence that it has right now could be either laid at the feet of Frank Sinatra (who used Stolichnaya as his martini base) or, for which I’m more inclined to blame, James Bond.

But Bond’s martini is wrong on so many levels. Consider that classic piece of dialogue taken from Ian Fleming’s "Casino Royale (1953)":

"[Bond] looked carefully at the barman.
A dry martini," he said. "One. In a deep champagne goblet."
"Oui, monsieur."
"Just a moment. Three measures of Gordon’s, one of vodka, half a measure of Kina Lillet. Shake it very well until it’s ice-cold, then add a large thin slice of lemon peel. Got it?"
"Certainly, monsieur." The barman seemed pleased with the idea.
"Gosh, that’s certainly a drink," said Leiter.
Bond laughed. "When I’m… er… concentrating," he explained, "I never have more than one drink before dinner. But I do like that one to be large and very strong and very cold and very well-made. I hate small portions of anything, particularly when they taste bad. This drink’s my own invention. I’m going to patent it when I can think of a good name."

Bond would eventually call his creation the Vesper, named after a woman who would soon after betray him. Served him right. First of all, Kina Lillet isn’t even a vermouth. And, finally, to shake a martini rather than stir it would have a twofold effect: "bruise" the martini and then dilute it. So this tough guy actually prefers his drink watered down. But we shouldn’t really be tough on Bond. In fairness, vodka martini is not even his favorite drink. Not even the Vesper. It’s actually whiskey, straight. Which speaks positively about his character.

My favorite martini story is how Winston Churchill liked it so dry that he just strains chilled gin into his glass while looking at a bottle of vermouth. Indeed, the driest of martinis is one of the best things one can indulge in that doesn’t come with the drag of emotional wear and tear. As Sinatra was wont to say: "I pity those who don’t drink because when they get up in the morning that’s as good as they’re going to feel for the rest of the day."

Spirits and national treatment

2012-01-26T05:06:00.000-08:00

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

This is in continuation of our reflections on the country’s unfortunate (but quirkily illuminating) loss in the WTO case Philippines -- Taxes on Distilled Spirits (docketed as DS396 and DS403). The issue in that case essentially is whether the excise tax laws of the Philippines on distilled spirits violated Article III.2, first and second sentence, of the GATT. Both the panel which tried the case and the Appellate Body said yes.

The first thing, then, needed to be discussed is the “national treatment” principle, which GATT Article III embodies. In the simplest of terms, national treatment prohibits less-favorable treatment to imported goods in relation to similar local products. This same concept was also the focus in another (albeit victorious) WTO case: DS371, otherwise known as Thailand -- Customs and Fiscal Measures on Cigarettes from the Philippines. That case had to do with Thai taxes imposed on imported cigarettes.

As described by Brendan McGivern of White and Case: “This dispute was adjudicated under the two core national treatment disciplines of GATT Article III: the so-called ‘charge’ provision of Article III:2, and the ‘non-charge’ provision of Article III:4. Thailand’s measures were found to be inconsistent with both disciplines. Under the ‘charge’ provision of Article III:2, imported products cannot be subjected to internal taxes in excess of those applied to like domestic products. The jurisprudence of the GATT and the WTO has interpreted this obligation strictly. In the present case, the Appellate Body affirmed an earlier ruling that ‘even the smallest amount of ‘excess’ is too much.’ The Philippines successfully challenged a Thai law that granted a VAT exemption for resellers of domestic cigarettes, but not for resellers of imported cigarettes. Accordingly, the law was found to breach GATT Article III:2. The ‘non-charge’ provision of GATT Article III:4 does not deal with taxes or internal charges. Instead, it requires that imported products must be provided treatment that is ‘no less favorable’ than that provided to like domestic products with respect to regulations affecting internal sale.”

One can see an almost similar nature of issues between the two WTO cases. As the ADB commentary on the WTO states: “The principle of National Treatment set out in Article III GATT addresses another form of discrimination, namely that between imported and locally produced goods. Article III requires that imported and locally produced goods be treated equally. In other words, Members are prevented from adopting internal or domestic policies designed to favour their domestic producers vis-a-vis foreign producers of a given product, even though the latter may all be treated in a uniform way. Article III:2 GATT concerns tax rules. It requires that internal taxes on imported products shall not be in excess of those applied to domestic goods. Article III:4 GATT imposes nearly the same obligation with respect to regulations and requirements affecting the internal sale of imported products. It provides that the products of the territory of any Contracting Party imported into the territory of another Contracting Party shall be accorded treatment no less favorable than that accorded to like products of national origin, in respect of all laws, regulations and requirements affecting their internal sale.”

It must be noted that there have been three (only three) liquor tax disputes prior to ours that went through the gauntlet of the WTO dispute settlement system. All three were resolved in favor of the EC as complainants. And all involved national treatment as the main issue. The first, Japan -- Alcoholic Beverages (DS8, 10, 11), had the EC complaining that, since vodka, gin, and white rum are “like products” to two categories of shochu, by applying a higher tax rate on the latter, the law violated GATT Article III:2, first sentence. The AB agreed -- ruling, among others, that the Panel’s finding that vodka was taxed in excess of shochu was correct. It also accepted the Panel’s interpretation that Art. III:2, first sentence, requires a determination of the presence of two elements: (i) whether the taxed imported and domestic products are like; and (ii) whether the taxes applied to the imported products are in excess of those applied to the like domestic products.

The second case, Korea -- Alcoholic Beverages (DS75, 84), relates to Korea’s multi-tiered taxation regime (the Liquor Tax Law of 1949 and the Education Tax Law of 1982) on the sale of alcoholic beverages. The complaint here centered on GATT Article III:2. In this case, the AB held, among others, that evidence of “present direct competition” and the Panel’s approach of grouping the liquor products were appropriate. Finally, Chile -- Alcoholic Beverages (DS87, 110) dealt with the “Additional Tax on Alcoholic Beverages,” levying an excise tax on the sale and importation of alcoholic beverages. The complaint again looked at GATT Art. III:2, second sentence.

This article hopefully demonstrated some of the intertwining concepts involved in GATT Article III. Succeeding articles will try to discuss why the WTO considered our excise tax laws on distilled spirits were in violation of the same.

Technicalities matter

2012-01-24T07:08:00.000-08:00

The past days have seen loud calls from certain sectors in our society (I refuse to call it “popular” or “numerous” calls, as that is certainly far from certain) for a distancing from the so-called “technical” or “legal” or “judicial” approach to the present impeachment proceedings. Such are misguided at most and certainly not thought through as thoroughly as needed at the least. While indeed there may be merit in a more “liberal” interpretation of the rules, this nevertheless presupposes the application of rules itself. The following, partly due to time constraints, constitute mere immediate thoughts and jottings on the subject, and certainly not to be treated as a comprehensive, deliberate reflection (or even a completely reviewed draft) on the matter. Nevertheless, it is hoped that it stimulates a more studied approach on the issue of the application of procedural rules on the present impeachment trial of Chief Justice Corona.

The importance of technicalities

What some call "technicalities" (i.e., the rules of court) are but means to attain the "truth" that people say they want. It must be emphasized that lawyers don't resort to rules because they want to confuse people. They resort to those rules because experience and logic (and the rules themselves being the product of experience and logic, including the evidentiary rules in full display currently at the impeachment proceedings) have shown that this is the objective, impartial way to arrive at that truth against the mere passions of the crowd.

Some lawyers (and not a few crusading journalists) have harped on not letting the rules get in the way of finding the truth. But the rules, the evidentiary rules, were precisely there to help people arrive at that truth. Who is there to say that a particular document or testimony is to be admitted or is irrelevant? What qualification does any individual lawyer or judge (including senator judges) have over others that would make their consideration paramount over all? The point is, if anybody has found a better way to determine admissible evidence then perhaps they should tell us what it is so we can replace our present rules on the matter. There is a reason why the rules of court (which includes evidentiary rules) are so important is because it is objective. It insulates us from the passing passions of the moment. And people should remember this: the rules are there precisely for situations that we have at this moment. Let me repeat: the rules are there precisely for cases like the impeachment trial that we have now – when there are loud, angry calls that have ostensibly no presence of doubt that an individual should be punished for a crime he is supposed to have committed.

The rules are helpful in ordinary cases, when there relatively cooler heads that are fighting over an issue or rights. But the rules simply become necessary when people are terrifyingly certain that a fellow human being must be punished for an act he is alleged to have done. Because it is at that point that we then must exercise restraint and the rules are there to help us exercise that restraint.

Furthermore, people should not confuse the matter of admissible evidence with the standard of evidence or proof necessary to attain judgment. The latter we shall tackle further below. As to the former, it merely means or refers to the crux of the issue of the past days: the application of the rules of court as to the admissibility of evidence. Again, the rules are not mere technicalities so that lawyers can feel superior about themselves. The rules are there to guide us in knowing what document or testimony is relevant, admissible, truthful, or not reliable. Not all documents are correct copies or relevant, some witnesses may only be indulging in gossip or are biased – the rules are there to help us sift through the evidence that should be considered and that which should be discarded. Why the rules? Because unlike the lawyers and the senator judges, we can be more or less (more or less because nothing is perfect) assured that the rules will be more objective, impartial, and not swayed by the need for popularity, pressure, or personal ambition.

Note that the US impeachment proceedings (which proceeds from their Constitution, upon which our own Constitution closely relates) makes unabashed reference to “federal court, common law principles and the precedents of past impeachment trials” in relation to procedure. The reason for this, according to one commentator, is that: “the main functions of rules of evidence in criminal cases is to shield juries from potentially prejudicial or unreliable material, a protection that is less important in the Senate, whose members have the sophistication to give due weight to ‘hearsay’ evidence or other matters. Unlike regular jurors, senators aren't prohibited from reading newspapers or discussing the case; presumably they have already been exposed to much of the evidence. As a general matter, the Senate in the past has tended to err on the side of including evidence.”

Besides, the House Prosecution Panel very well knew the rules and what they were getting into when they filed the articles of impeachment. We know this because the Rules of Court have been there since those House members were in law school, the Senate Rules on Impeachment (particularly Article VI, which specifically makes reference to the recourse to the Rules of Court) have been there since the impeachment proceedings of former President Joseph Estrada, and the Constitution has been there since 1987. Which means that the responsible, intelligent, and mature manner of going about the impeachment proceedings is to have thoroughly prepared as much as possible, including having full knowledge of the rules, before the impeachment complaint was filed. To say that one’s litigation skills are “rusty” or that one is “not as experienced” is not an excuse. It only meant that the House Prosecution Panel, considering the tax money they will use up, had the responsibility to compensate for whatever inadequacies they may feel they have by simply working and studying harder. If they say that they didn’t know that it will be this difficult is to beg the question: why didn’t they know? In any event, nobody forced them (or at least none that we know of) to file the impeachment complaint now rather than later when they could have been (possibly) more prepared.

We also must consider: how fair is to the other party that just because the House Prosecution Panel are having difficulties that the rules should be changed mid-proceedings? Due process and the equal protection principles alone, which is applicable to all – bar none – frowns on this tact.

Political but judicial as well; Proof beyond reasonable doubt

The line has been taken that the impeachment proceedings are political in nature and not necessarily judicial. That is wrong. More accurately, they are both. They certainly call on the judgment of each of the individual senator judges. And it must be emphasized that the reason why under the US Constitution (upon which our Constitution parallels) it is the Senate that rules on the impeachment trial and not a judicial body like the Supreme Court is not to belittle the judicial characteristics of the latter but simply because, unlike the Supreme Court, the members of the Senate were not appointed by the President (see Alexander Hamilton, Federalist Papers, No. 65). So, again, to say it is political is true but it should not be at the expense of the judicial aspect of the proceedings. Emphasis must be made at this point that, as mentioned above, commentators are clear in declaring that, historically, US impeachment proceedings tended to rely on evidence in case of doubt. And so, therefore, while a senator judge must ultimately rely on his individual judgment, it is respectfully proffered that such judgment (like “consciences” when dealing with the subject of morality) must be properly formed. And that formation would necessarily involve the rules. What do those rules say?

The main charge essentially is that CJ Corona committed “culpable violation of the constitution” or "betrayal of public trust". These phrases are found in Article XI of the Constitution. Legal commentators have been clear that the former term is supposed to mean "the deliberate and wrongful breach of the Constitution." Furthermore, it has been stated by legal experts that "violation of the Constitution made unintentionally, in good faith, and mere mistakes in the proper construction of the Constitution do not constitute an impeachable offense." The picture that we get from this is the need for a deliberate wrongful act. In short, malice. It must also be considered that "culpable violation of the Constitution" and "betrayal of public trust" are placed alongside the crimes of "treason, bribery, graft and corruption, other high crimes." To be noted as well that impeachment convictions under the US constitution are those for the acts of "treason, bribery or other high crimes or misdemeanors."

Let us shift then to the Rules of Procedure on Impeachment Trials in the Senate. Article I immediately refers to “prosecutors”. Article VII refers to a “plea of guilty”. Article XXI talks of verdicts of “guilty or not guilty,” as well as "acquittal" or "conviction" (incidentally, Article XI of the Constitution also makes use of the word "conviction").

All the foregoing evokes the picture of a criminal proceeding. I am not saying that the impeachment proceedings are a purely criminal proceeding. I am pointing to the fact that it evokes a criminal proceeding, for which the senator judges are well invited to frame their judgments around. Some legal commentators seek to categorize (and in the process belittle) the impeachment proceedings as not criminal in nature because apparently CJ Corona is not sought to be “imprisoned” or “fined” but rather merely “removed from office.” That argument is a farce. The office is not merely any office. It is the office of the Chief Justice of the Supreme Court of the Philippines. It is very sad indeed if one cannot grasp the gravity of that. Furthermore, this is not to mention the fact that the impeachment proceedings could potentially ruin a man’s career, reputation, life, or even place in history. If one cannot appreciate the immensity of that, then one’s sense of compassion is very unfortunately non-existent.

In any event, considering that the rules, in its totality, seem to evoke a criminal proceeding, and that the rules itself on the standard of proof is silent on the matter, and considering the gravity and the immensity of the impeachment proceedings and its verdict, then for a senator judge to consider “proof beyond reasonable doubt” as the basis for his or her judgment (or at least as one basis) is not an irresponsible thing to do.

Certainly, this question was very much in the minds of the senator jurors in US President Clinton’s impeachment trial. Senators from both sides of the aisle have believed that “proof beyond reasonable doubt” is a proper standard. Yale Law School professor Charles L. Black Jr. believed that "overwhelming preponderance of the evidence" (which is a higher standard than that for civil or administrative cases) is proper considering "removal by conviction on impeachment is a stunning penalty, the ruin of a life. Even more important it unseats the person the people have deliberately chosen for the office."

-- In fine --

To call for a "non-judicialized" impeachment proceeding sounds nice on paper. But it should definitely limit itself, not to simplify or change the rules mid-stream, or (even worse) refer to an absence of rules, but merely a liberal interpretation of the rules as is needed by the situation. However, it must be emphasized that this is something that judges normally do anyway, as experienced litigators already know, and for which presiding Senator Judge Enrile is fully aware of and frankly is already doing. Otherwise, “non-judicialized” is merely a motherhood statement: warm and fuzzy but one that does not have any root in reality. If there were simpler, better rules around then we should be using them already even for ordinary legal proceedings for the simple reason that due process and equal protection principles demand it.

Interestingly enough, during the impeachment proceedings for then President Estrada, with a House Prosecution Panel that included now retired Justice Antonio Nachura, assisted by private lawyers such as now former Ombudsman and Solicitor General Simeon Marcelo, nobody seemed to have minded then the rules of the proceedings which were practically the same as they are today.

These impeachment proceedings don't need a change of rules. It just needs more hard work and lesser sloppy thinking.

Distilled spirits lose on WTO appeal

2012-01-19T04:53:00.001-08:00

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

In a ruling that probably was a surprise to some, the WTO Appellate Body upheld last December an earlier WTO panel ruling against the Philippine liquor industry. The AB recommended that the Philippines “bring its measures, found... to be inconsistent with the GATT 1994, into conformity with its obligations under that Agreement.” The US, understandably, was exultant: “This is an important victory for American distilled spirits producers and workers,” declared US Trade Representative Ron Kirk.

The WTO AB ruling was quite straightforward, focusing on the idea that “competitiveness” is a key aspect to grasping the concept of “likeness”: “While in the determination of ‘likeness’ a panel may logically start from the physical characteristics of the products, none of the criteria that a panel considers necessarily has an over-arching role in the determination of ‘likeness’ under Article III:2 of the GATT 1994. A panel examines these criteria in order to make a determination about the nature and extent of a competitive relationship between and among the products. We understand that products that have very similar physical characteristics may not be ‘like’, within the meaning of Article III:2, if their competitiveness or substitutability is low, while products that present certain physical differences may still be considered “like” if such physical differences have a limited impact on the competitive relationship between and among the products.” (see paras 119-120)

The AB finding harks back to the discussions made in EC-Asbestos that “a determination of ‘likeness’ under Article III:4 is, fundamentally, a determination about the nature and extent of a competitive relationship between and among products.” In sum, the AB seemed to have agreed with one US manufacturer’s assessment that Philippine excise laws on distilled spirits “is a textbook case of discrimination against imported products.” Or, as more diplomatically put by Ambassador Kirk: “The Philippine tax system for these products is discriminatory, plain and simple.”

The Philippine defense was spirited (no pun intended), led (as reported by other newspapers) by a host of trade law experts, including Solicitor General Jose Anselmo Cadiz and Gregory Spak of White & Case. White and Case, incidentally, is also the law firm assisting the Philippines in Fraport AG Frankfurt Airport Services Worldwide vs. Republic of the Philippines (docketed as ARB/11/12). The case, which practically was sent back to square one by the ICSID arbitral tribunal, had reportedly -- if newspaper reports are true -- already cost the government P2.65 billion in legal costs.

The Distilled Spirits Association of the Philippines (DSAP), however, still put up a valiant face, saying that the AB got the “wrong result.” The ruling, incidentally, was penned by renowned and highly respected trade law expert Peter Van den Bossche (as AB presiding member, with fellow AB judges Jennifer Hillman and Ricardo Ramirez-Hernandez -- all with advanced international law training and years of international trade practice). Anyway, the ruling stands. As Finance Assistant Secretary Maria Teresa S. Habitan said, there will be “one rate for fermented liquor such as beer and one rate for distilled spirits. The distinction on raw materials is removed.” This is seconded by Trade Secretary Greg Domingo, stating that the government will just have to “find ways to help alleviate potential negative impacts on distillers.”

However, one wonders why the tax law amendments weren’t made sooner. Timely amendments certainly could have helped the Philippines stave off a humiliating WTO loss. President Aquino already categorized the amendment of the said taxes to be a “priority measure,” with the draft bills placing emphasis on general welfare, increased revenue, and health objectives. In fact, as late as last year, reported then by BusinessWorld, the Finance department already suggested legislation adopting a simplified “unitary rate” for alcoholic products: “Distilled spirits such as whiskey, brandy, rum, gin and vodka will be taxed according to their alcohol content under the new bill. Those that contain 45% alcohol and below will be taxed P42 per proof liter next year, increasing to P80 in 2013 and P150 the following year. Distilled spirits that have a more than 45% alcohol content will be charged P150 per proof liter next year, P233.73 in 2013 and P317.45 in 2014.”

As it is, the Philippines now has to make the amendments within a “reasonable period of time,” which could either mean the period of time approved by the WTO Dispute Settlement Body, or as agreed by the Philippines with the winning Parties, or as determined through arbitration (which means additional legal costs for the government). Any such period should normally not exceed 15 months from the date of adoption of the AB report. If the winning Parties aren’t happy with the way implementation of the AB recommendations are being made, they could just resort to retaliation as provided for in Article 21 of the WTO Dispute Settlement Understanding.

We’ll devote further articles on this quite instructive ruling, analyzing the various issues raised by the Philippines and as addressed by the Appellate Body.

The bully in Asia

2012-01-12T06:01:00.000-08:00

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

The Philippines last December again had to contend with Chinese naval intrusions in the Philippine territories within the Spratly group of islands, specifically the Escoba Shoal. This after multi-country agreements or understandings had been reached that any movement within the West Philippine Sea shall be peaceful and in conformity with international law.

The incident is but another in a long line of unapologetic Chinese intrusions in our territory, the most recent one prior to this being their incursion near Reed Bank. That time, Chinese boats brazenly moved against a Philippine ship, apparently with the intention of ramming it. The Philippine military properly and rightfully deployed two warplanes, one an OV-10 bomber, causing the Chinese boats to retreat. It must be emphasized that such happened within what is clearly Philippine territory.

All this merely goes to show the need to review our policy vis-a-vis China. This is simply a country whose government cannot be trusted. And insists with its inane stance of being Asia’s resident bully: aside from intrusions into Philippine territory, there’s the Senkaku incident, where a Chinese trawler intentionally rammed itself into Japanese coast guard ships while within disputed waters. Also, as reported by the Wall Street Journal (China’s aggressive new diplomacy, 1 October 2010), when: “... fleets of Chinese fishing ships illegally entered Indonesian waters in May and June, leading to a stand-off with Indonesian patrol craft that ended when one of the Chinese vessels aimed a large-caliber gun at the Indonesians. xxx China’s new assertiveness is more than a matter of provocation and petulance. It’s also a new state of mind.... when Hillary Clinton took the side of Vietnam in mildly pushing back against China’s claims to the South China Sea, Foreign Minister Yang Jiechi could barely contain his anger. Calling the Secretary of State’s remarks ‘an attack on China,’ he lectured that ‘China is a big country and other countries are small countries, and that’s just a fact.’”

The problem is exacerbated considerably because China’s government can’t even be relied on to be rational. Just last December, Chinese officials blasted US Representative to Hong Kong, Consul General Stephen Young, for “interfering in local politics” and which could lead to him “being declared persona non grata and expelled.” And what did Young say to deserve such attacks? As reported by the Wall Street Journal (Paranoia in Hong Kong, 23 December 2011), all he did was that he “praised Hong Kong’s fulfillment of Deng Xiaoping’s promise of ‘one country, two systems’ and its progress toward democratization.” Weird.

And this is worsened by US President Barack Obama’s seeming confusion on how to deal with the Chinese. While indeed proclaiming last week that new US military strategy is to put focus on the Asia-Pacific (a statement that naturally drew hysteria from the Chinese government), President Obama nevertheless last October turned down Taiwan’s repeated requests for F-16 fighters jets. As reported by Daniel Sayani: “Experts believe that the primary reason why the Obama administration refused to sell Taiwan the new F-16s is its desire to improve relations with communist China. Rather than viewing China’s growth as a threat to American interests, Obama stated on January 19, 2011 (at a White House press conference with Chinese President Hu Jintao), ‘We welcome China’s rise. I absolutely believe that China’s peaceful rise is good for the world, and it’s good for America,’ arguing that the country’s economic progress benefits the United States and opens the door to greater international stability and humanitarian progress.”

This declaration, made against the interests of a fellow democratic country that is Taiwan and contrary to calls by Republican leaders in the US House of Representatives, is pretty unrealistic. And quite disconcerting for countries in the Pacific area such as Vietnam, Indonesia, and the Philippines, which possess territories that China is attempting to unlawfully grab. It also smacks of shortsightedness, placing the burden of defending Taiwan, in case of a future Chinese attack, on the next US president.

In this context, the Obama administration’s apparent plans to push US Senate approval of the 1982 UN Convention on the Law of the Sea (UNCLOS) is ill-advised and again indicative of the US government’s wanting it both ways (whatever that may be or means) with regard to the Asia-Pacific. As cogently put by former US Ambassador to the UN John Bolton: “China wants to deny American access so it can have its way with its neighbors,” while what “Washington [should want] is to do what it has done since it became a maritime power: use its Navy to enhance international peace and security, deter conflict, reassure allies, and collect intelligence.”

We should clearly maintain our diplomatic efforts, particularly encouraging the maintenance of a balance of power in Asia. We should also insist on our legal rights. And I reiterate: the best way to deal with China in the meantime is to simply implement our laws, particularly on smuggling and immigration.

The doctrine of self-help

2012-01-05T04:41:00.001-08:00

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

The ongoing dramas (emphasis on the plural) that we have on the impeachment trial of Supreme Court Chief Justice Corona made me reflect on the fragility of our legal system. This is not the best of times to be a lawyer, particularly if you are a lawyer who is a) sane and b) intends to take his oath seriously. However, setting aside the plight of lawyers (who, presently, I find difficulty in taking seriously) the present national situation is even more damaging to that vanishing breed of Filipinos: the middle-class.

There are just too many laws (and planned laws) seeking to protect the “poor,” which is well and good. But current law is seemingly detached from reality, romanticizing their plight rather than providing them with the wherewithal to better their situation. Instead, shallow comfort is given by dragging down those fortunate enough to have more material resources (at present) than they do. But since our current laws or system are also constructed to help the elite maintain their undeserved status, the only group left that can be discriminated or trodden upon -- effectively -- is the middle-class.

So, apparently, in this country if you are middle-class, educated, taxpaying, with legal residence and occupation, heterosexual and with family, Catholic (or devoutly religious regardless of faith), not leftist, and not a Chinese or Spanish mestizo (or mestizo of any kind), the laws and our legislators (and our weakened judicial system) are most likely against you.

Take the case of an automobile collision with a jeepney or tricycle. The middle-class individual, who very possibly acquired his car through a company plan and is already struggling with higher gasoline prices, is now faced with the burden of recovering damages from the said driver. Or take the case of a maid (or any employee) suddenly deserting their employers, despite the fact that the latter already advanced the former’s transportation costs from the provinces. Or the middle-class landlord, whose sole source of income would be the few apartment units he owns, whose lessee suddenly stops paying and, even worse, starts taunting the landlord to “sue” if he wants to be paid. Or every delayed flight by an airline or premature disconnection by a phone or electric company.

In all those situations, the law would be incredibly unhelpful in giving relief to our middle class individual. To file a case in court is cumbersome (and expensive). He would need to file leave from the company in which he is employed, as court filings (including lawyer’s conferences) take hours. Then there’s the hugely jaw-breaking slow legal system. Unless you are Gloria Arroyo that the government wants to stop from leaving the country, it would take months, even years, for it to issue an order remotely helpful. And assuming that actually happens, how damages could be recovered from a jeepney driver (or owner), or maid, or lessee without discernible assets or tangible income is inexplicable.

That is why I am grateful to our very own dear leader and his administration for showing the way: if following a law or court ruling will not allow one to achieve a rightful objective or interest, then the law or court ruling should be disregarded. And since we are President Aquino’s “boss” (he said so himself), then what he could do, under this republican, democratic form of government we tell ourselves we follow, we could do as well and more.

Such thinking could actually be justified under the legal concept of “self-help,” which Celia Taylor, assistant professor at the University of Denver College of Law, defined as “private actions taken by those interested in the controversy to prevent or resolve disputes without official assistance of a governmental official or disinterested third party.” It’s a recognized, albeit not necessarily accepted, principle under both domestic and international law. Under the latter, the most recognized example would be the case of Alvarez-Machain, where the US decided, after extradition proceedings with Mexico stalled, to kidnap an alleged Mexican murderer and bring him to the US.

Our laws contains sporadic mentions of self-help, such as Article 429 of the Civil Code, and referred to by our Supreme Court in German Management & Services, Inc. vs. CA (G.R. No. 76217, September 14, 1989). Our criminal laws also contain provisions akin to self-help, particularly relating to individual safety, honor, or property. All permit the use of force or violence as the situation merits.

In any event, our Constitution provides that “no person shall be... denied the equal protection of the laws.” Presumably, this should be interpreted to mean that neither can the laws be used to improperly discriminate against the middle-class in favor of the vote-rich poor and the elite who constantly seeks to benefit from such votes. Now what the limits of self-help are, as we can presently extrapolate from the actions of our government, is something yet to be determined.

Thoughts on a double vodka

2011-12-29T07:43:00.000-08:00

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

It was James Thurber who once insightfully said: “One martini is alright, two are too many, and three are not enough.” And this being a somewhat wettish December, this adage also comes to mind: “I must get out of these wet clothes and into a dry martini.”

The article last week (“A very significant announcement,” BusinessWorld, 23 December 2011) was not based on this writer’s imaginings, much as I’d like to take credit for it. The details were culled from various sources, among which are the visions of Anne Catherine Emmerich, the non-canonical gospel according to James, historians account of the environment and economy of Nazareth, and -- of course -- the Gospels according to Sts. Matthew and Luke.

Incidentally, the story pushed around by secular media that Jesus was not born on December 25 and that the said date was actually a pagan festival co-opted by the Catholic Church has been shown to be a lie by Biblical scholars. As Rev. Dwight Longenecker explains: “In 386, St. John Chrysostom preached a sermon linking the date for Christmas to the date of the Annunciation. He does so in a way that suggests that this was already an established belief. The date of the Annunciation was based on a Jewish tradition that the world was created on March 25, or Nisan 15, according to the Jewish calendar. The Jews also believed that a great man would die on the same day as his conception. The early Christians [who were of course Jews] therefore concluded that Jesus had been conceived on March 25. This made it the date of the world’s creation, and the start of the world’s redemption [and therefore the new creation]. It’s easy. If the Lord Jesus Christ was conceived on March 25, then he was born nine months later on December 25.”

In relation to which, it must be noted that Pope Benedict XVI restored the tradition of chanting the “Kalenda,” which proclaims the birth of Christ: “Today, the twenty-fifth day of December... is the nativity of our Lord Jesus Christ according to the flesh.” One has to love this Pope, uncompromising regarding the faith and simply always the smartest man in the room, whoever else may be in that room.

Speaking of smart people, Germany’s Merkel has a Phd in physics, UK’s Cameron is an Etonian and (unfortunately) Oxonian, US’ Obama is Harvard, Indonesia’s Yudhoyono studied at the US Army Command and General Staff College and Webster University, Malaysia’s Mohd Najib from Nottingham, Singapore’s Lee is a Cantabian (as all truly smart people are), while India’s Singh is an Oxbridge man. Of course, we have the most prepared and best of all possible leaders in Noynoy, and this is shown in his soaring popularity and satisfaction ratings. I’m sure those affected by Sendong are utterly grateful that he is at this country’s helm.

And speaking of Noynoy, there have been some really brainless, even insane arguments, and Pro-RH ranks highest among these. The arguments have so much condom in the brain, these guys are no longer able to think straight. Besides, how much of a free thinker can they be if they’re actually accepting the fact they’re ruled by mere advertising, compulsions, and neuroses? Perhaps if the politicians and public commentators supporting RH would admit to a purer, if less benign reason, such as the fact that they actually just want to get their hands on the millions of dollars supposedly waiting at the Millennium Development Fund, then their arguments would have a little more logic (and reality).

This leads to the depressing thought that teaching law is increasingly becoming a futile exercise. After all, how useful can legal education be when everybody, by which I mean the top officials of the land, brazenly disregard our Constitutional principles and precepts? How responsible would it be for me to encourage law students to study and work hard when our leaders insist in hiring the most mediocre of lawyers? As it stands, today’s law students are better off partying with the sons of politicians, as well as dropping by Welfareville for a dose of insanity (which seems a prerequisite for those who want to make it good nowadays).

Which then makes me think of the country’s recent loss at the WTO in the Distilled Spirits case. The Appellate Body ruling gives the impression of being an English language lesson, what with it’s protracted discussions on “like,” “similar,” “directly competing,” and “substitutable” products. But which also emphasized how basic the issues were. And, more importantly, what was the point of our defense again? Sheeesh.

In the end, as always, it is Frank Sinatra, quoting General Irving Lincoln, at the great Sands concert with Count Basie, who puts it best: “I pity those who don’t drink because when they get up in the morning that’s as good as they’re going to feel for the rest of the day.”

A very significant announcement

2011-12-22T06:50:00.000-08:00

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

The morning air blazed insistently and the sun seemed to have come out earlier than usual. The young girl stretched her arms and let out a slight yawn. She could hear her mother in the kitchen, her father packing his satchel to go to the temple. Mary sat on the edge of the bed, gathering her thoughts, letting the sleep get out of her head.

Anna, Mary’s mother, pokes her head into the bedroom. “Get up Mary. What’s wrong with you?” Mary lets out an impish grin and lies back again in bed. “Awww... I want to sleep more,” she teases. Anna grabs Mary’s arms and playfully pulls her. “No, get up,” she says, “I have to go to the market. I want you to fill the vats with water before I get back.” Mary follows her mother out of the room. A slice of bread was on the table and she washes her face with water. “Mary, stop splashing water all over the place!” her mother yells. “You clean that up, get more water from the well, and don’t forget to feed the chickens!” Anna continues, stepping out of the house, her words almost muffled by the shawl she wrapped around her. “Buy me figs, Mama!” Mary called out. “Yes,” was Anna’s weary reply. Joachim, Mary’s father, rushes out of his study. He kisses Mary on the forehead, gives her a hug, and runs after Anna so they could walk together.

Alone, Mary shuffles around the quiet stone house, munching on her bread, and played a little with her dolls by annoying the family cat with it. The cat runs away. Mary shrugs. Just over a year ago her life was vastly different. She worked in the temple and her daily routine alternated between service to the temple elders and study. But there was also lots of playtime with girls her age. It was a good life and Mary had no complaints. She even got to see her father at work every day. And since Nazareth was near the trade routes, there was always interesting news from Egyptian and Mesopotamian travellers who dropped by the temple.

Then she turned 12 years old. “Look here, my favorite daughter,” her father teasingly said, as she happened to be Joachim’s and Anna’s only child, “we’ll have to marry you off.” Several suitors immediately turned up. But it was the quiet Joseph, who dealt with good humor a pesky dove who insisted on sitting on Joachim’s head that sealed the deal. Joseph, however, had to go away on business for a year. In the meantime, Mary waited at her parents’ house.

Water and chicken chores done, she decided to cool off a little bit in her bedroom. It was while she was reminiscing over her favorite cousin Elizabeth, elderly but always ready with the jokes and now amazingly pregnant, that it happened.

There was a flash of white light and then there he suddenly was. He looked young, thought Mary of the strange visitor. It took her a while before she decided it was a boy she was talking to, well he seemed like a boy -- very fine features and his hair a bouncy blond. He tightly held a little trumpet. Even so, Mary had to admit feeling a little bit scared of this somewhat adorable, albeit odd, intruder. It was when he spoke, however, that cold terror hit her: Mary, you are to conceive by the Holy Spirit, give birth to a boy, you shall call him Jesus.

It took a while and a fair bit of frantic cajoling by the youth, but Mary eventually settled down. She began to think: is this kid for real? He seemed quite detailed, even giving me the baby’s name. But if I get pregnant as he described it my parents would be dishonored. Joseph too and he’d leave me. Who’d take care of me? I’d be disgraced, an outcast; assuming I don’t get stoned to death. And yet ...

Gabriel would later say it was the most nerve wracking assignment he ever had. And he was used to big jobs: engineering John the Baptist’s birth, supervising the seraphims and cherubims, and he even has the task of declaring the start of the apocalypse. But this, this waiting for the answer of a girl just approaching her teens, made him sweat. “I tell you,” he would later say with a laugh to Michael and Raphael, “my heart stopped when she was about to open her mouth and give her decision.” Actually, what Gabriel didn’t realize, because he was so nervous, was that the whole of creation, including time, actually did stop, waiting in equally great trepidation the choice that Mary was about to make. Simply put, the fate of everything created now depended on the answer of this simple unassuming girl.

Then it came: “Be it done to me according to your word.”

Gay rights and marriage

2011-12-15T05:00:00.000-08:00

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

The problem when one wants to put into public query and analysis anything related to gay rights, particularly as to marriage, is that one nearly always runs into the inevitable accusations of intolerance, bigotry, or even stupidity. But the stupidity lies actually in not questioning and objectively examining popularly held presumptions, particularly when such have widely acquired favor in media or among the so-called fashionable circles.

But it would be good to proceed from a position that I’m sure nobody would find reason to disagree with: that the family is a very important basic social unit and to allow the deterioration of this important institution would lead to a consequent depreciation of society. As Harvard sociologist Robert Sampson found: “Family structure is one of the strongest, if not the strongest, predictor of variations in urban violence across cities in the United States.” Thus, where the institution of the family goes, so goes a country. That is why our Constitution -- wisely -- mandated that the State “protect and strengthen the family as a basic autonomous social institution.”

So proceeding on the importance of the family as a basic institution of society, the comment by Rick Fitzgibbons, director of Comprehensive Counseling Services and one who practiced psychiatry for 35 years, is pertinent: “The most important issue is the welfare of the child. Social science research has repeatedly demonstrated the vital importance of both a father and a mother for the healthy development of children and the serious risks that they face if they are raised without a mother or a father. Mothers and fathers bring unique gifts that are essential to the health of a child.”

It must be considered that the objections posited here place no reliance on religious doctrine, Catholic or otherwise. The need to reject homosexual unions finds its basis in natural law. As Princeton’s Robert P. George (Sex and the Empire State, 28 June 2011) says: “... once one buys into the ideology of sexual liberalism, the reality that has traditionally been denominated as ‘marriage’ loses all intelligibility. That is true whether one regards oneself politically as a liberal or a conservative. For people who have absorbed the central premises of sexual liberation (whether formally and explicitly, as liberals tend to do, or merely implicitly as those conservatives who have gone in for it tend to do), marriage simply cannot function as the central principle or standard of rectitude in sexual conduct x x x The idea that sexual intercourse (the behavioral component of reproduction) consummates and actualizes marriage as a one-flesh union of sexually complementary spouses naturally ordered to the good of procreation loses its force and even its sense. x x x As a result, to the extent that one is in the grip of sexual-liberationist ideology, one will find no reason of moral principle why people oughtn’t to engage in sexual relations prior to marriage, cohabit in non-marital sexual partnerships, form same-sex sexual partnerships, or confine their sexual partnerships to two persons, rather than three or more in polyamorous sexual ensembles.”

Hence the need for greater reflection regarding any expansion of gay rights. Senate Bill No. 2814 and House Bill No. 1483 are two draft laws that ostensibly appear harmless, even necessary at the outset, asking as they do for the outlawing of discrimination based on “sexual orientation.” But it is highly important that people be given the time to scrutinize and ponder over the proposed legislations and their consequences. While no bill presently seeks to allow marriage between people of the same sex, nevertheless the probability of it happening through “creeping” legislation is there. Notably, HB No. 1483 even demands unconditional employment for homosexuals in the military and educational institutions (regardless if the school is a nursery or kindergarten).

However, as George notes, “... people should care because the whole edifice of sexual-liberationist ideology is built on damaging and dehumanizing falsehoods. It has already done enormous harm -- harm that falls on everybody, but disproportionately on those in the poorest and most vulnerable sectors of our society. If you doubt that, have a look at Myron Magnet’s great book The Dream and the Nightmare: The Sixties’ Legacy to the Underclass, or some of the writings of Kay Hymowitz and other serious people who have examined the social consequences for the poor of the embrace of sexual liberalism by celebrities and other cultural elites.”

A distinction must be emphatically made between the person, and the inclination and related action. As regards every individual, respect, tolerance, and charity should indeed be given. However, natural law tells us that the homosexual inclination is “disordered,” the same (along with the action) being at variance with the basic “human goods” determined by right reason. Accordingly, same sex marriages are to be denied, it inevitably not conforming with the unitive and procreative aspects that make marriage what it is and for its consequent effect on the family and society.

The still-unconvincing ICC

2011-12-08T05:14:00.000-08:00

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

Thursday last week I had the honor of being invited to talk as reactor at the Regional Forum on the Rome Statute of the International Criminal Court organized by LAWASIA Philippines and the Konrad Adenauer Foundation. There I again raised my doubts -- not as to the need for the ICC (which is a different issue all its own) but on the wisdom of the Philippines joining it at this time.

To reiterate, the ICC is a permanent institution, exercising jurisdiction over persons for the most serious crimes of international concern. Envisioned to operate similarly to the International Court of Justice, the Court instead exercises jurisdiction over individuals committing the crimes of genocide, aggression, serious violations of laws and customs applicable to armed conflict, crimes against humanity, and other such crimes.

Note that the Philippines signed into the Rome Statute on 28 December 2000. The Senate gave its concurrence to this on 30 August 2011, with Philippine membership effectively starting on 1 November 2011. The Rome Statute of the International Criminal Court, it must also be remembered, entered into force on 1 July 2002. The ICC, like any criminal court, however, works prospectively. Thus, any statement (assuming the local advocates for the ICC were actually serious when they said it) that with the ICC former President Gloria Arroyo can be held accountable for whatever or that the alleged human rights victims during the Marcos administration can get justice or Japan can now be made to pay further reparations to the comfort women are clearly ridiculous.

Furthermore, it must be emphasized that the Philippines is not involved in any international armed conflict. The Philippines, definitely under legal definitions that we should be espousing for the sake of national interest, is also not engaged in any internal armed conflict. The chances of the Philippines, therefore, in making use of the ICC to protect its citizens is minimal. Notably, Malaysia, Indonesia, Vietnam, or China (our co-claimants to the Spratly or Kalayaan islands) or Libya, Saudi Arabia, United Arab Emirates, or Pakistan (where a lot of our OFWs are) are not parties to the ICC. This means that we can’t even use the ICC to protect our soldiers defending our interests or OFW rights. In any event, there are other avenues available to the Philippines in that regard.

A further reason for the nonnecessity of the Philippines joining the ICC is the enactment of RA 9851 or the “Philippine Act on Crimes Against International Humanitarian Law, Genocide, and Other Crimes Against Humanity.” While another ill-conceived and sloppily thought-out law, nevertheless, it does make Philippine membership in the ICC a completely un-urgent matter (if not a redundancy). In any event, we should not be distracted from the fact that any incident that occurs within the Philippines could validly and satisfactorily be dealt with by simply implementing our Constitution and domestic laws. At most, the application of international customary human rights law or provisions of international human rights conventions that the Philippines entered into, by way of the utilization of the doctrine of incorporation, as embodied in Article II, Section 2 of the Constitution, would suffice.

Which leads me to my biggest concern regarding our joining the ICC: the possibility that international criminal cases can be hurled against our police or military officers, even public officials, upon the mere instigation by any foreign or local individual. There is simply no safeguard against the probability that prosecutions can be made against our public or military officials due to ideological or foreign funded interests. Which directs us to issues of national security and national interests. Assuming that the Philippines want to assert its rights in relation to territorial integrity, particularly in Mindanao, our public and military officials will now be working warily under the cloud that at any moment they could be hauled off to and imprisoned by an international court just because charges were filed by some domestic crusading lawyer out to make a name for himself.

That is why Sudan, Israel, and the US have “unsigned” from the Rome Statute. And that is why African countries are now thinking of doing the same, frustrated as they are that the ICC, after being in operation for nine years, seems only interested in prosecuting Africans, thus raising suspicions of Western or racial bias. Hence my insistence: yes, human rights in this country should be aggressively protected. But to do so is a matter I would trust fellow Filipinos with, who knows our particular circumstances (eccentric they may be) rather than some foreigner at The Hague.

Frankly, I find it profoundly bizarre that the government is openly contemptuous of our very own Supreme Court and yet display huge confidence in a foreign “international” court. I also find it disappointing that, rather than make policies designed to advance national interests, our government instead prefers to stoop down and satisfy a single politician’s wish of joining an international tribunal.

Anti-trust and corruption

2011-12-01T17:09:00.000-08:00

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

If there’s one thing that foreign businesses hope to pass through Congress without much fuss then it must be the long-sought competition law. Which probably means Congress (and the rest of country) should indeed make a fuss about it. The fact that the imports/exports situation of our country remains uncertain up to the next year is no reason to rush any competition/anti-trust legislation. The question is not whether we should have a competition law (we should) but rather to have a competition law that will work primarily for the interests of Filipinos.

As I’ve continuously written, Filipinos should be more discerning about the strong possibility of foreign corporations sneaking up in acquiring Filipino companies or influence to the point that monopoly powers are exercised from beyond Philippine jurisdiction, constricting Filipino entrepreneurial efforts and damaging local consumer interests. Seemingly, Section 3 of Senate Bill 3197 (Competition Act of 2009) interestingly describes the enforceability of the intended law to be “within the territory of the Republic of the Philippines x x x including those that result from acts done outside the Republic of the Philippines.”

The fact that jurisdiction is had over offenses committed within the Philippines is par for the course -- territoriality being a long accepted jurisdictional premise within Philippine law. However, the latter portion of Section 3 is fascinating, flirting as it does with the probability of jurisdiction being extended by reason of either the protective principle or the passive personality principle of jurisdiction (the former being embodied, as an exception within our body of criminal law and jurisprudence, in Article 2 of the Revised Penal Code). It could also be indicative of Philippine acceptance of the emerging “effects doctrine” (more like that of objective territoriality doctrine), which is being increasingly employed by the US (e.g. the Helms-Burton and Sarbox laws, as well as the strange case of US vs. Alvarez-Machain).

Continuing from this line of thought would be the relationship of competition law with corruption. Competition policy, in its simplest form, primarily deals with the state of competition internally, that is, with regard to the state of competition within a country’s borders. However, the economic situation of the country is a bit different from, say US or the EU. There, the people who lead in business would not be the same people who comprise government. While undoubtedly relationships exists between the two groups in any country, that is a far cry from having the same families actually in control of both business and government. Which is the case in the Philippines: any cursory reading of our history would show that the same names in government and business appear over and over and over and over again. The same families would side with the Spanish against the Katipunan, collaborate with the Americans, then collaborate with the Japanese, then collaborate with each other in utter disregard of the interests of the country. It is no accident that the most heinous and damaging instances of corruption in the country were at the instigation or committed by these so-called “elite” families.

Thus, the use of the term “historic accident” in SB 3197 is curious for a law that should be forward looking. Also interesting is that when one looks at three domestic industries which are under varying degrees of trade remedy protection from the government -- if recent trade remedy petitions data are accurate, the local ceramics industry has around 50% local market share, float glass (85%), and soap raw materials such as STPP (90%) -- are, apparently under SB 3197, “monopolies.” Note that Section 6 of SB 3197 provides that: “It shall be unlawful for any firm to willfully monopolize, or knowingly attempt to monopolize, x x x Provided, That, a firm that has at least fifty percent (50%) of the relevant market as found and certified by the Department of Trade and Industry or the Concerned regulatory agency shall be deemed a monopoly.”

While there remains the fact that (as found by law professors David Trubek and Alvaro Santos) “the connection between eliminating corruption and ‘development’ remains obscure” -- thus demonstrating the idiocy of basing a government program on a slogan -- nevertheless, corruption is clearly not a victimless crime. Vast amounts of money that could have been used for education or health are instead diverted to less altruistic enterprises. It may have even diverted potential investments away from the country. Deloitte’s 4th annual “Look Before You Leap” found that “63 percent of respondents reported that the FCPA and anti-corruption issues caused their companies to renegotiate or pull out of planned business relationships, mergers or acquisitions over the last three years.”

The point here is that while indeed a competition law could be a valuable tool for the country’s development, we should take care it doesn’t get wasted due to lack of vigilance. For all we know, the proper targets of such a law are those publicly and loudly advocating for it.

Speechless spokesmen preferred

2011-11-24T05:11:00.001-08:00

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

At the outset, let me say that I believe in the importance and authority of the Supreme Court. Whatever one may say regarding the individual justices that comprise it, the fact remains that it is the institution granted by our Constitution with the power to make final interpretations regarding our laws. To disregard such would be to self-arrogate a power reserved for another and thus renders oneself (as well as the country) vulnerable (perhaps even more so) to the tempestuous and passing passions of the day. The blatant disobedience to the Court, no matter what the reason (and reasons are easy to make) is an unfortunate display of political immaturity and utter lack of statesmanship.

However, the past days also made it clear how fragile the power of the Court really is. Freshman law school teaches that the Court is the most passive of the three co-equal branches of government, unable to act except for “justiciable matters.” The Court has no army (unlike the Executive branch) and by nature (quite dissimilar to the Legislative branch) it cannot make public pronouncements unless required to do so by a case brought before it. The power of the Court, therefore, lies in its reticence, the mystique brought about by its rare presence in public life, and of making every word that it utters count.

And it is within this context that we inquire into the curious active public presence of the Supreme Court spokesman Midas Marquez. The Supreme Court should -- must -- only speak through its rulings. The Court should not be made to explain its decisions because the decision itself should categorically stand as the best form with which the Court expressed its decision and legal reasoning. The Court should not defend its decisions because to do so would be to mitigate the prestige upon which a lot of its power is based. As Sir Igor Judge, previous Lord Chief Justice of England and Wales, the head of the English judiciary, once said “I do not want the decision justified other than by the judge. The judge has the responsibility of making clear why he has reached the decision that he has.”

The very public visibility of the present Court administrator and (acting) chief of the Public Information Office is therefore quite peculiar. Considering indeed that the Supreme Court should not be made to explain or defend its rulings, then his act of doing so purportedly on behalf of the Court is superfluous at best. His pronouncements could not be considered as addendums or extensions of Court rulings (as no provision of law would support this). And if he were doing so on his own account, then it would have to be determined what special qualification does he have to entitle him to “explain” the decision of the Court. The credentials and thus right to clarify such Court decisions to the public by a Fr. Joaquin Bernas or Dean Amado Valdez or a Dean Sedfrey Candelaria I can understand. But as to the Court spokesman, the same is not quite so clear.

The said pronouncements by the Court spokesman have even led to complications. Last week, Justice Meilou Sereno “advised” Atty. Marquez “to be careful not to go beyond his role in such offices and that he has no authority to interpret any of our judicial issuances, including the present Resolution, a function he never had from the beginning.” Atty. Marquez then responded by reminding the public that Justice Sereno was speaking through her “dissenting” opinion, which is “merely” a dissent. While Atty. Marquez may be right in classifying Justice Sereno’s comment as a dissent, nevertheless, it does raise the uncomfortable spectacle of a Justice of the Supreme Court being engaged in a public disagreement and essentially being reminded by someone who is unquestionably a subordinate within the judiciary.

And this is not even an isolated one-time thing. Last March, as reported by Newsbreak: “SC spokesman Midas Marquez has been asked to ‘make the necessary correction to media’ surrounding the voting last September 14 of the status quo ante order stopping the House impeachment proceeding against Ombudsman Merceditas Gutierrez.” In this instance, the “senior justice was referring to Marquez’s statements that the justices were given copies of Gutierrez’s 60-page petition before they took a vote on the stay order.” And just this November, BIR Commissioner Kim Henares felt compelled to make a public clarification regarding certain “PEACe Bonds” in reaction to statements by Atty. Marquez. Which raises the question whether Atty. Marquez’s actual legal authority merits such a response from the BIR commissioner (or of any public official, for that matter).

These days, self-restraint in public life is a very rare thing indeed and therefore a virtue to be prized. The Court spokesman is respectfully encouraged to exhibit such restraint, confining himself to merely notifying the public as to when decisions are to be released and to provide copies of such decisions.

Stupid is the new sexy

2011-11-17T04:59:00.000-08:00

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

“There’s something of the mudslide about you. You bring everything down.” It’s one of my favorite movie lines, delivered icily by John Malkovitch (as Tom Ripley) in Ripley’s Game. For some reason, it reminds me of my long unanswered query: is there something in our water that makes people here dumber by the minute?

A marble monument? Cover it with paint. A beautiful road? Put billboards and dig big holes. A nice lake view? Put a huge Batangas sign. A welcoming park? Trash it and allow tacky little stores to squat. A historical site? Put McDonald’s. And ensure that everywhere there’s noise and the ugly mug of some politician and his family.

This freakish mentality is creeping into our services. Which is disconcerting as our economy runs on the service industry. Readers of this column may remember my friend who was shooed away by a Makati building security guard because “bawal tumingin sa directory.” Well, I once wanted to eat at Conti’s. After parking my car a guard comes up and menacingly asks: “Saan kayo?” As I was parked directly in front of Conti’s, I said: “Sa tingin mo saan??”

This idiotic behaviour happens every day. And I strongly disagree that poverty or education accounts for the stupidity: A friend went to KFC. The waitress was spaced out and was more intent in flirting with her co-workers than attending to customers. She was actually pissed off that she had to attend to customers. KFC is one of the worst: never getting delivery orders right, lines at the cashier are always long, and the waiters get angry or confused if you can’t give them the coins they want. Same with Chow King. Idiots.

In Red Ribbon, a friend of mine politely asked for an official receipt. The waiter grumpily replied that the machine dispensing receipts was broken. When my friend insisted, the waiter retaliated by asking for my friend’s name and TIN number and took 30 long slow minutes just to copy the details. The waitresses in Cyma can never remember the orders taken. The S&R meat section people are spaced out and clueless. Shell attendants just mindlessly talk and talk. Example -- Me: “P1,000 unleaded please (as I hand over the money).” Shell guy: “Sir, would you like Citibank card blah blah blah.” Me: “No, thank you.” Shell guy (without pausing to listen to my reply): “Sir, V-Power blah blah blah; sir, cash or card?” Me: “Huh?? High ka ba?? Hawak hawak mo na nga pera ko eh!!” Idiots.

In French Baker, another friend asked for carbonara. The waitress asked what type of pasta she wanted. My friend said she preferred spaghetti. The waitress cheerily replied (and notice that a lot of service providers here are very cheerful when they’re telling you that you can’t have what you want) there’s no spaghetti, only fettucine. My friend said that’s ok. The waitress then proceeded to confirm the entire order, saying “carbonara with spaghetti pasta.” When my friend pointed out that she previously said they’re out of spaghetti, the waitress just shrugged. When the order came, it was carbonara with spinach fettucine. Idiot.

A friend wanted to have Globe Internet. Globe responded by saying they don’t have available connection. Incredibly in the middle of Metro Manila. When it got finally connected, the Internet service kept fizzling out. Another friend went to PLDT, where he was pestered for immediate deposit before they install anything. He promptly paid, got lousy service, asked for his money back. The reimbursement took three weeks to be released. It has to be noted that prompt payments don’t matter much. Inadvertently miss a payment, disconnections are made and demand letters issued. But ask for service and they’re quite talented in making excuses. The same with Meralco, whose repairmen are always nowhere to be found but their disconnection people are incredibly determined workaholics. Idiots.

Cebu Pacific? Never on time. And they think that everything can be smoothed over with that stupid on-air games of theirs. Every flight delay, every re-seating, every chaotic check-in, every malfunctioning online reservation, every rough landing is accompanied by “sir, ok lang?” Siempre hindi! “We hope to make it up to you.” What the %•@# gave you the idea you’re capable of doing that!? Idiots.

Which is perhaps why it’s very hard to find a good martini here. A martini is like our adobo, simple ingredients but easy to louse up. M Cafe’s are disappointing. Mandarin’s Martinis is stingy. Stock Market’s and the rest of Serendra’s are abominations. And that I guess sums it all up. The secret to a good martini, like anything else in life, is simply the care put in making it. Apparently, a lot here just don’t care.

Filipino consumers should be more demanding. And uncompromising. Money is hard to come by in the Philippines for honest folks. There’s no reason why we should part with it for lousy crappy service.

Class war

2011-11-10T05:27:00.001-08:00

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

Amid the sloganeering of the Occupy mob regarding the hated 1% were proper calls for restraint. Firstly, the Occupy Wall Street crowd actually is part of the 1%, income-wise if one takes that in the context of incomes made by individuals globally. But more importantly, to target the rich is mindless prejudice against men that would normally include the likes of Steve Jobs, Mark Zuckerberg, Bill Gates, and Warren Buffet. These are guys who built their wealth on sheer talent, intelligence, hard work, and - most importantly - without receiving an iota of goverment subsidy or bailout.

Thus, calls for class warfare in the US (or even Britain, Germany, and the rest of Europe) is uncalled for, even idiotic. The declaration by US President Barack Obama that the taxation of the rich is "not class warfare. It's math" is ingenuous at best. The Economist (Hunting The Rich, 24 September 2011) got it right (when has it not?) by calling for a more studied approach in taxing the rich, ensuring that shouts for undue redistribution be not indulged in, and yet recognizing that a more equitable sharing of the burdens of the economy should be made. In short, avoid class warfare. Nevertheless, Filipinos should be encouraged to read such within proper contexts. If one is to be asked if class warfare is to be applied in the Philippines, then there is a decidedly and hugely reasonable ground to answer in the affirmative.

The difference lies in the nature of their rich. The US and other Western countries have an incredibly healthy social mobility. Forbes' annual 400 richest Americans ranking points to the fact that the list of the richest men in 1990's US is far different from the list of 2011. This indicates a robust and effective competitive business environment, where talent (and not one's surname) is what matters. Another significant difference is that the people who lead in business would not be the same people who comprise government. While undoubtedly relationships exists between the two groups in any country, that is a far cry from having the same families actually in control of both business and government.

The Philippines obviously has a circumstance very different from the context with which The Economist placed its analysis. Social mobility here is non-existent. Any cursory reading of our history would show that the same names in government and business appear over and over and over and over again. The same names, the same families, would side with the Spanish against the Katipunan, collaborate with the Americans, collaborate with the Japanese, then see their kind give pardon to the collaborators, preside over ever increasing corruption and stagnation in the Third Republic, and then exploit (either in government or in opposition) the Marcos era, People Power, and Edsa Dos.

As Tony Lopez of BizNewsAsia once wrote: "In the last quarter century ... Filipinos must note: 1. The Philippines became the slowest growing economy in Asia in terms of per capita income ... 2. The same families who ruled today are the very same families who have ruled the country in the last 25 years. So if nothing happens to Filipinos, blame these dynastic families.” Ditto Elmer Ordonez of the Manila Times: "Self-interest and conspicuous consumption appear to be the oligarchy’s guiding lights. x x x Events like EDSA 1 and 2 are sometimes described as 'revolutionary' but they are actually transfers of political power from one set of oligarchs to another." The idea being peddled by the political class (which, it must be remembered, also constitutes the wealthy end of our social spectrum) pointing to corruption as the problem is misleading. It’s the elite families who are the problem. Commentators from vastly different ends of the political spectrum converge on this point.

That's why books or biographies about our "great" families or men are simply laughable. Claims of having succeeded out of nothing, through wars or poverty, or against political enemies all conveniently forget that their relatives or in-laws (or classmates) own the banks from which they get behest loans, or are part of governments that generously gives them subsidies, protectionist treatment, allowed war profiteering, or simply looks the other way when enforcing laws.

Albert Einstein once said that “insanity is doing the same thing over and over again and expect different results.” Well, it's insanity to have these same families ruling over and over again over the Philippines. We need laws and policies that directly address this insanity: stronger and more comprehensive estate taxes, taxes that focus on property (akin to Britain's Liberal Democrats' proposed "mansion taxes") rather than on wages or salaries, strong competition laws that restrains family control rather than the companies themselves, consistent and sustained liberalization of trade and the economy, controlled election spending, and an overhauled, stricter educational system.

To borrow US President Obama's line (for a more Philippine appropriate context): This is not class warfare; it's nation building.

Philippines ICSID’d

2011-11-03T06:49:00.000-07:00

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

When people talk about the World Bank, they’re actually talking about a family of institutions: the International Bank for Reconstruction and Development (otherwise known as the IBRD, otherwise known as the World Bank), the Multilateral Investment Guarantee Agency, the International Finance Corporation, the International Development Association, and -- most importantly right now for the Philippines -- the International Center for the Settlement of Investment Disputes.

The ICSID first came to (relative) public view when the German company Fraport sued the Philippine government for P18 billion in relation to its investment in NAIA3. After a much publicized victory by the government, the whole thing became a downer when the said “victory” was later overturned and the case was ordered to start, essentially, at the very beginning.

For students of public international law, the ICSID represents a huge development in that it allows entities normally considered as “objects” in international law to sue a State. As basic constitutional law declares, private individuals or entities are not allowed to sue the State on the basis of immunity, unless, that is, if the State gives its consent to be sued. The ICSID short circuits these obstacles and allows such private entities to protect their investments that they made in a foreign country.

So, for the purpose of encouraging investments among countries, the ICSID scheme was devised by the IBRD, thus accounting for the ICSID’s seat at the IBRD headquarters in Washington, DC. The jurisdiction of the ICSID is set out in Article 25 of the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention):

“The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.”

The ICSID has capacity for conciliation and arbitration. Conciliation requests are rare but arbitration is more common. However, very much like the Permanent Court of Arbitration (which international lawyers affectionately keep referring to as neither being “permanent” nor a “court” nor “arbitrates”), the ICSID is not a tribunal but rather a “framework.” The ICSID maintains a list (panel) of people who can act as conciliation or arbitrators.

It must be emphasized that ICSID proceedings are self-contained: no appeals to local courts, no diplomatic protection and once ICSID is engaged all other remedies are deemed excluded. The ICSID Convention obliges each contracting State to recognize and enforce pecuniary obligations imposed by awards of ICSID tribunals as if they were final judgments of the State’s own courts. Note that State immunity may still hold, but then that State will have to answer for possible treaty violation.

As it stands, the Philippines has two pending cases at the ICSID, with a potential for a third. As mentioned above, there is Fraport AG Frankfurt Airport Services Worldwide vs. Republic of the Philippines (docketed as ARB/11/12). This case, which practically signals a mere beginning (or all back to square one), is taking place after the government had reportedly already spent P2 billion in legal costs. But, as ruled by the ICSID just a little before Christmas Day last year, the original decision (made August 2007) favoring the Philippines was annulled when a second set of arbitrators was said to have found a procedural lapse. Apparently, Fraport was improperly disallowed by the first set of arbitrators from producing evidence relating to alleged agreements among Piatco shareholders as to managerial control of the subject airport.

The second case is Baggerwerken Decloedt En Zoon NV vs. Republic of the Philippines (docketed as ARB/11/27). This is a P4 billion suit against the present government when the latter unilaterally terminated the contract with Baggerwerken Decloedt en Zoon NV for the proposed Laguna Lake Rehabilitation Project for being allegedly a “midnight deal” of the past administration. Reportedly, that conclusion was reached due to a Cabinet secretary making the utterly laughable claim that a unilateral termination of the contract can be done without penalty to the government. The Belgian company subsequently shut down its operations, with an official of it being quoted in the newspapers as saying that it’s “impossible to do business in the Philippines.” Evidently, Belgian Prime Minister Yves Leterme wrote a letter to our government expressing his concern. The latter has yet to reply.

Another ICSID case could come if renegotiations fail after a contract with another foreign company has been unilaterally terminated. It’s really interesting that the government’s intensity in fighting with foreign investors (as well as fighting with the Supreme Court and the Catholic Church, and even the military) is inversely proportional to its determination to defend the State against the MILF or resist China’s Kalayaan advances.

Food

2011-10-27T05:55:00.000-07:00

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

As I wrote years back, the Wall Street Journal came out with an article that sought to dispute the claim that “there’s no good food [in the Philippines]!” This reminded me of another moronic comment, that Filipino cuisine is just Chinese food with Spanish names. Thankfully, WSJ’s Robyn Eckhardt was way smarter than that, giving gracious reviews of our cuisine, taking a food trip from Milky Way to Salcedo Village’s Saturday market to Café Adriatico, seeking to at least “convince just one Philippine food naysayer (and there are way too many out there) to give the nation’s cuisine another look.”

The problem is that we allow people to look down on Filipino food. The sorry thing about it is that the “naysayers” are led by some of our countrymen. Whether it be out of insecurity, ignorance, or both, some Filipinos readily resort to dissing what is theirs. I remember one former co-worker of mine who, when asked by a visiting Thai which is better, Filipino or Thai fish sauce, without batting an eyelash, in full pseudo-American accent, answered: Thai. Which is weird considering she’s never been to Thailand before and has never been seen using Thai fish sauce.

The cause of advancing Philippine cuisine is certainly not helped when you have the alleged elite of our society pathetically serving Spanish, Italian, or French food in their dinner parties because of their belief that Filipino food “isn’t classy enough.” It is. It’s they who aren’t. And it definitely doesn’t do well when you have Philippine culinary personalities appear on international TV food shows appearing embarrassed about Filipino food, mutter that it’s the Filipino version of [insert name of foreign country here], or when some lame-o -- bizarrely -- refer to lechon (or litson) as “leytssonne.”

Then there’s the canard that Filipino food is allegedly too salty or too fatty or too whatever. This conveniently ignores the fact that China has one of the highest diabetes or heart disease rates, the French have cirrhosis, or the Americans have an obesity problem, and that Filipinos are still among the happiest people in the world.

I can’t even understand the giggly adoration some of our countrymen have on foreign cuisine. Soufflé? It’s just airy mamon. Pot au feu? It’s beef nilaga. A daube is kaldereta and thom yan is sinigang na hipon and Hainanese chicken is tinola. The list goes on: shnitzel is breaded pork chop, strudel is turon, German pork knuckles is crispy pata, creme caramel is leche flan, ceviche is kilawin, jerk chicken is inasal, blood pudding is dinuguan, haggis is merely bopis, and ratatouile is simply pinakbet.

But it also has to be emphasized that Filipino food generally doesn’t resort to heavy spices or sauces for the simple reason that, unlike other countries, our ingredients come fresh and don’t need any flavor disguises. After all, the initial value of spices and smoking and sauces was to hide the taste of food that had already gone a bit bad. We had no need for such trickery because we’ve always had relatively an abundant and readily available supply of food.

Filipino’s shouldn’t fall for the con that has been continually fostered on us. Take the case of coffee: supposedly, true good coffee can only come from beans grown under the romantic air and sun of Tuscany, due to the magical minerals in its soil, and with water coming from the Alps. But if one believes such ridiculously specific standards, then logically our coffee won’t match it. Try basing good coffee on whether it matches the body, aroma, and acidity of Batangas coffee and see if foreign coffees match that? No, our coffee is as good as any, thank you very much.

We should be be proud of Filipino food simply because it’s Filipino. It’s a part of who we are. I love it also because, quite frankly, it’s incredibly good cuisine. It is food at its en famille, al fresco best. Some people see in our food Spanish, American, Chinese, Indian influences. Fine. But which cuisine didn’t have outside influences? We’ve always been the perfect poster child for the benefits of globalization and our food is no different. Like any of globalization’s offspring, our food, though derived from many sources, still evolved into our own, our Filipino, food.

Parents should ensure that their children take pride in Philippine cuisine, the fact that (unlike pretentious lesser leaders that served pasta, Merlots, or sushi in Malacañang) Magsaysay proudly served basi and lambanog during State dinners, that Rizal missed tuyo while in Spain, Marcos lived on dinengdeng, or that Ramos loved bangus, of the joys of sapinsapin or palitaw, of great regional cuisines like Bicol’s, and that we’ve been enjoying cheese ice cream long before LA kitchens raved about them.

We Filipinos should be proud of our food. What you eat is who you are and what we are we should be proud of.

Occupied Philippines

2011-10-20T06:12:00.001-07:00

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

It used to be that the shout of the past was “workers of the world, unite!” Now, very much like the “Avengers, assemble!” battle cry, it’s “idiots, occupy!” I don’t even think these people know what they’re doing or where they’re supposed to be. Using products made by successful corporations, like iPhones, laptops, with postings in Facebook, they go out to rally against such corporations, screaming against Wall Street by marching in the secluded homes of George Soros’ neighbors.

But pretty much like that joke that if Batman is stupid for wearing his underwear on top of his pants, then Robin is dumber for copying Batman, the same can be said of the people shouting “occupy Mendiola” or Makati. Look, what is the point of making a nuisance in those busy places? To protest against poverty and income inequality? Only for these same people, come election time, with tears in their eyes and with all the passion that idiocy can muster, to again elect people from the same elite, rich families who have long proven themselves incompetent failures or traitors, and who caused all this inequality in the first place.

What would’ve been so funny if it weren’t so pathetic is how shameless and unapologetically arrogant these self-righteous activists are. Only 10 years ago, Villar was applauded by these people for passing (as Speaker of the House) the articles of impeachment against Estrada. These people, the elite and their middle-class wannabes (collectively called the “un-civil society”), would disrupt the Senate impeachment proceedings, hysterically rally in the streets, kick Estrada out, and install Gloria Arroyo as president. Now these very same people want us to forget that it was they who put GMA into power and that we should again believe them when they laud the “greatness” of some current officials, push to “occupy” this or that, or advocate for a contraceptive Philippines?

The hypocrisy of all of this is nauseating. When House Representative Pacquiao or Senator Sotto tried to raise the impropriety of the RH/RP Bill, their academic credentials were questioned. Since when has this country cared about university degrees or academic achievements? If it ever did, then how come those who raised the issue of academics in the last elections were derided or treated with contempt? How come the academic qualifications of those running for office were treated as inconsequential, to the point that if one had them it was actually taken against them?

Why do we have a society where a senator of the land had to apologize for resorting to Filipino instead of English, as Senator Lapid recently did? What kind of screwed-up mentality is that when people are actually contemptuous of someone who prefers to speak a native language instead of a foreign one? What’s the acceptable language then? Spanish or English, the language of our past slavery? Or is it Mandarin or Cantonese, the language of our future potential slavery?

This messed-up way of thinking, that educated self-made men are to be treated suspiciously while rich untalented kids of powerful moms and dads are praised even more than the Pope, is what’s putting us where we are: the pits. This is a country that will not vote for a Lincoln, a Mandela, or an Obama even if they landed right in the middle of EDSA simply because they’re self-made successful men.

Corruption is one issue that is truly the height of double standard and hypocrisy: if it’s the old rich who does it, it’s pragmatic and clever business; if it’s the poor or from the poor who does it, it’s corruption. But how much corruption can the poor do? Petty corruption for purposes of “processing” papers in a government office? This is nothing compared to the large-scale methodical corruption done by the alleged elite in our society and that is what truly damaged our country. Remember all the scandals that happened in the past decades? Those weren’t corruption done by the poor or of the poor. They were instigated by the elite, the purported “de buenas familias.” Read the newspapers and then read our history textbooks: it’s the same people and families screwing the country over and over and over again.

Real change will be effected once the ordinary Filipino realizes that. It won’t be done by psuedo-intellectual columnists quoting Rawls, not the foodie socialite who deludedly thinks she works oh so hard, those that don’t know what a Blahnick is, those who cannot afford Bisteca, those who cannot speak fluent English with the put-on accents. Change will be done by those who work for a living, who actually have to work for a living, because they don’t come from wealthy families or are without powerful fathers or grandfathers that would allow their stupid selves to pose as smart sophisticates.

First thing we do is make sure those idiots that now occupy and keep wanting to occupy don’t get to occupy anymore.

Manila, Bangkok agree on cigarette tax reforms

2011-10-18T19:31:00.000-07:00

from today's issue of BusinessWorld:

The Philippines and Thailand have agreed on policy reforms required by the World Trade Organization (WTO) regarding a trade dispute, won by Manila, involving Bangkok’s cigarette tariffs.

“The Philippines and Thailand mutually agreed to a reasonable time frame for Thailand to comply with the ruling of the WTO. This agreement reflects the effectiveness of the multilateral trading system in resolving trade issues to expand global trade,” Trade Secretary Gregory L. Domingo yesterday said in a statement.

A WTO document dated Sept. 27 states that both parties agreed that “With respect to the DSB’s (Dispute Settlement Body) recommendations and rulings ... the reasonable period of time to comply shall be 15 months, expiring on 15 October 2012. With respect to ... all other measures, the reasonable period of time to comply shall be 10 months, expiring on 15 May 2012.” By mid-October, the Thai government is expected to resolve its inconsistent application of value-added tax (VAT) rates on locally made and imported cigarettes.

The Philippine government filed a case before the WTO after Thai authorities charged higher duties on cigarette exports by Philip Morris Philippines on suspicion of undervaluation of goods.

A preliminary decision in favor of the Philippines was issued in November last year, which was followed by an appeal by Bangkok last February. A WTO Appellate Body adopted the original panel recommendation in July 15.

Sought for comment, Philip Morris Philippines Manufacturing, Inc. (PMPMI) Managing Director Chris Nelson said: “We are very pleased with the Philippines and Thailand having agreed on a clear timetable. Based on my understanding, the first aspect of the reform involves promoting transparency in customs valuation. The second aspect will involve the actual adjustments on tax.”

Exports to Thailand by Philip Morris Fortune Tobacco Corp., a PMPMI merger with Fortune Tobacco Corp., grew by 12.9% to seven billion sticks last year.

The Philippines is the leading cigarette exporter in Thailand, the Trade department noted. It said that last year, local tobacco producers held some two-fifths or $200 million of the Thai market.

Horrible bosses mean losses

2011-10-13T07:33:00.000-07:00

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

Not to be a downer but, amidst all the adulation heaped on Steve Jobs the past days, one has to remember that he probably would have hated most of those praising him if they were his employees. Jobs was an absolutely driven, dictatorial, ruthless, and incredibly harsh taskmaster. He would drive employees for days without rest, constantly screaming in their faces, and belittling them if their work do not match his standards. Despite that, I’d forgive him because he was just unconditionally freakishly brilliant.

The problem with that last statement I just made, however, is that it could lead to certain misconceptions, as illustrated by this dialogue in the TV show House:

“Inspector Conway: Okay. The rules exist because 95% of the time, for 95% of the people, they’re the right thing to do.
Dr. Cuddy: And the other 5%?
Inspector Conway: Have to live by the same rules. Because everybody thinks they’re in that 5%.”

The point is that most would still have to accept that they’re not Steve Jobs, that the better bet is for them to live out their lives as courteously and as nicely as they can be to everybody else. Clearly, that is something not recognized by a lot in corporate Philippines, many of whose inhabitants still somehow believe in being “alpha males”. But such is ridiculous. It would be all right if you’re a baboon or a gorilla. But for a human in civilized society to openly act like an alpha male is downright strange. And stupid.

Don’t get me wrong, I believe in competition. I wouldn’t be an advocate for liberalized trade if I wasn’t. What I am against is the nonsensical behavior exhibited by alpha male wannabes such as staring, swaggering, boasting, loud talking, and, yes, being an asshole. It’s quite counterproductive as it gives a very public signal to everybody that one is overcompensating for some weakness. Denzel Washington in American Gangster said it best: “the loudest man in the room is the weakest man in the room.”

Indeed, Steve Jobs is a one-off. I’ve been blessed to have worked or studied among the best and the brightest, from Manila to Cambridge to Geneva, men like Justice Ricardo Puno, James Crawford and Sir Elihu Lauterpacht, and DTI Undersecretary Tom Aquino and Asistant Secretary Tong Buencamino, Justice Antonio Nachura and Dean Mariano Magsalin, Jr. They were the nicest, most generous, and smartest people I’ve met. And incredibly low key in behavior. I’ve always had the greatest respect for those people who, despite being at the top of their profession or business, are always punctual, calm, good humored, unhurried, attentive and courteous, and would never dream of boasting of how busy they are.

I have heard though of some bosses who are complete jerks. There’s this one lawyer who’s said to wander around his office swaggering and looking very intense (or constipated). Always wanting to give the appearance of having no time for small talk. But the problem is: he never accomplishes anything. His department has the lowest revenues, his staff turnover counts among the highest in the region, and absolutely nobody respects his absence of expertise (despite corporate pamphlets to the contrary). He boasts of being up at dawn to workout, describing his exercise regime in the most violent of terms: he “hits” the gym or “pounds” the treadmill or “genocides” the pool (I made the last one up). He would have been a mere joke around the office canteen if it weren’t for the fact that he’s not very nice to his people. Nobody looks forward to meetings with him because meetings with him are never fun. I particularly remember one story of how he gathered the junior staff for a breakfast meeting to rouse their morale. Everybody left the meeting depressed. He needlessly cuts people down to size, takes credit for others’ deeds, never gives compliments, and relishes in giving impossible tasks to staff. In the end, for all his bluster, he is just a small sad failed man.

Which reminds me of an insight by Lucy Kellaway of the Financial Times: “Power tends to corrupt and absolute power corrupts absolutely, as Lord Acton famously wrote. But I don’t think he got it quite right: power may corrupt, but absolute power corrupts a lot less than partial power. This thesis is upheld by a new study showing that people who have a little power but don’t have status can behave in nasty ways and get a kick out of demeaning others.” The research is expected to be published in the Journal of Experimental Social Psychology.

Bad bosses, horrible bosses, are simply not worth it for the employee or the company. Bob Sutton of Stanford University found that even if the company is earning a profit, in terms of opportunities lost a company is far better off getting rid of bad bosses (he labels them “assholes”).

Bottom line: nice guys do finish first.

Contraception and natural law

2011-10-06T05:56:00.000-07:00

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

One argument constantly leveled against the pro-life side (i.e., those against the RH Bill) is that they seek to impose Catholic doctrines on the rest of the country and make others follow their own concept of morality. In a “pluralistic society”, so it is said, we should respect each other’s beliefs and not impose our own beliefs on others. Such contentions, however, are unfortunately misleading.

The pluralism of society must be based on reason and coherence. While indeed we should all respect other’s beliefs, it has to be accepted that to do so would not make those beliefs necessarily correct. To those saying that "nobody has the right to impose one's morality on others," they have to recognize that every law imposes a morality. The only question is which one to impose. Any law that purports to be free of morals is still a law imposing its own kind of morals. And finally, the overarching rationale against contraception is not Catholic doctrine but rather that it violates natural law, which applies to all regardless of religion or culture.

Natural law is an objective standard of right and wrong that any human being can arrive at through the independent use of right reason. Murder and adultery, for example, are all objectively wrong, for which no circumstance can make right (acts done in self-defense or polygamous marriages in cultures that allow it are to be differentiated from murder or adultery). Setting aside discussions on actual application and subjective culpability, such are always wrong regardless of whoever you are.

As explained by Martin Rhonheimer: “Because man is by nature a reasonable being, there exists also a law of reason, which are acts ordered by his practical reason in which man distinguishes good and evil, feeling himself bound to do the good, based on the rational understanding of what is good for man. This function of practical reason, natural in man, constitutes therefore a natural law.”

To emphasize that natural law is not an exclusive Catholic thing, it must be remembered that natural law owes a lot to Aristotle. For him, there is an objective moral order which human reason can figure out. Our free will, on the other hand, allows us to recognize that order or ignore it in favor of our passions or emotion. For those who disagree that there is a natural law, they would have to logically disregard the existence of such objective moral order. Which would then result, as explained by Robert P. George, in accepting a world where there is no “built-in, objective reason for me to choose one goal over another”, the goals of Gandhi would now be of the same weight as the goals of Hitler. One Philippine legal giant, Jorge Coquia, would even declare that: "Most who reject the validity of natural law claim themselves as 'liberal' or 'progressive'. But in its essence, it is a reaction and an easy road to totalitarianism".

Having established, therefore, that there is natural law and that natural law is an objective standard applicable to everyone, the question remaining is how can contraception be said to violate natural law? I will deliberately refrain from addressing that question in detail, this column not being the proper venue or occasion for such a matter related to a significant legal and jurisprudential debate. I will, instead, refer to a truncated description of how Germain Grisez, renowned philosopher and influential “new natural law” exponent, approached the issue.

Grisez listed certain basic human goods that logically could be seen as “integral to human flourishing.” Examples are “friendship,” “knowledge,” “excellence in work and play,” and “life”. Each is an end in itself and not a mere means. From the foregoing, quite analogous to the fact that drunkenness goes against the precepts of self-preservation and robbery contradicts subsidiary norms of being part of society, Grisez would conclude that contraception violated a basic good of “the handing on of new life.” Obviously, Grisez has a more defined and meticulous explanation regarding the matter. And so does John Finnis of Oxford. And so do countless other authorities. These are all publicly available and can be examined by anybody who wants to. Bottomline, contraception violates natural law.

I emphasize to the reader one important fact about the foregoing paragraphs: Not once have I mentioned God nor have I resorted to theology, much more Catholic doctrine. As George would say, natural law invokes “no authority beyond the authority of reason itself”. Hugo Grotius, the father of international law, would even dramatically declare that natural law “would maintain its objective validity even if we should assume the impossible, that there is no God or that he does not care for human affairs.”

Natural law is here and in its light that the RH Bill must be weighed. To those who wish to disregard or deny natural law, Sorbonne’s Etienne Gilson had this to say: "natural law always buries its undertakers."

A spirited appeal

2011-09-29T06:20:00.000-07:00

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

The Philippines appealed its quite surprising and bizarre loss in “Philippines -- Taxes on Distilled Spirits” (docketed as DS396 and DS403) to the WTO’s Appellate Body last Sept. 23, 2011. With admirable tenacity and definitely sobriety, it is hoped that a victory can be achieved with the respected judicial body of the WTO similar to that achieved by the Philippines in its cigarette case against Thailand.

The appeal is made more interesting by the fact that, as reported by BusinessWorld, the Finance Department already came up with suggested legislation simplifying the excise tax structure on alcoholic products by adopting a so-called “unitary rate”. Thus, “Distilled spirits such as whiskey, brandy, rum, gin, and vodka will be taxed according to their alcohol content under the new bill. Those that contain 45% alcohol and below will be taxed P42 per proof liter next year, increasing to P80 in 2013 and P150 the following year. Distilled spirits that have a more than 45% alcohol content will be charged P150 per proof liter next year, P233.73 in 2013 and P317.45 in 2014.” The change was drafted with general welfare and health purposes in mind, as well as the additional income of P60 billion it was expected to generate. The foregoing is also in line with President Aquino’s categorization of the amendment as a “priority measure.”

Never mind that the WTO dispute settlement system seems to have a “tendency towards complainant success,” with one research discovering an 81.9% success rate in Panel rulings, and a 78.4% success rate in Appellate Body rulings for complainants. Not relevant as well is that our very own legislators and government officials were “‘aware’ of the WTO incompatibility of the measures as well as that some domestic legislation distinguishes between domestic (‘local’) and imported products,” a fact mentioned in the panel report (see Panel report, page 91, para. 7.172).

Thus, as seen in the Panel report, Senator Ralph Recto would be found commenting that it “would be to the interest of the nation if we protect our local manufacturers.” Senator Enrile [stated that the purpose of lower tax rates was] “to protect the domestic people.” The Department of Finance acknowledged that the current excise tax system needed to be reformed so as “to make it consistent with the [Philippines’] commitments under the WTO,” while the Department of Trade and Industry declared the excise measure “inconsistent with GATT 1994 as it gives preferential treatment to domestic products produced from indigenous or locally sourced raw materials.” The Panel, along with the EU in its first written submission and the US’ response to Panel questions, also noted the following admissions from the 14th Congress: HB 6079 (filed by Reps. Limkaichong. Armaiz, and Teves) -- “The bill addresses the issue of unfair competition between manufacturers of locally produced and of imported alcohol products”; SB 2980 (filed by Sen. Lacson) -- “The bill addresses the issue of unfair competition between manufacturers of locally produced and of imported alcohol products”; and SB 3190 (also by Sen. Lacson) -- “The price-based classification of these products have severely favored locally produced brands.” (see Panel report, page 91, footnote 599).

In any event, as to the appeal process itself, it must be considered that the Appellate Body cannot determine questions of fact but merely look at issues pertaining to specific points of law. The appeal itself shall be heard by a three member grouping of the AB, all of whom are persons of “recognized authority, with demonstrated expertise in law, international trade and the subject-matter of the covered agreements generally. They are also required to be unaffiliated with any government and are to be broadly representative of the Membership of the WTO.” The Philippines has had the honor of having two of its own be members of the AB: Florentino Feliciano, who served from 1995 to 2001, and currently with Lilia Bautista, whose term ends in December of this year. The AB’s current chairman is American lawyer Jennifer Hillman. Usually, the AB takes three months to wrap up the appeal, after which the report is made to the Dispute Settlement Body which actually votes and decides on the case.

The beauty (and the power) of the WTO dispute system has to do with its speed and efficiency. It is, simply put, the most effective international dispute settlement system around today. It has great credibility as well, the AB particularly for its reputation of real integrity, with its members known to be “independent, impartial, and avoid conflicts of interest.” It is obvious why people consider the WTO dispute settlement system as the “crowning jewel” of the Uruguay Round of negotiations. However, an international trade dispute is still no place for flaky thinking or grandstanding. Particularly because international trade litigations are hugely expensive (not to mention research intensive) affairs.

All in, evidently an appeal has to -- nay, must be -- made because it will benefit the country to do so. God knows how.

Drinks with the TT: Supernatural

2011-09-22T06:14:00.000-07:00

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

In line with my continuing obsession to coax the Financial Times to invite me for an interview involving a meal or drink, here is another TT interview: The roadhouse was deserted, except for a truck driver here or there having his dinner of steak, fries, and coffee. The “Martha Special.” The band hasn’t played yet but country music isn’t really my thing so I’m relieved. Raylan Givens would’ve felt at home here. I was sitting at the counter, opting for my usual bourbon and a bourbon when in walks my guests.

They saunter over real casual like but you can tell they’ve already memorized the layout of the place. The taller one shakes hands with me, the older one sits beside me and says: “How the hell have you been?” The typical Sam and Dean welcome. Dean doesn’t wait for an answer and calls the waitress for a cheeseburger, extra bacon, and whiskey. I order my drink. Sam looks at me and I explain the interview. He shakes his head and mutters: “They’ll print anything these days.”

“You mean like the Supernatural books of Carver Edlund?” I shoot back. Sam grimaces, Dean sneers at me. But I know he’s happy with his burger and half-eyeing the waitress behind the counter. “Where is Mr. Chuck Shurley?” The prophet Chuck. Dean shrugs. He’s been missing for some time. They act unconcerned, which assures me Chuck is safe. Although, then again, in their world, one can’t be sure what “safe” means. We talk about wendigos, the Hook Man, Bloody Mary, croatoan viruses, djinns, and clowns. “Don’t forget the long pig!” Dean chuckles. I laugh.

Then just to screw around with his mind, I start to read a passage about them that I found in the Internet: “... and the demons who, even now, must be approaching, the warmth of their embrace comforted them. And then Sam caressed Dean’s clavicle. ‘This is wrong,’ said Dean. ‘Then I don’t want to be right,’ replied Sam, in a husky voice.” Sam groans, Dean glares and throws a french fry. “You do know we’re brothers right!?,” his voice rising. I chuckled, “Why are you defensive? Besides, I didn’t write this ‘Wincest’. Becky Rosen did.” Sam grabs my arm and turns to Dean, “Can I kill him?” Dean looks at me angrily and whispers, “Not in public.” This interview was getting out of hand.

A waiter arrives to take further orders and the brothers loosen up. I offered another round of drinks and they accept. I order three double bourbons. “Super fantastic!” the waiter said and left. Dean finds him strange. I shrug. I ask about Bobby Singer. He’s fine, still his cranky, paranoid research, whiskey-fueled self. And Castiel? The moment I said it I knew I made a mistake in bringing it up. Castiel got power mad after wiping out his enemy angels. Nevertheless, he did utter one of my favorite lines ever: “You know that liquor store down the road? Well, I drank it.” He’s currently a sore spot for the brothers, particularly Dean, who became close friends with the nerdy angel. We’ll find him, was all Dean would say.

I decide to ask about the Impala. Dean’s eyes light up. For me, the Impala is what I find the coolest about the brothers. A black 1967 Chevrolet Impala, with a radio constantly playing Öyster Cult, AC/DC, and Bad Company. The rumbling sound alone would make good company during hours of cross-country driving. The trunk full of mean weaponry ain’t too bad either. “It is,” Dean would say, “my life and sanctuary.” I can understand why.

I ask about how they feel that their parents named (or based their names) from characters in a Jack Kerouac novel. “You mean ‘On the Road?” says Dean. “What??” says Sam, suprised that Dean even knew who Kerouac was. “Hey I read,” shrugs Dean. “No connection really to Sal and Dean, except for the fact that we travel all over,” says Sam. Not really true, I replied. The self-knowledge, the spirituality (at least for Sal) that was acquired during the travels obviously got to you guys too. “Perhaps,” Sam admits. And what of that alternate reality they encountered, where Supernatural was just a TV show? Dean spluttered, “Yeah, that was weird. I mean Jared Padalecky, Jensen Ackles, Misha Collins, what the hell kind of names is that?!”

The roadhouse was getting noisier and the band was getting ready to play. It was time to wrap up the interview. Dean insisted on hitting on the waitress. I tell him to leave her alone. Dean testily declared me as stuffy as Sam. “And you,” I tell Dean, “can go to hell. Again.” Dean chuckles. I want to finish the interview with some pie. Sam rolls his eyes, Dean sighs contentedly. “Gotta have pie,” he says.

The Roadhouse
1 x cheeseburger (extra bacon)
9 x double whiskeys
3 x pies

More on natural law

2011-09-15T06:19:00.000-07:00

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

Natural law plays an incredibly significant part in our society. And history. Yet natural law is practically a forgotten part of our legal education. Most legal scholars here probably would rather have it conveniently ignored. Partly from a fondness for Oliver Wendell Holmes but more likely from the prevailing academic fashion of secularism, legal positivism, realism, or relativism, natural law has been pushed to the side. But to allow such would render baseless our quests for independence against foreigners, the civil disobedience movement during the Marcos years, and the subsequent People Power Revolutions. All that could only see justification through natural law.

Holmes was wrong about natural law and profoundly inaccurate when he asserted that “the life of the law has not been logic, it has been experience.” For experience is but a tool to uncover the principles that we seek. Holmes himself would be found inadvertently contradicting his famous dictum in his other writings. And John Austin’s definition of law, which most of us lawyers memorized by heart (“law is a rule of human conduct promulgated by competent authority ...”) is incomplete. Otherwise, everybody should have unquestionably obeyed the Marcos, Estrada, or Arroyo governments. Or even Hitler. And to the secular positivist or relativist charge that “nobody has the right to impose one’s morality on others,” the answer is simple -- every law imposes a morality. The only question is which one to impose. Any law that purports to be free of morals is still a law imposing its own kind of morals. Finally, to criticize natural law by saying that there are no absolutes is a self-defeating argument because to say there are no absolutes is itself relying on an absolutism.

There is nothing mysterious about natural law. It is, simply put, an objective standard of right and wrong that any human being can arrive at through the independent use of right reason. Murder, theft, adultery, for example, are all objectively wrong, for which no circumstance can make right (acts done in self-defense or cultures that accept polygamous marriages are to be differentiated from murder or adultery). Such acts will always be wrong regardless of whether you are Muslim, Christian, agnostic, or atheist. Or American, Arab, Polynesian, or Asian. The objective standard of natural law is distinct, however, from the so-called subjective culpability (which I’ll take up in another future article).

To take an illustration by Princeton’s Robert P. George (taken from his remarks before the American Political Science Association Convention) on the use of reason arriving at an objective norm of right and wrong: “A human being is conceived when a human sperm containing twenty-three chromosomes fuses with a human egg also containing twenty-three chromosomes (albeit of a different kind) producing a single-cell human zygote containing, in the normal case, forty-six chromosomes that are mixed differently from the forty-six chromosomes as found in the mother or father. Unlike the gametes (that is, the sperm and egg), the zygote is generically unique and distinct from its parents. Biologically, it is a separate organism.”

“Assuming that it is not conceived in vitro, the zygote is, of course, in a state of dependence on its mother. But independence should not be confused with distinctness. From the beginning, the newly conceived human being, not its mother, directs its integral organic functioning. It takes in nourishment and converts it to energy. Given an hospitable environment, it will, as Dianne Nutwell Irving says, ‘develop continuously without any biological interruptions, or gaps, throughout the embryonic, fetal, neo-natal, childhood, and adulthood stages -- until the death of the organism.’”

From the foregoing, anybody can now logically conclude, as George does, that: “The scientific evidence establishes the fact that each of us was, from conception, a human being. Science, not religion, vindicates this crucial premise of the pro-life claim. From it, there is no avoiding the conclusion that deliberate feticide is a form of homicide.”

There are numerous instances of human law (or positive law) being in conformity with natural law. One clear example is the Constitution’s Bill of Rights. Admittedly, there are instances when State interests may require the temporary modification or suspension of such rights. Nevertheless, those rights (e.g., to life, liberty and property, freedom of speech, etc.) actually exist independent of the Constitution because such are considered inalienable and inherent (“natural”) to man.

That is why we judge a law’s propriety first on the basis of its constitutionality. But what if an unjust law is ruled as within the bounds of a constitution (such as previous US racial segregation rules) or, worse, when a constitution itself contains unjust provisions (which is always possible, our previous martial law provisions come to mind)? Natural law could now be relied on to correct the situation. It is certainly the only logical basis for “civil disobedience” against a validly promulgated but unjust law. As our Supreme Court declared: “man stands accountable to an authority higher than the State.”

Panda hugger blues

2011-09-08T06:59:00.000-07:00

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

What amazes me about the Kalayaan/Spratly islands issue is how logic and reality have completely been thrown out of the proverbial window for God knows what purpose. All of a sudden, we hear or read public commentators or politicians telling Filipinos to refrain from being too “belligerent” against China, to be more considerate and gentle in asserting our national interests, and -- in so many words -- to be suspicious of imperialist US intentions when it proffers help and trust China instead.

What do these guys know about China? Information gleamed from Chinese press kits distributed during cocktail parties hosted by the Chinese? With all due respect (and remember I’m not insulting anyone as I said the words “with all due respect”): “Xie xie, idjits ...” How a country as small and as yet to be wealthy as ours can actually be considered intimidating to a supposedly rich and militarily powerful China is beyond me. Belligerent for merely standing up for our rights? Combative for correctly calling the disputed areas as the West Philippine Sea? Quarrelsome for calling attention to the fact that China is parking military vessels and installations in the area, thus making any future legal or negotiated settlement either inutile or a foregone conclusion?

Some Filipinos have really been duped by China’s game of appearing to be the victim when actually it’s Asia’s resident bully. Have they forgotten the Senkaku area, where a Chinese trawler intentionally rammed itself into Japanese coast guard ships while within disputed waters? Or, as reported by the Wall Street Journal (China’s aggressive new diplomacy, Oct. 1, 2010), when: “Chinese fishing boats harassed a U.S. Navy ship in [international] waters xxx More recently, fleets of Chinese fishing ships illegally entered Indonesian waters in May and June, leading to a stand-off with Indonesian patrol craft that ended when one of the Chinese vessels aimed a large-caliber gun at the Indonesians. xxx China’s new assertiveness is more than a matter of provocation and petulance. It’s also a new state of mind. ... when Hillary Clinton took the side of Vietnam in mildly pushing back against China’s claims to th South China Sea, Foreign Minister Yang Jiechi could barely contain his anger. Calling the Secretary of State’s remarks ‘an attack on China,’ he lectured that ‘China is a big country and other countries are small countries, and that’s just a fact.’”

This is a country whose government can’t be relied on to be reasonable. At the height of the Senkaku incident, Chinese Foreign Ministry spokeswoman Jiang Yu, in an incredible display of undiplomatic speak, dismissed Japan’s statements outright by saying that “it is futile to play tricks by deceiving the world and international public opinion” and that “Japan’s sophistry is untenable.” Actually, all that Japan said was for China to remain “calm.” When ASEAN and the US issued a bland 2010 joint statement reaffirming “the importance of regional peace and stability, maritime security, unimpeded commerce, and freedom of navigation, in accordance with relevant universally agreed principles of international law, including the United Nations Convention on the Law of the Sea (UNCLOS) and other international maritime law, and the peaceful settlement of disputes,” China went hysterical and aggressively claimed “sovereignty over the entire sea and all the island groups within it.”

Actually, this is a country whose government can’t be relied upon. Period. As George Weigel of the Ethics and Public Policy Center recently wrote: “For some time, a modus vivendi was in place between the Vatican and Beijing on the appointment of bishops. It was never codified, but everyone knew the basic rules of the road: No bishops are to be ordained without the tacit approval of the Holy See. The regime brazenly broke that working agreement late last year, going so far as to drag one elderly Chinese bishop by his hair to an illicit episcopal ordination.”

Let us not also forget that this is a country whose government recently executed three of our nationals. That bullied other countries into boycotting the Nobel Peace Prize award to Liu Xiaobo. Whose military has resorted to repeatedly harassing the Philippines in asserting its dubious claims.

So, while indeed we should strive for diplomatic means in resolving the Spratly issue, it should be done without forgetting who we’re dealing with and always with the thought that we’re legally in the right. Because we are. Filipinos who do not understand public international law should shut their yakkity pie-hole and stop peddling wrong information. There’s one public international law and that law is in our favor. Period. Let no Filipino be dumb enough to say China has a legal point. If China thinks they’re right then let’s invite them to settle the issue in court. But, curiously, China does not want to go to court. Which tells you something.

Our country should not be ashamed of standing up for its interests, as well as its (alleged) democratic and human rights values.

More on distilled spirits

2011-09-01T06:17:00.001-07:00

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

In an IEL site, I came across a discussion on an 1872 report of the US Senate finance committee on the necessity of imposing higher duties for Russian hemp over Manila hemp. Claiming violation of MFN privileges arising from bilateral relations, the Russians demanded a refund on the “excess” duties paid. The Senate noted that “Russia hemp and Manila hemp are quite unlike in appearance, Russia hemp being of a dull yellowish-green color, while Manila hemp is much brighter and lighter, or almost a cream color. The latter is rather sharp and stiff to the touch, and the former comparatively soft and more yielding. Botanically they are distinct, and differ totally.”

Thus, the US Senate claimed, considering there was no “likeness” between the two hemps, the higher duties were justified. 140 years later, this same issue of “likeness” would play a crucial part in our WTO panel loss in Philippines -- Taxes on Distilled Spirits (docketed as DS396 and DS403). WTO members are prohibited from applying internal taxes on an imported product at rates higher than that applied to domestic “like products.” Clearly, “like products” is a complex term and was actually the focal point of the deliberations in the three previous WTO alcoholic beverage cases involving respondents Japan, Korea, and Chile, respectively. Philippine courts essentially recognize almost the same type of reasoning when dealing with cases that involve the “equal protection clause” of the Constitution.

The panel ruled in our case (see page 57 of the report) that relevant factors to be considered in determining “likeness” include “the product’s properties, nature and quality”; “the product’s end-uses in a given market”; “consumers’ tastes and habits, which change from country to country”; tariff classification, which, if sufficiently detailed, “can be a helpful sign of product similarity”; and “other internal regulations.” The panel also declared that its “analysis will focus on the relevant market in the present case; namely, the Philippines’ market” and kept “in mind the Appellate Body’s statement that the definition of ‘like products’ under Article III:2, first sentence, must be construed narrowly.” Finally, the panel stated that “likeness under the first sentence of Article III:2 is not limited to products that are identical. Indeed, had this sentence intended to cover only identical products, the agreement would have used the word ‘identical’, instead of using the expression ‘like products’.”

In the end, the panel was quite dismissive of Philippine arguments, finding (see page 67) that “with respect to the physical qualities and characteristics of the products, as well as with regard to their end uses, there is similarity between all the relevant imported and domestic distilled spirits, irrespective of whether they are made from the designated raw materials or from other raw materials. With respect to consumers’ tastes and habits, some elements, such as the manufacturers’ marketing campaigns, suggest similarity between all distilled spirits relevant in the present dispute.” Furthermore, “the labels of domestic distilled spirits made from designated raw materials do not suggest to the consumer that these products are different from imported spirits made from other raw materials. With respect to tariff classification, the fact that all distilled spirits at issue in this dispute, irrespective of the raw materials from which they are made, fall within the HS heading 2208 is a further indication of their similarity. Finally, domestic regulations on distilled spirits in the Philippines do not distinguish between imported and domestic spirits, nor between spirits made from the designated raw materials and those made from other raw materials.”

The panel also waived away Philippine arguments regarding “impact on competitive conditions” (page 95), saying such “are misplaced at this stage of the analysis and do not cast doubt on the Panel’s finding that the contested measures afford protection to domestic production.”

Interestingly enough, the Finance Department recently came up with suggested legislation that simplifies the excise tax structure on alcoholic products, adopting a so-called “unitary rate.” Thus, according to BusinessWorld, “Distilled spirits such as whiskey, brandy, rum, gin and vodka will be taxed according to their alcohol content under the new bill. Those that contain 45% alcohol and below will be taxed P42 per proof liter next year, increasing to P80 in 2013 and P150 the following year. Distilled spirits that have a more than 45% alcohol content will be charged P150 per proof liter next year, P233.73 in 2013 and P317.45 in 2014.” Although one wonders why, considering also the general welfare and health purposes of the amendatory draft law, as well as the P60 billion in additional income it was expected to generate, that it wasn’t effected sooner. It certainly could have helped the Philippines stave off a humiliating WTO loss. In any event, President Aquino already categorized the amendment of said taxes to be a “priority measure.”

Taking it all in, an appeal to the WTO’s Appellate Body will be a rather intriguing exercise indeed, for which a rational purpose is to be presumed.

Punch drunk spirits

2011-08-25T18:47:00.000-07:00

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

Last August 15, a WTO Panel finally confirmed what everybody else knew: after the country’s historic WTO Appellate Body win in our Thai Cigarettes case, the Philippines disappointingly lost in Philippines -- Taxes on Distilled Spirits (docketed as DS396 and DS403). The Panel ruled that the excise taxes on imported distilled spirits, such as Jack Daniel’s and Jim Beam, as well as Spain’s Brandy de Jerez, are discriminatorily 10 to 50 times higher than those produced in the Philippines.
United States Trade Representative Ron Kirk gleefuly announced that the "ruling demonstrates the commitment of the United States to combat trade barriers wherever they occur. [The] Panel Report confirms that the Philippines’ taxes on imported distilled spirits are discriminatory and inconsistent with WTO rules. We urge the Philippine government to comply swiftly with the Panel’s recommendations and rulings, and level the playing field for our exports immediately."

The Panel essentially found the imported spirits taxed more than domestic spirits. While the Philippines did argue that domestic distilled spirits are made from indigenous raw materials, such as cane sugar or coconut, and imported spirits are generally made from cereals or grapes, the Panel thought the difference unconvincing, and did not justify a low flat tax for the local products and higher tax rates for imported products. The products in question -- according to the panel -- are practically the same: gins, rums, and whiskies. Thus, according to the Panel, while the Philippine measure gives the appearance of neutrality, it nevertheless is discriminatory and violates the first and second sentences of GATT Article III:2.

The Distilled Spirits Association of the Philippines (DSAP) is certainly trying to put up a brave face. DSAP president Olivia Limpe-Aw has reportedly said that the Panel findings are "not yet binding" and that an appeal shall certainly be made to the WTO’s Appellate Body. For his part, House Speaker Feliciano Belmonte, Jr. was reported to have ordered all deliberations suspended on any bill seeking the amendment of the distilled spirits’ excise tax laws. This apparently upon request of the local industry and despite President Aquino categorizing the amendment of such laws as a "priority" matter.

Nevertheless, an appeal would certainly be interesting. In his 2010 paper, New York University’s Mathew Turk (Why Does The Complainant Always Win At The WTO: A Reputation-Based Theory of Litigation at the World Trade Organization) found a WTO "tendency towards complainant success." Meanwhile, John Maton and Carolyn Maton (Independence Under Fire: Extra-legal Pressures and Coalition Building in WTO Dispute Settlement) discovered an 81.9% success rate in Panel rulings, and a 78.4% success rate in Appellate Body rulings for complainants. The foregoing corroborates the findings of Andrew Guzman of the University of California (The Political Economy of Litigation and Settlement at the WTO) and Juscelino Colares of Syracuse University (A Theory of WTO Adjudication). Colares’ study reported win-rates approaching 90% for the complainants. It’s a win-rate far above that of any domestic tribunal.

More significantly, however, are the statements and admissions made by our very own legislators and government officials, which did not escape the notice of the Panel: "Philippine authorities were ‘aware’ of the WTO incompatibility of the measures as well as that some domestic legislation distinguishes between domestic (‘local’) and imported products, these constitute further evidence of the protective application of the measure" (see Panel report, page 91, para. 7.172). Thus, the Panel noted, Senator Ralph Recto [declared that it] "would be to the interest of the nation if we protect our local manufacturers". Senator Enrile [stated that the purpose of lower tax rates was] "to protect the domestic people." The Department of Finance acknowledged that the current excise tax system needed to be reformed so as "to make it consistent with the [Philippines’] commitments under the WTO." The Department of Trade and Industry declared the excise measure "inconsistent with GATT 1994 as it gives preferential treatment to domestic products produced from indigenous or locally sourced raw materials." The Panel, along with the EU in its first written submission and the US’ response to Panel questions, also noted the following admissions from the 14th Congress: HB 6079 (filed by Reps. Limkaichong. Armaiz, and Teves) -- "The bill addresses the issue of unfair competition between manufacturers of locally produced and of imported alcohol products"; SB 2980 (filed by Sen. Lacson) -- "The bill addresses the issue of unfair competition between manufacturers of locally produced and of imported alcohol products"; and SB 3190 (also by Sen. Lacson) -- "The price-based classification of these products have severely favored locally produced brands." (see Panel report, page 91, footnote 599).

All in all, this case is finely instructive on how to conduct trade policy, legislation, and litigation. Considering the huge amount of time, effort, and definitely money that will go into this appeal, presumably there is some realistic, rational, and studied purpose for it. As I’ve said and will say again: in vino veritas.

Returning to natural law

2011-08-18T07:51:00.000-07:00

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

Most of our legal understanding arises from the perspective of the positivist theory of law, which problematically compels one to essentially take the view that a law should still be followed even if such is unjust or immoral. This is perhaps understandable when one considers that a substantial number of our law professors were brought up appreciating the contributions of Oliver Wendell Holmes in legal thinking, particularly his quite popular essay "The Path of the Law."

But there’s another school of legal thinking, one based on natural law. However, the difficulty of the latter has been illustrated by Murray Rothbard as follows: "In the controversy over man’s nature, and over the broader and more controversial concept of ‘natural law,’ both sides have repeatedly proclaimed that natural law and theology are inextricably intertwined. As a result, many champions of natural law, in scientific or philosophic circles, have gravely weakened their case by implying that rational, philosophical methods alone cannot establish such law: that theological faith is necessary to maintain the concept. On the other hand, the opponents of natural law have gleefully agreed; since faith in the supernatural is deemed necessary to belief in natural law, the latter concept must be tossed out of scientific, secular discourse, and be consigned to the arcane sphere of the divine studies. In consequence, the idea of a natural law founded on reason and rational inquiry has been virtually lost. The believer in a rationally established natural law must, then, face the hostility of both camps: the one group sensing in this position an antagonism toward religion; and the other group suspecting that God and mysticism are being slipped in by the back door."

Nevertheless, the prevailing rejection by most local lawyers of natural law is somewhat ironic when one considers the heavy reliance that our legal tradition has on the same. Most recent significant example of which is the Supreme Court’s ruling in Estrada vs. Escritor, which tolerated non-application of the law on the basis of "sincere religious belief." The ruling recognizes the "religious nature of Filipinos" and the "elevating influence of religion in society." As the Supreme Court declared: "man stands accountable to an authority higher than the State."

Indeed, the foregoing ruling should be no surprise to Filipino lawyers considering that natural law strongly runs through the vein of the Constitution. While focus is on Articles II and III of the Constitution (i.e., the non-impairment clause, taken wrongly as separation of Church and State, for which more accurately non-discrimination against any religion was intended), it must also be remembered that the very first sentence of our Constitution actually contains a fervent appeal to our Creator: "We, the sovereign Filipino people, imploring the aid of Almighty God ..." The Constitution goes on to enumerate instances of adherence to natural law: from "truth," the proscription against aggressive war, the preservation of the family, to taking care of the environment.

The Constitution’s reliance on natural law is most strongly seen in the Bill of Rights. Contrary to popular belief, the rights contained therein are not given by the Constitution. Those rights (e.g., to life, liberty, and property, etc.) exist independent of the Constitution because such are considered inalienable and inherent ("natural") to man. There are instances perhaps when State interests may require the temporary modification or suspension of such rights. The Bill of Rights merely serves as a limitation or framework within which that modification or suspension could be made. Now one of those rights considered inalienable and inherent (including those enumerated above) is the freedom to exercise one’s religion.

The beauty of natural law lies in the fact that it proceeds from "right reason," that is, regardless of one’s religious affiliations. Even before St. Aquinas discussed the subject, Aristotle and Cicero had thought about it, then Hobbes and Kant and such other philosophers. The Maturidi, a school of Sunni theology, declares that "the human mind could know of the existence of God and the major forms of ‘good’ and ‘evil’ without the help of revelation." This is illustrated by its proscription on stealing, murder, and adultery.

The problem with the positivist legal theory (which necessarily would be advocated from a purely secular orientation) is that unanchored as it is on any fixed moral principle, even an act such as a law calling for genocide could be legal and should be complied with for the simple reason that it is the law. It is perhaps because of the huge advances in technology and globalization that natural law is attaining a form of resurgence, with legal theorists John Finnis, Germain Grisez, Joseph Boyle, and (my master on the subject, his In Defense of Natural Law should be required reading for law students, lawyers, and policy makers) Robert P. George leading the way.

That’s it for now on the subject but I shall definitely be discussing more about natural law in future articles for this column.

Snappy responses to condomics 3

2011-08-11T16:26:00.000-07:00

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

Through a widely publicized speech given by a senator, the Senate launched its own deliberations on the RH Bill. While seemingly coherent, the points raised again fail to persuade. Old arguments were simply rehashed and faulty assumptions employed that in the end only again reveal the paucity of logic of the contraceptive movement. Here, then, are some short simple responses to the main points raised at the Senate.

Contraception is supported by most Catholic theologians. No. The reverse is true. First of all, the doctrines of the Church are not to be taken from the personal opinions of a few theologians. This is the same as thinking that what the law really is can be gleamed by reading one textbook. Secondly, the theologians resorted to by the senator need to have their positions better examined. For example, McBrien has been called "inaccurate" and "misleading" by the U.S. National Council of Catholic Bishops, Bokentotter’s book was said to be "tendentious Modernist ideology masquerading as history" by Professor James Toner, Wilhelm’s book was called a "theological deception" by Catholic Culture, and Dwyer’s writings were critiqued as having "strong roots in a Marxist sociology of knowledge." On the other hand, Giovanni Montini, Karol Wojtyla, Joseph Ratzinger, Steve Ray, John Murray, John Hardon, William Most, Jimmy Akin, Scott Hahn, Janet Smith, Mike Aquilina, Roberto Latorre, Mark Shea, Charles Chaput - one cannot get a better set of philosophers, theologians, and apologists than that and all uphold the doctrine against contraception as an ordinary "universal" Magisterium of the Church.

Liberation Theology is a progressive movement within the Church. Only if you call resorting to discredited Marxist views as "progressive." Liberation Theology, while it makes a good subject for movies and produces nice sound bites, has itself been discredited by the Church for teachings that constitute "deviations... damaging to the faith." The problem with Liberation Theology is its disordered priorities, putting primacy of material needs over the need to have a closer relationship to God. As Benedict XVI so cogently puts it: "the first poverty among people is not to know Christ." Having said that, let us also remember that the Catholic Church is the largest, most efficient, and most effective charitable, pro-poor organization in the world.

Vatican II made the Church "democratic." The Church has always been democratic, in a manner more inclusive in fact than others. St. Thomas More referred to this in his trial, GK Chesterton wrote about it, Pope Benedict XVI keeps referring to such. It’s the Church’s "democracy of the dead," which means that all the Apostles, saints, and the faithful "that have gone ahead of us" have a say. You get a glimpse of this fact if you go to Mass and listen closely to the priest. That is why when somebody refers to surveys or the fact that other countries or religions believe so and so, the same still do not matter when taken in the context of the Church’s tradition mentioned above. The problem with Vatican II (if you can call it that) is not that it instituted "radical" changes in Church teachings (because it didn’t) but that too many people, indulging their modernist or Marxist proclivities, misinterpret the actual documents of Vatican II.

The Pope’s authority has been diminished by Vatican II. Absolutely not true. As for the primacy of the Petrine Office, simply put: if you don’t believe in it you are not Catholic. And if you don’t like that setup, complain to the guy who made it: Jesus Christ (Mt 16:18-19). This has been affirmed actually in Vatican II’s main document, Lumen Gentium. Hence, with regard to the supposed "improper" rejection of the advisory 1963 Pontifical Birth Control Commission’s report, Pope Pius XI simply decided, with the Holy Spirit’s guidance, that nothing in the Commission’s findings justified deviating from Church doctrine and tradition.

We should trust our conscience more than what the priests say. True. But with one important caveat: our conscience should be guided by the Bible, Holy Tradition, and the Church. Why? Because of man’s capacity for self-deception. Anybody who tried to diet or quit smoking knows this. If we do otherwise, we are making ourselves vulnerable to acting on the basis of imperfect information and the transient emotions and desires of the time. As Pope Paul VI says: "[Catholics] must follow the demands of their own conscience enlightened by God’s law authentically interpreted, and sustained by confidence in Him."

The Church’s teachings are far more intellectually precise and nuanced than some people believe. The Church won’t force anyone to follow. Whatever one does ultimately becomes a matter between him and God. But considering the incredibly smart people who’ve defended the Church and the fact that the Church has always been proven right, you might want to take this piece of advice from Archbishop Charles Chaput: "If you’re Catholic and you disagree with your Church, what do you do? You change your mind."

ITLOS

2011-08-04T07:02:00.000-07:00

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

We do not wish to increase tensions with anyone, but we must let the world know that we are ready to protect what is ours. We are also studying the possibility of elevating the case on the West Philippine Sea to the International Tribunal for the Law of the Sea, to make certain that all involved nations approach the dispute with calm and forbearance. -- President Benigno Simeon C. Aquino III, 2011 State of the Nation Address

The International Tribunal for the Law of the Sea (ITLOS) was created under the provisions of the Third United Nations Conference on the Law of the Sea, the latter taking effect on Nov. 16, 1994. The ITLOS, based in Hamburg, is entrusted with settling disputes among its 161 parties, with the Philippines being a party on May 8, 1984 and China on June 7, 1996.

So far, 19 cases have been submitted to the ITLOS, the first being the 1997 M/V "SAIGA" Case (Saint Vincent and the Grenadines v. Guinea) case. ITLOS’ most famous case, however, is the Southern Bluefin Tuna Case. It involved the request of Australia and New Zealand for provisional measures against Japan to preserve the population of Southern Bluefin Tuna. In the end, provisional measures were granted, the ITLOS noting that "there is no disagreement between the parties that the stock of Southern Bluefin Tuna is severely depleted."

There is no question, therefore, about the respect which the ITLOS holds in the world of international dispute settlement. The problem here is the complexity of its dispute settlement system and the State sovereignty aspects of ITLOS’ jurisdiction. The ITLOS potentially has jurisdiction over "all disputes and all applications submitted to it in accordance with the Convention. It also includes all matters specifically provided for in any other agreement which confers jurisdiction on the Tribunal (Statute, article 21). The Tribunal has jurisdiction to deal with disputes (contentious jurisdiction) and legal questions (advisory jurisdiction) submitted to it." "Contentious jurisdiction" refers to "disputes concerning the interpretation or application of the Convention, subject to the provisions of article 297 and to the declarations made in accordance with article 298 of the Convention."

Specifically, this refers to "jurisdiction over any dispute which is submitted to it in accordance with Part XV of the Convention concerning the interpretation or application of the Convention (Convention, article 288, paragraph 1; Statute, article 21) and the Agreement relating to the Implementation of Part XI of the Convention." Parties may, however, refer by agreement a dispute that falls under Articles 297 and 298 of the UNCLOS. Under Article 288, paragraph 2, of the UNCLOS, the ITLOS has jurisdiction over any dispute concerning the interpretation or application of an international agreement related to the UNCLOS.

Furthermore, as I wrote a couple of weeks ago, China has to accept the proposal to elevate the case to the ITLOS. The reason is that, unlike domestic tribunals which can acquire jurisdiction by mere service of summons for example, international tribunals operate within the constraints of State sovereignty. In other words, the only way an international tribunal can have jurisdiction over the case is if the States parties to the dispute actually give their consent to be subjected to such jurisdiction. And China has pointedly rejected the jurisdiction of the ITLOS when it made the following declaration upon joining the UNCLOS: "The Government of the People’s Republic of China does not accept any of the procedures provided for in Section 2 of Part XV of the Convention with respect to all the categories of disputes referred to in paragraph 1 (a) (b) and (c) of Article 298 of the Convention."

China’s reference to Article 298 means that "it does not accept any one or more of the procedures provided for in section 2 with respect to one or more of the following categories of disputes": disputes concerning the interpretation or application of articles 15, 74, and 83 relating to sea boundary delimitations, or those involving historic bays or titles; disputes concerning military activities, including military activities by government vessels and aircraft engaged in non-commercial service, and disputes concerning law enforcement activities in regard to the exercise of sovereign rights or jurisdiction excluded from the jurisdiction of a court or tribunal under article 297; and disputes in respect of which the Security Council of the United Nations is exercising its authorized functions, unless the Security Council decides to remove the matter from its agenda or calls upon the parties to settle it by the means provided for in the UNCLOS.

All the foregoing becomes more interesting when we consider the fact that China has a sitting member in the ITLOS: Zhiguo Gao, and we don’t (although we would be entitled to appoint an ad hoc judge should the case indeed reach the ITLOS). So, regardless of Philippine good intentions, the bottom line still is China’s sincerity to have the Spratlys issue resolved in peaceful and just manner.

Transformation, poverty and crime

2011-07-28T06:07:00.000-07:00

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

A prevailing myth apparently adopted by most of our society is that crime happens because people were forced to do so by poverty. The effect of this thinking is to essentially absolve the commission of crime due to the misguided (and destructive) notion that people should be released from any responsibility for doing what they did in order to survive. The truth of the matter is that people, no matter how poor, should be made accountable for their decisions. And our policies should be made to reflect that fact.

Some of the poorest countries in the world actually have the lowest of crime rates: Azerbaijan, Andorra, Angola, Bangladesh, Burkina Faso and Mali, Cambodia, Cameroon, and Vietnam. According to one source, India has one of the lowest crime rates in the world and this from a country with 1.2 billion people. Aside from battling massive poverty, it is also a huge mix of different cultures and religions. By Philippine understanding, it should be mired in crime but isn’t. On the other hand, the US, definitely an economic leader, possesses high crime rates.

Heather MacDonald, reporting for the Wall Street Journal, points out that the “notion that crime is an understandable reaction to poverty and racism took hold in the early 1960s,” particularly through the work of sociologists Richard Cloward and Lloyd Ohlin. However, these theories came into considerable doubt when it was found that crime rates fell when unemployment rose. The financial crisis of 2008 resulted in the loss of seven million lost jobs but sees crime rates fall at record levels.

Thus, as MacDonald finds, even in the 1960s “homicides rose 43%, despite an expanding economy and a surge in government jobs for inner-city residents. The Great Depression also contradicted the idea that need breeds predation, since crime rates dropped during that prolonged crisis.” In more recent times, “by the end of 2009, the purported association between economic hardship and crime was in shambles. According to the FBI’s Uniform Crime Reports, homicide dropped 10% nationwide in the first six months of 2009; violent crime dropped 4.4% and property crime dropped 6.1%.”

The poverty-results-in-crime theory is certainly a very destructive basis for social policy. But for those espousing liberal politics in the US and very much the common attitude in the Philippines, it justified the giving of preferential treatment to the unproductive in society. But clearly this resulted in the worst for our country: our chronically weak institutions have been continually undermined due to the belief that since individuals cannot be held responsible for their actions, then society owes something to individuals rather than the other way around.

Furthermore, it also disguises the fact that the most massive corruption and crimes in this country are actually committed not by the poor but by our rich elite. From the embezzlement of Katipunan funds, to collaboration with the Americans or the Japanese, war profiteering, corruption over the US Army surplus, currency manipulation, import licensing schemes, behest loans, government coddling of favored companies, bungled land reform, missing sequestered assets, missing agricultural funds, NBN-ZTE, the unconstitutional MILF-MOA -- these are not crimes committed by the poor.

So, instead of poverty, some experts are pointing to other causes of crime: the breakup of families, poor housing conditions, education, weak police enforcement, and inequality. The last is interesting as it was just recently reported that Stratbase Research Institute found the Philippines to have a higher degree of inequality as compared to other Southeast Asian countries. The institute warned that “inequality, if left unaddressed, leads to the polarization of society and the creation of social tensions that eventually undermine the process of growth and development.” The foregoing is paralleled by a World Bank report finding that “the richest 20 percent of the Philippine population outspend the poorest 20 percent by more than eight times.” Most reprehensively, it was found by the ADB that the “[richest 10% of Filipino families are] raking in more than a third of the country’s total income.”

Moving forward on a new legislative year, it would be helpful therefore to take into account realities rather than romanticizing the plight of our people. We should address crime as a matter that takes into account individual responsibility and emphasizing discipline for purposes of benefiting society. Our law enforcement capabilities should be strengthened and essentially give a signal that when people commit crimes they will be taken to account for their actions. Furthermore, dole-outs or any similar type of welfare programs should be stopped. If money is to be given out, then it should be done in a manner emphasizing the need for equalization of opportunity and the rewarding of merit, not encouraging dependency. Instead of having a contraceptive and divorce mentality, policies should be made strengthening the family as an institution. Finally, rather than focusing on growth as an indicator of economic success, we should address the continuing problem of inequality in the country.

Spratly

2011-07-21T07:12:00.000-07:00

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

As I repeatedly keep pointing out, one of the most annoying things in international law practice is how more often than not it would be fellow Filipinos who would be “lawyering” for the other countries. Merun kasi diyan ang galing makipagtalo pag kapwa Filipino pero pagdating sa dayuhan oo agad o tameme lang. This inane behavior is again on full display in relation to the Spratly islands debate. Rather than have confidence in the strength of our position, some would go to the extent of criticizing our public officials for doing something that they also should be doing: asserting our national interest.

Foreign Affairs Secretary Albert del Rosario must be lauded and supported for declaring, as reported in the newspapers, that “China’s hesitation to accept the Philippine suggestion to elevate their dispute to ITLOS could lead to conclusion that China may not be able to validate their stated positions in accordance with the UN Convention on the Law of the Sea (UNCLOS).”

The reason for the need to have China accept the proposal to elevate the case to the International Tribunal Law of the Sea (or ITLOS) is that, unlike domestic tribunals which can acquire jurisdiction by mere service of summons for example, international tribunals operate within the constraints of State sovereignty. In other words, the only way an international tribunal can have jurisdiction over the case is if the States parties to the dispute actually give their consent to be subjected to such jurisdiction. The application of sovereignty to a tribunal’s jurisdiction is such that, in certain cases, the States parties can even dictate who the tribunal members are, the language to be used, the scope of the ruling, venue, etc. Sovereignty constraints also bind the UN’s International Court of Justice, which essentially presents a two-consent mechanism: assent to the ICJ Statute and execution of the optional jurisdiction clause. China has not done the latter. The WTO dispute settlement system jurisdiction, on the other hand, had been consented to by the members upon joining.

So Secretary Del Rosario was completely right in concluding that China’s discomfort with the objective proceedings of the ITLOS (or ICJ) is essentially an indication of an admission of weakness on the part of China. The latter’s lame excuse not to resort to international tribunals is that “China always maintains that the South China Sea dispute should be resolved through direct negotiations between directly concerned countries.” Annoyingly, a number of our countrymen bought this argument, all the while conveniently forgetting that we are dealing with a country whose government just does not have palabra de honor.

One example: as George Weigel of the Ethics and Public Policy Center recently wrote: “For some time, a modus vivendi was in place between the Vatican and Beijing on the appointment of bishops. It was never codified, but everyone knew the basic rules of the road: No bishops are to be ordained without the tacit approval of the Holy See. The regime brazenly broke that working agreement late last year, going so far as to drag one elderly Chinese bishop by his hair to an illicit episcopal ordination.” And as if it needs emphasizing: China’s military has resorted to repeatedly harassing the Philippines in asserting its dubious claims.

The Philippines should view its relationship with China with greater objectivity, not allowing itself to be dazzled by the business that China is baiting us with or be awed by its supposed power. This is not to say we shouldn’t deal diplomatically with China. Of course we should. But we negotiate with the strong inner conviction that we are in the right. Because we are. This includes, if necessary, re-drafting our Baselines Law approximately back to the boundaries covered by the old Baselines Law: RA 3046, as amended by RA 5446, that, along with PD 1596, expressly includes Sabah and the Kalayaan Islands as part of Philippine territory. We should prohibit or ban any map or material, specially official documents, that makes reference to a “South China Sea” because it’s really the “West Philippine Sea” or the “Philippine Sea.”

And I reiterate, in the meantime, 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. Why? Because they are what we stand for! It’s hypocritical and betrays an utter lack of character to loudly pontificate on such only to forget them the moment money is dangled before our eyes.

WTO DSB adopts Panel and AB reports for DS371

2011-07-16T20:17:00.000-07:00

From the WTO:

DS371: Thailand — customs and fiscal measures on cigarettes from the Philippines.

The DSB adopted the Panel and Appellate Body reports (WT/DS371/R and WT/DS371/AB/R) which examined Thai fiscal and customs measures affecting cigarettes from the Philippines.

The Philippines expressed its deep satisfaction with the outcome of the reports and noted that it prevailed on virtually all the claims it made. The Philippines said that this case was about exports that directly or indirectly benefited many Filipinos from leaf-growing to manufacturing. The Philippines added that its exports continued to suffer arbitrary and discriminatory treatment at a tremendous cost not only in economic terms. The Philippines said that the objective of this dispute was to end such treatment and to put exports back on the secure and predictable ground of the rule of WTO law. The Philippines stated that this was the first dispute to interpret in detail the substantive rules on custom valuation and added that the panel set out in clear and concise terms the obligations imposed on an importing member in a situation where buyers and sellers were related. The Philippines expected Thailand to promptly and fully implement the DSB ruling affording its goods the treatment required under WTO rules.

Thailand said it was puzzled by the Appellate Body's statement which affirmed that it was not appropriate for Thailand to refer to the panel's interim report in its appeal, given that the interim report formed part of the record of the panel proceedings. Thailand was also concerned regarding the Appellate Body's view that a panel could make an objective finding on the basis of evidence which one party had not had the opportunity to comment. Thailand said that the Appellate Body could have addressed its arguments in more detail regarding its VAT system. Thailand added that it was strongly supportive of the binding dispute settlement system in the multilateral trading system, on which it had successfully relied in the past to vindicate its rights under WTO law. Thailand looked forward to working cooperatively with the Philippines.

The EU was very satisfied with the findings of the panel regarding certain obligations enshrined in the Custom Valuation Agreement. The EU added that the panel set in stone that this agreement imposed an obligation on national authorities to determine the customs value of imported goods on the basis of their transaction value and, if this was not possible, to sequentially apply the other customs valuation method. The EU welcomed the clarification from the panel about the respective responsibilities of the customs authorities and the importers.

Australia had reservations about the reasoning applied by the Appellate Body in its application of the necessary test under Article 20 of GATT 1994. According to Australia, the Appellate Body indicated that the analysis of an Article 20(d) exception should focus on whether the differential treatment applied to imported versus domestic cigarettes under the measure was “necessary”, rather that considering whether the measure as a whole was “necessary”. Australia also pointed out that in no case should the Appellate Body proceedings exceed 90 days (Article 17.5 of the Dispute Settlement Understanding (DSU)) except in circumstances where the legal and factual complexity of an appeal required additional time. Australia said that where the facts and legal issues of an appeal were limited in complexity, efforts should be made to respect the time-frame provided under the DSU.

According to the US, in its analysis of Article 20(d) of GATT 1994, the Appellate Body stated that it was the differential treatment that must be “necessary” to secure compliance. For the US, this seemed to be at odds with prior reports in which it was found that it was the “measure” that must be necessary. The US noted that the Appellate Body report was circulated outside the 90-day period stipulated in Article 17.5 of the DSU. The US noted that the parties accepted the report would be circulated outside the 90-day period. The US regretted that this agreement was not mentioned by the Appellate Body contrary to past practice. The US said that the approach in this dispute resulted in less transparency.

Mexico said that the Appellate Body report was issued 115 days following the notice of appeal and that no reference was made on this issue in the report. Mexico noted that the time-frame was extended from beyond 90 days as required by the DSU.

Japan shared the concerned expressed by the US and Mexico about the lack of transparency of the Appellate Body which deviated from its practice.

A question of experts

2011-07-14T06:26:00.000-07:00

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

One of the bigger tragedies played out in the domestic scene relating to trade was when a local industry got the idea of filing a safeguards measure petition. The problem was that the lawyers consulted weren’t really knowledgeable about trade law. As the product in question wasn’t even subject to a “bound” tariff rate, the safeguards petition then was unnecessary to protect the industry and the latter just wound up needlessly paying millions of pesos to those consulted. Expertise does matter.

However, experts have been getting a bad rap lately. Several (very good) books have come out questioning the merit (in varying degrees) of experts. One of the best books on the subject is The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. Written by James Surowiecki, the book argues that accumulated information by a group resulted in decisions made that are far superior to those of individuals, even if such individuals be experts.

David Freedman’s Wrong: Why Experts Keep Failing Us -- and How to Know When Not to Trust Them is another very good book. The book starts with him relating that around 30% of the findings published in the top medical journals are reversed within just a few years. He then goes on to find that around 90% of doctor’s medical knowledge are eventually found to be entirely wrong. In fact, there is allegedly an 8.33% chance that every doctor’s diagnosis will actually harm a patient. Freedman doesn’t single out doctors, mind you. He goes on to examine the experts of many fields, from accountants preparing tax reports to newspaper reporting to the fact that most studies made by economists turn out to be wrong (well, the last one we know!).

Finally, there’s this book by one of my favorite writers, Tim Harford of the Financial Times (and of The Naked Economist). His latest book, Adapt: Why Success Always Starts With Failure, dwells again on the theme that the world’s problems are so complex that the combined thinking of our leaders and experts would always be found wanting compared to the collective decision of the many. The book starts by relating an experiment done whereby experts from various fields were asked “to make specific, quantifiable forecasts -- answering 27,450 of his questions between them -- and then waited to see whether their forecasts came true.” The outcome was disappointing, with the experts doing just a little better than mere college undergraduates.

So, with all such findings, does this mean the irrelevance of experts? The answer is complex, and for the Philippines the answer even more so. One thing that should be noted is that the studies or findings made in those books were taken from the context of decisions made by societies that had a high degree of education, free exchange of information, and cultures that allowed for spirited and objective (as opposed to emotional) debates. This can be seen from Surowiecki’s book, which actually makes a distinction between “wise” crowds and “irrational” ones. Thus, a “wise” crowd is composed of persons with adequate private information, with individual opinions not determined by the opinions of the people surrounding him, with the ability to specialize and yet tap on local information, and institutions exist that can effectively utilize such private judgments and translate them to collective action.

Surowiecki therefore 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 and are discarded. In this regard, Andrew Keen’s The Cult of the Amateur: How Today’s Internet Is Killing Our Culture would be good to read.

The necessity, therefore, for an educated, mature, objective crowd (or people) is obvious. All the more so if Harford is right: that today’s problems are so complex that a fixed solution will simply not do the trick and that such problems can only be tackled by a great deal of improvisation, dealt from varied sources of information, by a people that is willing to select the best (either of people or ideas) and adapt as needed.

Until that happens, the need of the Philippines for more knowledgeable, expert individuals is all the greater.

When spirits are willing ...

2011-07-07T05:48:00.000-07:00

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

As mentioned last week, after the country’s historic WTO Appellate Body win in our Thai Cigarettes case, news came that the Philippines disappointingly lost in Philippines -- Taxes on Distilled Spirits (docketed as DS396 and DS403). As reported by BusinessWorld, a WTO panel, “in a confidential report circulated to the parties involved in the dispute, had ruled that the Philippines’ taxes discriminate against brands such as Jack Daniel’s and Jim Beam as well as Spain’s Brandy de Jerez, while favoring domestic producers catering to the country’s $3-billion spirits market.”

Following WTO practice, the panel ruling itself is confidential until its formal release in August. This is to “provide sufficient time for the Members to consider panel reports,” which shall be considered for adoption by the Dispute Settlement Body only after 20 days from the date of circulation to the WTO members. After which, WTO members objecting to the panel report “shall give written reasons to explain their objections” at least 10 days prior to the DSB meeting.

In any event, the reactions of the disputants were quite predictable. US Ambassador Henry K. Thomas “welcomed” the panel ruling. The Distilled Spirits Association of the Philippines (DSAP) was reported by BusinessWorld as urging the government to immediately appeal the case to the WTO’s Appellate Body. In its statement, DSAP bravely declared that “the battle isn’t over for the local distilled spirits industry ... The Philippines needs to appeal WTO’s findings because of its adverse impact on local manufacturers, allied industries, Filipino consumers and the economy in general.”

An appeal would certainly be quite interesting. There have been three (only three, although there is also the ongoing DS423, Ukraine -- Taxes on Distilled spirits, filed by Moldovia) previous liquor tax disputes that went through the gauntlet of the WTO dispute system and all three were resolved in favor of the complainants. Theoretically, stare decisis is not followed in international law. Nevertheless, recent empirical studies have disturbingly shown that complainants in WTO disputes remarkably win almost 90% of the cases that go into litigation. This is a win-rate far above that of any domestic tribunal.

In a 2010 paper by New York University’s Mathew Turk (“Why Does The Complainant Always Win At The WTO: A Reputation-Based Theory of Litigation at the World Trade Organization”), he found that “the tendency towards complainant success is also not reversed under any subset of disputes. Maton and Maton found an 81.9 percent success rate in Panel rulings, and a 78.4 percent success rate in Appellate Body rulings. xxx In summary, while statistical studies of WTO outcomes use a variety of methods, their results are all substantially the same: the complainant almost always wins. Colares’ study, which coded its data most analogously to research on civil litigation, reported win-rates approaching 90 percent. Furthermore, these win-rates did not significantly decline for any subset of complainants or substantive area of dispute. Thus, the threshold counterargument -- that there is no empirical puzzle to explain because studies use the label ‘win’ incorrectly and fail to capture the true significance of litigation outcomes should be rejected.” Significantly, the foregoing corroborates the findings of Andrew Guzman of the University of California (“The Political Economy of Litigation and Settlement at the WTO”) and Juscelino Colares of Syracuse University (“A Theory of WTO Adjudication”).

Going back to the previous liquor cases, the first dispute, Japan -- Alcoholic Beverages (DS8, 10, 11), concerned the Japanese Liquor Tax Law’s system of internal taxes. The AB agreed -- ruling, amongst others, that the panel’s finding that vodka was taxed in excess of shochu was correct. It also accepted the panel’s interpretation that Art. III:2, first sentence, requires a determination of the presence of two elements: (i) whether the taxed imported and domestic products are like; and (ii) whether the taxes applied to the imported products are in excess of those applied to the like domestic products.

The second case, Korea -- Alcoholic Beverages (DS75, 84), relates to Korea’s multi-tiered taxation regime (the Liquor Tax Law of 1949 and the Education Tax Law of 1982) on the sale of alcoholic beverages. The complaint centered on GATT Article III:2. In this case, the AB held, amongst others, that evidence of “present direct competition” and the panel’s approach of grouping the liquor products were appropriate.

Finally, Chile -- Alcoholic Beverages (DS87, 110) dealt with the “Additional Tax on Alcoholic Beverages” (“Impuesto Adicional a las bebidas Alcoholicas”), levying an excise tax on the sale and importation of alcoholic beverages. The complaint again looked at GATT Art. III:2, second sentence. The AB found that an examination of the design, architecture, and structure of Chile’s tax law tended to reveal that the application of dissimilar taxation of directly competitive or substitutable products would “afford protection to domestic production.”

A more accurate analysis of this case would have to wait for August. In the meantime, nevertheless, it still boils back to that old dictum: in vino veritas.

Reported liquor loss for next week

2011-06-30T06:16:00.000-07:00

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

For now, we’ll discuss certain points of the Philippine win embodied in the WTO Appellate Body’s report in Thailand -- Customs and Fiscal Measures on Cigarettes from the Philippines (docketed as DS371). The case had to do with Thai taxes imposed on imported cigarettes covering the areas of customs valuation, excise taxes, VAT, and dual licensing requirements. Some commentators referred to the Philippine complaint as Thai Cigarettes II (a landmark case during the GATT days relating to health measures), as well as purportedly containing elements of the Korea -- Beef case.

The dispute involves the provisions of Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”), Article XXII:1 of the General Agreement on Tariffs and Trade 1994, and Article 19 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (the “Customs Valuation Agreement”). A portion of the case deals with the validity of dual retail requirements, the Philippine complaint alleging that Thailand requires tobacco and/or cigarette retailers to hold separate licenses to sell domestic and imported cigarettes, respectively. The issue essentially is how the dual licensing requirement leads to discriminatory treatment against the imported cigarettes and thus is a violation of Article III.4 of the GATT.

A WTO panel did find 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. of the GATT. The panel found also that “Thailand does not maintain or apply a general rule requiring the rejection of the transaction value and the use of the deductive valuation method.”

On appeal to the Appellate Body, Thailand focused on the panel’s findings under Article III:2, Article III:4, and Article X:3.b of GATT 1994. The AB basically upheld practically all of the panel’s findings, finding that Thailand did violate Article III:2, first sentence, Article III.4, and Article X.3.b of GATT 1994. The AB concurred with the panel that Thailand’s measures created a discriminatory tax liability against imported like products. The Thai VAT exemption effectively subjected Philippine exported cigarettes to taxes not applied to like domestic cigarettes. Denying the defense that the subject measures constitute necessary “administrative requirements,” it was found by the AB that Thailand failed to prove that such could be justified under Article XX.d of GATT 1994. It was also found by the AB that Thai Customs failed to provide an adequate “independent tribunals or procedures for the prompt review of customs guarantee decisions,” any such review being available only after customs had made final determination on the matter.

The interesting thing about it is that, after all is said and done, where a panel or the AB concludes that a law or measure is inconsistent with a WTO agreement, it merely recommends “that the Member concerned bring the measure into conformity with that agreement.” A finding of damages, unlike in domestic litigation, is rarely given in a WTO proceeding. Furthermore, it’s not, technically, the panel or the AB that “decides” a case. That power is with the Dispute Settlement Body, which is composed of the 153 members of the WTO, voting by way of a bizarre, quite futile, procedure called the “reverse consensus.”

Thailand actually has several options at its disposal at this point. It could, within 30 days after the date of adoption of the AB report by the DSB, inform the DSB of its intentions regarding the implementation of the recommendations and rulings of the DSB. If it is impracticable to comply immediately with the recommendations and rulings, the member concerned shall have a reasonable period of time in which to do so. What is “reasonable period of time” is unfortunately an issue-laden matter. Thailand could also raise the question as to whether it already acted in consistency with a covered agreement of measures taken to comply with the recommendations and rulings in relation to the subject dispute. In which event, such shall be decided through recourse to dispute settlement procedures, perhaps involving even the original panel. All this time, it must be said, the DSB shall be monitoring the implementation of the adopted recommendations or rulings. The issue of implementing the recommendations or rulings may be raised at the DSB by any WTO member at any time following their adoption.

The Philippines, however, is not without recourse: should Thailand not implement the AB recommendations and rulings within a reasonable timeframe, the Philippines may request compensation or for suspension of concessions. Compensation is voluntary and, if granted, shall be consistent with the covered agreements. If Thailand’s compensation offer be unsatisfactory, then the Philippines may request authorization from the DSB to suspend the application to Thailand of concessions or other obligations under the covered agreements.

More to come about this case (and our alleged sad loss in the liquor case) in future articles.

Philippines said to have lost liquor tax dispute

2011-06-29T06:05:00.000-07:00

reported in today’s BusinessWorld:

Taxes levied by the Philippines on alcoholic drinks from the European Union and United States are illegal under global rules, the world’s trade dispute body ruled on Monday, according to sources close to the case.

Washington’s envoy in Manila said he welcomed the decision, while the Philippines’ tax chief -- insisting that the duty system was not discriminatory -- said it would be up to legislators to change relevant laws.

Sources said that a World Trade Organization (WTO) legal panel, in a confidential report circulated to the parties involved in the dispute, had ruled that the Philippines’ taxes discriminate against brands such as Jack Daniel’s and Jim Beam as well as Spain’s Brandy de Jerez, while favoring domestic producers catering to the country’s $3-billion spirits market.

The ruling is confidential until its publication in August, and trade officials for the EU and US were unable to comment on its contents. But it is being eyed keenly by Spanish brandy makers and US firms such Brown-Forman Corp. , which owns Jack Daniel’s, and Fortune Brands Inc., which makes Jim Beam.

“We have long questioned the Philippines’ discriminatory tax approach. We are optimistic of a positive result from the WTO panel, which will be particularly welcomed by Spain since Spanish brandy constitutes the main EU spirits export to the Philippines,” said Jamie Fortescue, director general of the European Spirits Organization.

The ruling dismissed Manila’s argument that imported whiskey and brandy do not compete with locally made alcohol and that differing taxes -- set according to the raw material used -- should therefore be legal, sources said.

It found that the purpose of a lower tax on domestic alcohol that can be directly substituted for imports was to protect domestic producers, an illegal aim under WTO rules.

The EU, whose annual global spirits exports amount to about 7 billion euros ($10 billion), blames the tax for halving EU spirits sales to the Philippines between 2004 and 2007 to 18 million euros. Brussels lodged a WTO challenge against the Philippines in January last year.

The United States, which followed suit with a similar challenge in April last year, similarly says the Philippines’ tax system -- imposing duties 10-40 times higher on spirits not distilled from materials such as sugar cane and molasses produced in the Philippines -- means it has failed to gain more than 5% of the country’s market.

In Manila, US Ambassador Henry K. Thomas said Washington welcomed the WTO’s preliminary decision.

“The US looks forward to a level playing field in the country, since the consumer benefits with fair prices even from goods coming from outside the Philippines,” Mr. Thomas Jr. said at the sidelines of a Management Association of the Philippines press conference.

Bureau of Internal Revenue (BIR) Commissioner Kim S. Jacinto-Henares, meanwhile, said it would be up to Congress to amend the country’s tax laws once the WTO ruling becomes final.

“I will still collect excise taxes, as stated in the National Internal Revenue Code (NIRC). There will be no changes until Congress amends the law,” Ms. Henares told BusinessWorld.

Under Section 141 of the NIRC, alcohol products produced from the sap of nipa, coconut, cassava, camote, buri palm or from the juice, syrup or sugar of the cane are charged an P8 excise tax per proof liter.

Alcohol products not made from the identified raw materials are levied an excise tax of between P75 to P300 per proof liter Imported spirits tend to fall under this category because they are usually made of barley, wheat and grapes, Ms. Henares explained.

Decoupling WTO from Doha

2011-06-25T10:41:00.000-07:00

Can the WTO be decoupled from Doha? is the question that seems to be on everybody’s mind these days, particularly considering that most likely Doha will not be concluded this year (if at all). Excerpt of an article by Ujal Singh Bhatia, Former Indian Ambassador and Permanent Representative to the WTO in Geneva:

“The first will arrest the continuing erosion of the non-discrimination principle. The second will thwart the trend towards unequal rules being incorporated into RTAs. Together, they will reinforce the centrality of the WTO in the global trading system. The prolonged standoff over “new” market access, by preventing the WTO from fulfilling these objectives, is causing serious damage to the global trading system. The solution to the WTO’s problems, therefore, lies not in decoupling the WTO from the Doha Round, but in enabling it to achieve an ambitious Doha outcome based on its development mandate.

There are a number of factors that lend credence to the view that the support and leadership of the US and EU for the multilateral process is diminishing. First, both continue to be preoccupied with the management of the aftermath of the financial and economic crisis. Second, the political dynamic in the WTO has shifted towards greater equality of voice among members and it has become difficult for the erstwhile leaders to have a decisive say in moulding outcomes. The increasing focus of the US and the EU on RTAs is a response to this development. The ACTA negotiations (anti-counterfeiting trade agreement) are another manifestation of this response.”

Philippines’ WTO win on cigarettes

2011-06-23T06:26:00.000-07:00

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

The country finally got good news in the international front when the WTO’s Appellate Body released last June 17, 2011, its report on Thailand -- Customs and Fiscal Measures on Cigarettes from the Philippines (docketed as DS371). The dispute is quite important considering that the livelihood of thousands of Filipino farmers was at stake. It should also 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.

The 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. The dispute, as a whole, covers the areas of customs valuation, excise taxes, health and TV tax, VAT, and dual licensing requirements. Specifically, it involves the provisions of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), the General Agreement on Tariffs and Trade 1994 (the "GATT 1994," which is actually GATT 1947), and the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (the "Customs Valuation Agreement"). The main cause of action of the Philippine complaint is whether Thailand is violating WTO national treatment provisions.

The WTO panel released its report last Nov. 15, 2010 (a copy of the 426 page report can be viewed at http://www.wto.org/english/tratop_e/dispu_e/371r_e.pdf). The WTO panel 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. The panel found also that "Thailand does not maintain or apply a general rule requiring the rejection of the transaction value and the use of the deductive valuation method."

On promptly appealing to the AB, Thailand focused on the panel’s findings under Article III:2, Article III:4, and Article X:3(b) of the GATT 1994. With its report, the AB essentially upheld all of the panel’s key findings and, thusly, an overwhelming victory for the Philippines. A copy of the AB report can be found in http://www.worldtradelaw.net/reports/wtoab/thailand-cigarettesphilippines(ab).pdf. The report, in conclusion, pointedly found:

"223. For the reasons set out in this Report, the Appellate Body:

"(a) with respect to the Panel’s findings under Article III of the GATT 1994 concerning Thailand’s treatment of resellers of imported cigarettes, as compared to its treatment of resellers of like domestic cigarettes:

"(i) upholds the Panel’s finding, in paragraph 8.3(b) of the Panel Report, that Thailand acts inconsistently with Article III:2, first sentence, of the GATT 1994 by subjecting imported cigarettes to VAT liability in excess of that applied to like domestic cigarettes;

(ii) with respect to the Panel’s findings under Article III:4 of the GATT 1994:

"- finds that the Panel did not err in concluding, in paragraph 7.738 of the Panel Report, that Thailand accords less favourable treatment to imported cigarettes than to like domestic cigarettes; xxx and

"(b) upholds the Panel’s finding, in paragraph 8.4(g) of the Panel Report, that Thailand acts inconsistently with Article X:3(b) of the GATT 1994.

"224. The Appellate Body recommends that the DSB request Thailand to bring its measures, found in this Report, and in the Panel Report as modified by this Report, to be inconsistent with the Agreement on Customs Valuation and the GATT 1994, into conformity with its obligations under those Agreements."

This is a good win for the country. It also clearly demonstrated how important it is for local industry to cooperate and work well with (rather than antagonize or take a suspicious stance vis-a-vis) our trade officials in handling disputes. In this case, the supportive attitude and competence of Philip Morris is to be commended. For Filipino lawyers, it also represents the first time the country won in an international dispute at the state-to-state level (the ICSID case involving the NAIA3 contract was on a state-to-private company level dispute). Prior to DS371, the Philippines had won none of its eight previous cases at the WTO (none also for the International Court of Justice). So I hope I be permitted in saying that, alongside trade officials Tom Aquino and Tong Buencamino and lawyers Dondi Teehankee and JV Chan-Gonzaga, I’m quite happy to at least have a small participation in this case as then legal adviser to the Philippines.

I’ll devote a future article to parse through some of the more interesting analysis and findings of the AB, as well as consequences moving forward. For the moment, a win is a win. It would be interesting to see how the other WTO case (DS396 and DS403) turns out, this time involving the EC’s and the US’ complaint that Philippine excise taxes on distilled liquor discriminate against imported whiskey. Hopefully, aside from the smokes, a victory drink would be forthcoming as well.

AB report on DS371 Thailand — Customs and Fiscal Measures on Cigarettes from the Philippines

2011-06-19T06:34:00.000-07:00

The WTO Appellate Body released its findings in DS371 Thailand — Customs and Fiscal Measures on Cigarettes from the Philippines last 17 June 2011. Below is the summary of findings from the WTO website. The full report can be found here.

Summary of key findings

Thailand's appeal was limited to certain of the Panel's findings under Article III:2, Article III:4, and Article X:3(b) of the GATT 1994. The Appellate Body upheld the core findings challenged by Thailand on appeal.

The Appellate Body upheld the Panel's finding that Thailand acts inconsistently with Article III:2, first sentence, of the GATT 1994 by subjecting imported cigarettes to internal taxes in excess of those applied to like domestic cigarettes. The Thai measure at issue consists of an exemption from value added tax (“VAT”) liability for resellers of domestic cigarettes, together with the imposition of VAT on resellers of imported cigarettes when they do not satisfy prescribed conditions for obtaining input tax credits necessary to achieve zero VAT liability. The Appellate Body agreed with the Panel that this measure affects the respective tax liability imposed on imported and like domestic products. The Appellate Body therefore rejected Thailand's characterization of the measure as “administrative requirements”, as well as Thailand's argument that the measure should have been examined under Article III:4, and not Article III:2, of the GATT 1994.

The Appellate Body also upheld the Panel's finding that Thailand acts inconsistently with Article III:4 of the GATT 1994 by according less favourable treatment to imported cigarettes than to like domestic cigarettes. The Thai measure at issue consists of an exemption from three sets of VAT-related administrative requirements for resellers of domestic cigarettes, together with the imposition of these requirements on resellers of imported cigarettes. The Appellate Body found that the Panel properly analyzed this measure and its implications in the marketplace, and therefore agreed with the Panel that this measure accords less favourable treatment to imported cigarettes by imposing the additional administrative requirements only on resellers of imported cigarettes. The Appellate Body further found that the Panel did not fail to ensure due process or to comply with its duty under Article 11 of the DSU by accepting and relying upon evidence, submitted by the Philippines late in the Panel proceedings, relating to one of the administrative requirements. Due to an error in the Panel's identification of the basis for its finding, the Appellate Body reversed the Panel's finding that Thailand had not satisfied its burden of proving its defence under Article XX(d) of the GATT 1994. In completing the legal analysis, however, the Appellate Body found, as had the Panel, that Thailand failed to establish that the administrative requirements at issue are justified under Article XX(d) of the GATT 1994.

Finally, the Appellate Body upheld the Panel's finding that Thailand acts inconsistently with Article X:3(b) of the GATT 1994 by failing to maintain or institute independent tribunals or procedures for the prompt review of customs guarantee decisions. Thai Customs requires importers to provide a guarantee in order to obtain the release of goods from customs pending a final determination of customs value. The Appellate Body saw no error in the Panel's conclusion that Thailand's system for the review of guarantees does not comply with the obligation to ensure prompt review under Article X:3(b) because such review is not available until after a final determination of customs value has been made.

EO 45, designating DOJ as Competition Authority

2011-06-17T20:34:00.000-07:00

Here's the full text of Executive Order No. 45, Series 2011:

MALACAÑAN PALACE
MANILA

BY THE PRESIDENT OF THE PHILIPPINES
EXECUTIVE ORDER NO. 45
DESIGNATING THE DEPARTMENT OF JUSTICE AS THE COMPETITION AUTHORITY

WHEREAS, Section 20, Article II of the 1987 Constitution provides that the State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments;

WHEREAS, Sections 13 and 19, Article XII of the 1987 Constitution provide that the State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity and shall regulate or prohibit monopolies when the public interest so requires;

WHEREAS, recent developments from the World Trade Organization (WTO), the ASEAN Free Trade Area (AFTA), and the trade liberalization initiatives under the Asia Pacific Economic Cooperation (APEC) forum advocate competition in domestic and international trade;

WHEREAS, there is a need to promote competition and level the playing field in the market;

WHEREAS, Republic Act No. 4152 approved on 20 June 1964 vests upon the Secretary of Justice the duty “to study all laws relating to trusts, monopolies and combinations, to draft such legislation as may be necessary to update or revise existing laws to enable the Government to deal more effectively with monopolistic practices and all forms of trusts and combination in restraint of trade or free competition and/or tending to bring about non-competitive prices of articles of prime necessity, to investigate all cases involving violations of such laws, and to initiate and take such preventive or remedial measures, including appropriate judicial proceedings to prevent or restrain monopolization and allied practices or activities of trust, monopolies and combinations”;

WHEREAS, Act No. 3247 enacted on 1 December 1925 and Article 186 of the Revised Penal Code, as amended, both penalize monopolies and combinations in restraint of trade;

WHEREAS, the Department of Justice (DOJ) is the principal legal counsel and prosecution arm of the government under Section 3, Chapter 1, Title III, Book IV of Executive Order No. 292 (Administrative Code of 1987) and also the central authority for matters requiring international legal cooperation;

WHEREAS, the DOJ likewise serves as the principal agency mandated to enforce the rule of law and investigate and prosecute offenders; and,

WHEREAS, the President, under Article VII, Section 17 of the Constitution; has the power and control over executive departments, bureaus and offices, as well as the continuing authority under existing laws to reorganize such executive departments, bureaus and agencies.

NOW, THEREFORE, I, BENIGNO S. AQUINO III, President of the Philippines, by virtue of the powers vested in me by law, do hereby order:

SECTION 1. Designation of Competition Authority. The DOJ is hereby designated as the Competition Authority with the following duties and responsibilities:
a.Investigate all cases involving violations of competition laws and prosecute violators to prevent, restrain and punish monopolization, cartels and combinations in restraint of trade;
b.Enforce competition policies and laws to protect consumers from abusive, fraudulent, or harmful corrupt business practices;
c.Supervise competition in markets by ensuring that prohibitions and requirements of competition laws are adhered to, and to this end, call on other government agencies and/or entities for submission of reports and provision for assistance;
d.Monitor and implement measures to promote transparency and accountability in markets;
e.Prepare, publish and disseminate studies and reports on competition to inform and guide the industry and consumers; and
f.Promote international cooperation and strengthen Philippine trade relations with other countries, economies, and institutions in trade agreements.

SECTION 2. Office for Competition. There is hereby created the Office for Competition under the Office of the Secretary of Justice to carry out the duties and responsibilities set forth in Section 1. The Office shall be manned by such number of staff including legal and technical experts, consultants and resource persons to effectively and efficiently pursue its mandate. The Secretary of Justice shall designate the Chief/Head and members of the said Office.

SECTION 3. Funding. To carry out the provisions of this Order, initial funds for the operations of the Office for Competition shall be taken from the available funds of the DOJ. Thereafter, such amount as may be deemed necessary for the annual operations of said Office, shall be incorporated and included in the annual budgetary appropriations of the DOJ.

SECTION 4. Separability Clause. If any provision of this Executive Order is declared invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting.

SECTION 5. Repealing Clause. All orders, rules, regulations, and issuances, or part thereof, which are inconsistent with this Executive Order, are hereby repealed, amended, or modified accordingly.

SECTION 6. Effectivity. This Executive Order shall take effect immediately upon publication in a newspaper of general circulation.

DONE, in the City of Manila, this 9th day of June, in the year of our Lord, Two Thousand Eleven.

(Sgd.) BENIGNO S. AQUINO III
By the President:

(Sgd.) PAQUITO N. OCHOA, JR.
Executive Secretary

Retired but not tired

2011-06-16T06:02:00.000-07:00

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

Early this week the man who taught me Constitutional Law, Supreme Court Justice Antonio Eduardo Nachura, retired. He was, is, someone I literally owe (along with Dean Mariano Magsalin, Jr.) my legal career -- encouraging me to continue my law studies after a series of disappointments almost made me want to stop, had supported my going to Cambridge, and with incredible generosity gave me, a then mere 39-year-old, the opportunity to become Bar Examiner for Political Law and Public International Law in 2009.

The newspaper accounts of his retirement ceremonies made much of the fact that he was given tokens that were symbolic or representative of his career: "a brass shingle, a photo album, a Philippine flag, a judicial robe, a book of court decisions, and a medallion, as well as a Supreme Court pen, flag, and seal." Mention was also made of the fact that Justice Nachura had the rare honor of serving in all three branches of government.

But even then, that doesn’t remotely capture what really makes him special. He will forever be for his students (and we will always just be his students) the personification of the lawyer we all want to be: pragmatic but scholarly, intellectual but easygoing, a serious man but of constant good humor, of high position but of down-to-earth humility. We would imitate him in class, trying to perfectly capture his distinct way of speaking, the ever present exhortation of "na-master niyo na iyan, kayang kaya niyo iyan!" This would be then followed by a shake of the head, a rueful smile, and a soft "ay naku ..." Any lawyer could say that he had the honor of learning constitutional law from so and so expert. But I think we, Nachura’s students, could claim the distinction that we actually had fun and looked forward, loved even, learning law from him.

This makes me truly doubt the wisdom of having a compulsory retirement age for Supreme Court justices. Why make it mandatory to retire somebody who is mentally alert, healthy, and with energy just because he or she reached a certain number? And I remember the other justices whose "early" retirement caused the Philippine judiciary to be deprived of their wisdom, experience, and intellect: Cesar Bengzon, who would go on to serve for years at the International Court of Justice, Florentino Feliciano, who would go on almost single-handedly to shape the judicial process of the World Trade Organization’s Appellate Body, Romeo Callejo (another professor of mine and who now teaches at Ateneo). The list goes on and on.

It just simply doesn’t make sense. Considering that the average life expectancy for Filipinos have steadily risen through the years (better nutrition, health care, lack of wars, etc.), why impose retirement at what is effectively quite young ages? This is all the more significant when one considers that global fertility rates are mostly declining (including that of the Philippines). The private sector has a general retirement age of 65. The military has an even more ridiculous retirement age: 56. Just when an officer (or even Chief of Staff) is reaching quite admirable levels of maturity, he is then told to go.

The Economist, commenting on the matter (Pensions, April 7, 2011), declared: "many governments have started to deal with the ageing problem. They have announced increases in the official retirement age that attempt to hold down the costs of state pensions while encouraging workers to stay in their jobs or get on their bikes and look for new ones. [Accordingly], working longer has three great advantages. The employee gets more years of wages; the government receives more in taxes and pays out less in benefits; and the economy grows faster as more people work for longer. Older workers are a neglected consumer market, as our briefing on the media’s ageing audiences explains."

Other countries have certainly heeded the times. The US Army, for one, changed the mandatory retirement age from 55 to 62. The US Supreme Court currently has 4 (out of the 9) justices past 70: Scalia (74), Kennedy (73), Ginsburg (77), and Breyer (71). In the private sector, the UK is reportedly upping the retirement age to 68, the US to 67.

The Economist actually presented (Schumpeter, April 7, 2011) three ways to get more efficient productivity out of senior folks: "The first is to treat them as mentors. Westpac, an Australian bank, has dubbed some older staff ‘sages’and asked them to codify the company’s informal knowledge. The second is to recognise that they respond to different incentives: they may be less interested in money and promotion and more concerned with flexibility. The third is to treat retirement as a process rather than a sudden event. Some employers offer older workers ‘bridge jobs’ between full-time work and retirement."

Indeed, considering the present dearth of talent in this country’s public service, we need all the Nachuras that we can get.

Of trade disputes

2011-06-14T06:21:00.000-07:00

(published in the June 2011 issue of Billionaire Magazine)

Anatomy of a conflict

There are two ways to look at trade disputes: one is to view it as an unfortunate state of affairs, by which each country treats the other country as engaging in inconvenient behavior. The other is to consider it positively and look at it as an opportunity to manage better the relationships among States and determine a more efficient way of allocating scarce resources.

Trade disputes are better seen from the latter view, chosen from a list of voluntary options that, because of their legal nature and circumstances, could offer benefits that easily address the short-term needs of States. The term "conflicts" is a general term, indicating a "general state of hostility between the parties." "Disputes", on the other hand, refers to an actual specific disagreement, by which rights or interests of a party has been violated and which entitles parties to proceed against each other by a series of inter-locking claims, counter-claims, and so on.

Trade disputes are normally initiated at the WTO level if a member considers that any benefit accruing to it directly or indirectly under the WTO agreements are being “nullified or impaired or that the attainment of any objective [thereof] is being impeded as the result of (a) the failure of another contracting party to carry out its obligations under th[e WTO agreements], or (b) the application by another contracting party of any measure, whether or not it conflicts with the provisions of th[e WTO agreements], or (c) the existence of any other situation.” Which is a long, convoluted way of saying that WTO members can file cases anytime they feel like it.

The Philippines, for example, is currently locked in several trade disputes at the WTO. There is DS371, formally designated as Thailand — Customs and Fiscal Measures on Cigarettes from the Philippines. There’s also Philippines – Taxes on Distilled Spirits (docketed as DS396). Then there are the two complaints filed in 2002 against Australia (DS270 and DS271), and our third-party complaints in DS375/376/377- EC Measures on certain ITA Products, that were concluded last year.

The stakes for these cases are unimaginably high. Despite the innocuous or dry sounding titles of the cases, EC’s (later joined by the US) whiskey complaint against the Philippines, for example, involves trade valued in the hundreds of millions of dollars. The complaint in this case centers on whether Philippine excise taxes on distilled liquor (as imposed by RA 9334) discriminate against imports and in favor of domestic products. The Thai cigarettes complaint, involving allegations of Thai discrimination against cigarettes imported from the Philippines, would have an effect on 95% of Philippine cigarette exports. An incredibly historic WTO case that had a huge effect on the Philippine coconut industry went by the harmless sounding title ”Desiccated Coconut”.

Anatomy of a complaint

The first significant stage of a WTO dispute would be the “consultations stage”. By provisions of Article 4 of the WTO Dispute Settlement Understanding, if a request for consultations is made, a reply to such request must be made by the requested country within 10 days after the date of its receipt and shall enter into consultations in good faith within a period of no more than 30 days after the date of receipt of the request, with a view to reaching a mutually satisfactory solution. If the consultations fail to settle the dispute within 60 days after the date of receipt of the request for consultations, the complaining country may request the establishment of a panel. The complaining country may also request for a panel during the 60-day period if both countries jointly consider that consultations have failed.

However, it may be almost axiomatic to say, in a manner that would make Clausewitz proud, that the outcome of the dispute is settled even before the first documents or pleadings had been filed in the case. International law experts George Norman and Joel Trachtman: “Measuring the Shadow of the Future: An Introduction to the Game Theory of Customary International Law” presented “a game theoretic model to identify the circumstances under which States have a rational incentive to comply with customary international law”. The reason as to why States do follow international law is a topic deeply discussed even in law school’s early days. For Norman and Trachtman, State compliance depends on the magnitude of the “shadow of the future” and how such could be employed to increase chances of compliance. According to their theory, a State complies with customary international law out of fear that if it doesn’t it will result in it being unable to realistically invoke international law at a future date when it needs to.

The point here is that it would be interesting to see what inputs game theory could provide on the probable outcome of trade cases. This is because, while normally one would think that the moment a dispute comes before a panel then chances are 50-50 for either party. However, this apparently is not so according to the 2002 findings of Andrew Guzman of the University of California, Berkeley, in his paper The Political Economy of Litigation and Settlement at the WTO. He found that complainant countries (or countries that complain against other countries’ trade barriers) in WTO disputes have almost a 90% chance of winning. These findings were corroborated in A Theory of WTO Adjudication by Juscelino Colares of Syracuse University, which made use of empirical analysis of WTO adjudication from 1995 through 2007, revealing again a high disparity between complainant and respondent countries’ success rates: Complainants do win 90% of the time. This rather unfortunate statistic is obviously well above the “win rate” of any domestic legal system (or any other international dispute system for that matter).

Anatomy of a dispute

As stated above, the proceedings begin with a “consultation”. Think of the consultations stage as the domestic litigation equivalent of pre-trial proceedings. If consultations fail to settle a dispute, the complaining party can now request for the establishment of a panel.

Panels are usually made up of three members (sometimes, in quite rare instances, five). Panel members are selected with a view to ensuring the independence of the members, a sufficiently diverse background and a wide spectrum of experience. When a dispute is between a developing country Member and a developed country Member (as in the case of DS396), the panel shall, if the Philippines so insist, for example, include at least one panelist from a developing country Member. The panel’s powers are usually laid down in what is called the terms of reference. Normally, the terms would read something like: "To examine, in the light of the relevant provisions in (name of the covered agreement(s) cited by the parties to the dispute), the matter referred to the DSB by (name of party) in document ... and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in that/those agreement(s)." Parties, of course, are free to add any other term they can agree upon and the panels are to address the relevant provisions in any covered agreement or agreements cited by the parties to the dispute.

Where more than one WTO Member requests the establishment of a panel related to the same matter (again, as in the case of DS396, where, apart from the EU, the US has already indicated filing a complaint against the Philippines) a single panel may be established to examine these complaints taking into account the rights of all Members concerned. Single panels are encouraged to be established to examine such complaints whenever feasible.

Also, as in the case of DS396, several countries (including China and Thailand), have indicated interest in the case as “third parties”. A third party is any WTO member having a substantial interest in a dispute. It shall have an opportunity to be heard by the panel and to make written submissions. A third party could eventually morph into a complainant in its own right and in such a case, the dispute shall be referred to the original panel wherever possible.

After the panel process, a party may appeal to the Appellate Body, which works as some sort of “supreme court” of the WTO. Unlike our Supreme Court, however, the AB may only uphold, modify or reverse the legal findings and conclusions of the panel but not remand.

The interesting thing about it is that, after all is said and done, where a panel or the AB concludes that a law or measure is inconsistent with a WTO agreement, it merely recommends “that the Member concerned bring the measure into conformity with that agreement”. A finding of damages, unlike in domestic litigation, is rarely given in a WTO proceeding. Furthermore, it’s not, technically, the panel or the AB that “decides” a case. That power is with the Dispute Settlement Body, which is composed of the 154 members of the WTO, voting by way of a bizarre, quite futile, procedure called the “reverse consensus”.

The beauty (and the power) of the WTO dispute system has to do with its speed and efficiency. It is, simply put, the most effective international dispute settlement system around today. Victors, of course, could crow back to their home constituencies and continue to laud the benefits of the global trading system. Losing governments, on the other hand, are not necessarily left completely beaten. They could also go home happy. For any policy measure that they have longed to implement but were afraid to due to political consequences, the losing government could finally implement their desired policies and shift the blame on the WTO for "forcing" them by way of the adverse ruling. In the meantime, business must go on for both the companies of the winning and losing companies.

All of the above also underlines one important thing: international trade disputes are really no places for domestic industries involved to engage in flaky thinking or grandstanding. Particularly as international trade dispute litigation is a hugely expensive (not to mention research intensive) affair, for which domestic industries have a (general) tendency to be suddenly work shy despite their heated patriotic rhetoric.

Doha: dead or a lite

2011-06-09T05:54:00.001-07:00

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

The focus of the trade world now is Doha. And just to show how freakishly convoluted trade talks are, the arguments currently revolve around whether Doha is "dead" or not, or whether one should go for "full" Doha or Doha "lite." If the general public nowadays doesn’t give a damn about it, I sometimes imagine because it was planned to be that way by trade experts, what with their endlessly monotonous declarations that could make an insomniac owl go to sleep.

Doha can’t be dead. As Jagdish Bhagwati pointed out: "if Doha was dead, one had to ask why the negotiators were still negotiating, and why nearly all G-20 leaders were still issuing endorsements of the talks each time they met." Indeed, the issue is not the death of Doha but rather how to end it. One way or another, Doha will be closed and it’s the manner of its conclusion that will (don’t ask me why) determine the future of the World Trade Organization.

Indeed, what is ominous is the fact that people from the developed countries are beginning to voice out something they were quiet about before. It’s something I’ve long suspected that they don’t like about the Doha Round: its "developmental" aspect. As reported in Reuters, one commentator, speaking under anonymity, said: "A development agenda should never have been introduced into the WTO in 2001. The WTO is about mercantilist interest, and there is no space for philanthropy. It’s dog-eat-dog according to a set of rules. You’re either a player or you’re not a player, and if you are not a player, you should get out of the way."

While definitely betraying a wrong appreciation of what the WTO stands for (a mere reading of the preambular provisions of the WTO Agreements would point this out), nevertheless, the comment does reveal the thinking behind some of the developed country calculations: launch a round with some nice motherhood statements, let the developing countries flounder in their under-resourced and unorganized way through the talks, conclude like Uruguay, and developed rich countries happy again. Unfortunately, the developing countries were apparently not given copies of the script. Learning from the Uruguay Round and gaining further experiences from Cancun and Hong Kong, the poorer countries learned to stand their ground and maintained focus.

The fact is, the poorer countries got so good at playing the WTO game that now commentators from the richer countries are floating ideas about letting the WTO "die." For instance, Daniel Altman of Newsweek gleefully calls for "good riddance" to the WTO, saying that "trade negotiations would actually go much further if the WTO simply closed down its talks altogether." His argument essentially is that "this is where the future of free trade lies: in pragmatic regional deals, not utopian global ones ... The majority of nations can simply leave the obstructionists behind and move forward with regional trading partners. Eventually, most of the world’s trading nations will arrange themselves into just a few big blocs."

All this sounds good, rational even. But for a developing country like the Philippines, it should be disconcerting. The argument above is designed to benefit developed countries. For developing countries, with its limited resources, the reverse is true. For the simple reason that free trade agreements are not free. Their very nature and number provides for an increasingly complex international trading system. Considering the concerns raised regarding the Philippines’ capacity to keep up with its multilateral trading commitments, this obviously would be multiplied in view of the inevitable proliferation of FTAs should the WTO indeed be waylaid. Among areas of concern would be the varied ROOs, dispute settlement jurisdictions, customs procedures, SPS and TBT measures, and -- perhaps -- smuggling.

Even the jewel of the WTO, its dispute settlement system, Professor Bhagwati insightfully maintains, would be rendered null: "the willingness of WTO members to invoke the Dispute Settlement Mechanism, the pride of the WTO -- and, indeed, of international governance -- would also be sapped. Tribunals established within PTAs ["Preferential Trade Agreements"] would take over the business, leading to the atrophy, and eventual irrelevance, of the DSM."

The foregoing are also the reasons why Doha should not be allowed to fail. Indirectly, they’re also the reasons why we can’t allow Doha "lite." The reasoning behind the latter seems to be that "something is better than nothing." And the answer to that is: "a something that does nothing is still nothing." Doha lite focuses on less-developed countries, with minimal mention of the concessions for developing countries (which include the Philippines). As Professor Bhagwati pointed out: "in multi-faceted talks that straddle several different sectors (for example, agriculture, manufactures, and services) and diverse rules (such as anti-dumping and subsidies), countries have negotiated concessions with one another in various areas. Whatever balance of concessions has been achieved would unravel if we were to try to keep one set and let go of another."

Connecting past and future

2011-06-08T06:41:00.000-07:00

is the article I wrote as part of Ateneo Law School’s 75th anniversary:

“What’s past is prologue.” So wrote William Shakespeare in – which is most appropriate for this piece – his play The Tempest. For the Philippines is certainly, whether its people realize it or not, in the middle of a tempest. Socially, culturally, politically, economically, the country is caught in an intense debate about itself and its future. But as nothing exists in a vacuum, then our choices moving forward would always be bound within the context of our history. Again, whether or not our people realizes that. Or accepts it.

Ateneo, of course, is very much intertwined with our history and Ateneo Law’s contribution to it could very much be the subject of its own, quite lengthy, article. However, I would like to focus on one individual in particular: Fr. Horacio De La Costa, the Jesuit priest-scholar, the first Filipino Provincial of the Philippines, and special counselor in Rome to Fr. General Pedro Arrupe.

In my particular field of international trade law and policy there are certainly lot’s of people to look up to: John Jackson, Robert Hudec, Jagdish Bhagwati, Amartya Sen. There is, sadly, a dearth of Filipinos among that list. Clearly there is Florentino Feliciano and Lilia Bautista. But among them all, Fr. Dela Costa for me stands out for his clear eyed and Christian vision of what a proper trade and developmental policy should be for a developing country. As such, he is for me a sort of mentor despite him not actually being a lawyer or economist, despite the fact that he has not even heard of the World Trade Organization, and despite him having died more than thirty years ago.

For somebody like me who has long been advocating for caution of Philippine entry into free trade agreements, Fr. Dela Costa had this to say: “Free trade between an industrial country and an agricultural country is to the detriment of the agricultural country … Our negotiating position … cannot be other than based on our national interest … and at the same time, on social justice.” (Trade between the unequal, lecture 30 August 1968). It must be emphasized that recent studies from international organizations would recently confirm the correctness of his assertions.

In the current discussions regarding poverty and inequality in the Philippines, Fr. Dela Costa’s words (from his paper Philippine economic development, 27 January 1966) ring fresh and relevant:

“We must now make our own decisions and must take the full consequences of the decisions we wrongly make, or weakly make, or cravenly fail to make. We no longer have a mother country or a colonial master to blame for our shortcomings; we only have ourselves.”

“But this is not all. We must also find some workable integration of the twin objectives of productivity and equity. Simple justice demands that labor, agricultural as well as industrial, receive as much of a share of what it helps to produce as will bring it at least within hailing distance of a human level of living. While doing this, we must bend every effort to produce more, for unless we do, unless we produce a great deal more, a redistribution of the product, no matter how equitable, cannot substantially raise levels of living across the board.”

“The people, then, all the people, must contribute to development … If we want economic development, this is the price that we must pay. And so, one question remains. Do we want it?”

Fr. Dela Costa had also hit on something forty years ago that I am only now am pitifully discovering on my own: that most of the country’s problems are self-inflicted, stemming from a lack of confidence in ourselves and each other. This was a theme he tackled in March of 1971, in his lecture The Filipino national tradition: “Would it be thought discourteous on our part if we were to recall that it was once said of England that patriotism was the religion of the English? And that it was not so long ago that American school texts prescribed formuse in the Philippines quoted with reverence the dictum of an American naval officer, ‘My country, may she always be right, but right or wrong, my country’?”

Furthermore, with words that are highly applicable to our political leaders today, Fr. Dela Costa wrote: “the quality of a society depends, in large measure, on the quality of its leaders. A democratic society, to be viable, needs a special kind of leaders – leaders who look on leadership not as dominance but as service.” (Philipine problems in historical perspective, paper, 20 March 1970)

Fr. Horacio Dela Costa, who once wrote that “those who know their history are encouraged to surpass it” and advises those undergoing tribulations that Jesus Christ on the cross is him “showing us how to take it like a man”, is therefore both an inspiration and a hurdle. For our problems and solutions cannot be same thing decades in and out. By now we should have taken his counsel and rendered him irrelevant. The fact that we haven’t displays the tragedy of his genius and of our ignorance.

Teaching has always been an act of faith and optimism, that our words would find resonance with our students, not really for the legal knowledge imparted to them but more for the responsibilities we hope they respect and carry forward to make a better country for us all. Fr. Dela Costa was definitely a teacher: “Permit me to propose the following, purely as a speculation: that the Filipino, given half a chance, given a situation even slightly competitive, has quite consistently been willing, ready and able to compete; and that if he has so seldom actually done so, this may only be because the conditions have so seldom been verified.” His optimism is well placed, our inability to learn is our irresponsibility that we need to correct.

To be with Ateneo Law School for me is therefore also to continually be in touch with Fr. Dela Costa: both mentoring about our past while leading towards our future. To teach in Ateneo enables me to learn from our failures, to live on our promises, and to look towards hope.

Reaction by Senator Saguisag

2011-06-02T18:03:00.000-07:00

With permission, here is an e-mail sent to me by Rene Saguisag, a former Senator and Cabinet official, in reaction to my article A Legal Disobedience, which appeared in the 27 May 2011 issue of BusinessWorld. Note that it contains - to my utter frustration - the one line (that uttered by St. Thomas More) I should have logically put in the article but bizarrely forgot to do so. That alone shows why Senator Saguisag is the far better writer than I am:

Dear Jemy:

Edifying, what you wrote today on disobedience.

I applaud Manny Pacquiao for supporting our Church on RH. But, is he just being sandbagged as a polite guest? And he is unlike Muhammad Ali, who put himself where his mouth is, in conscientious objection and refused to serve in the military. Does Manny have the time and inclination to study when his handlers say to ready for the next match in the Manly Art of Modified Murder? Or concert? Study takes time - to avoid being told in effect na huwag daw pong makialam sa usapan ng mga matatanda.

We may risk prison terms to raise a moral issue. In that sense, disobedience is not in accord with a law perceived as unjust. On June 26, 2005, after Garci, the Inquirer headlined my tax revolt call. I started making amends only after PNoy was sworn in. Antigone, in ancient times, said never surrender one's conscience to the State; in burying her brother, she defied Creon's law but not the superior unwritten law.

In the early 80's, we boycotted elections. Anding Roces, who just passed away, was prosecuted. MABINI defended him. Makati municipal Judge Elo Ynares- Santiago acquitted him, at a time when the Supreme Court (SC) was so accepting. (Elo is a retired SC Justice, and could replace Mercy Gutierrez but the Consti is wise in saying at 70, no more long-term jobs, ad hoc tasks maybe.) Anding's defense: "The right to vote comes from the State. The right not to vote comes from God. Render unto Ceasar what is Ceasar's and to God what is God's."

The Comelec, scratching its head, charged him. Elo mooted the cry of Boadbil's mother on seeing her son weep when sent to exile, last turning to look at the beloved Granada he had lost, in 1492, on the spot now known as El Ultimo Suspiro del Moro - The Last Sigh of the Moor. "Weep not like a woman," she reproved, "for the loss of a kingdom you could not defend as a man." The late Chit Estella was said to write "like a man." In my case, I say, no Rene, sans a gutsy principled Dulce, believing that life, liberty, family, security, work and comfort did matter, but there were things that mattered more, which we greatly wanted.

At a time of great want, Manny Pacquiao spends ostentatiously in his seemingly never-ending parties. It is the time he spends on lawmaking that matters, not the millions spent ostentatiously, on nation-wide TV at that. He was even honored by the House he disrespects (or at least, he does not take seriously). But is he really our anti-RH poster boy?

Peshawataro was a young Indian brave who decided that kidnapping a neighboring tribe maiden for sacrifice must end; he freed an abducted girl and returned her to her people. He rode back, submitting himself to his fellows, who did nothing. It was time to stop the folly. They had only needed an act of such courage to make that clear. Girouard v. U.S. involved an alien seeking naturalization but who had made it clear that as a pacifist, he would assume no military combat role. The U.S. SC said in 1946 that "the Bill of Rights recognizes that in the domain of conscience there is a moral power higher than the State." Nixon's first pardon was to commute a prison term of a New York neurosurgeon who, heeding his conscience, had refused to pay taxes and gave the money to blacks.

If my Church goes for Civil Disobedience, amen. The King's good servant, but God's first. Let's protect babies who cannot lobby or vote. Poverty requires RH? What might I have become as a rich kid? We seven siblings had the advantage of poverty, driving us to get a good education and develop street smarts, to help give our people a better life. The Good Lord takes care of the lilies of the field like me, even if it took the 2007 passage of my Dulce for me, as co-heir, and star boarder, to be able to sleep under the roof of a house I can call my own, for the first time in my life, ever. I live in Palanan, Makati, where there could be five simultaneous wakes, on the streets, telling the short and simple annals of the poor. They are lilies.

Have a good weekend.

Rene Saguisag UIOGD

Trade and human rights

2011-06-02T06:29:00.000-07:00

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

Kent Brockman of KBBL-TV News once famously declared: "Democracy simply doesn’t work." But then his comment should be taken with a grain of salt. Firstly, because Brockman was saying that under duress as the Earth was about to be hit by Bart’s comet. Another more obvious reason is that Kent Brockman is a character from the Simpson’s.

I got reminded of that immortal quote quite inadvertently by a seminar recently conducted at Ateneo in Rockwell. It had something to do with human rights being sacrificed at the "altar" of "free trade." Considering its venue, the seminar was somewhat quirky because Ateneo Law School has in its faculty two international trade lawyers who were both previously Bar examiners for political and international law. Neither of which were asked to speak at the seminar. But I digress. The real point is that Kent Brockman’s (as well as Homer Simpson’s) logic seems to be very much in play here. And equally as wrong.

As we all know life has its inevitable ups and downs. Unfortunately for trade these days every day is a Monday. To the glee particularly of those who’ve never been fans of trade anyway. But as with democracy, while trade is obviously not perfect, nevertheless, no rational, sane alternative to it exists. And as if on cue, reports come out that the Philippine economy slowed in the first quarter. One reason? The slowdown in international trade. And why the slowdown in world trade? Most likely because, as the WTO, OECD, and UNCTAD report suggests, the: "G20 governments have introduced more trade barriers, including export restrictions, in the past six months than in previous periods since the financial crisis began xxx Although measures to lower trade barriers are also accelerating, new import restrictive measures taken by G20 economies over the period October 2010 to April 2011 cover around 0.6% of total G20 imports which is also an increase over the previous six months (0.3%). Export restrictions are also on the rise. This adds to the cumulative total of world trade affected by new restrictions since the crisis began. Despite the positive forecasts for 2011, the outlook for world trade remains clouded by a number of significant risk factors in addition to the recent natural disasters in Japan. Sovereign debt problems, rising prices for food and other primary commodities, and unrest in major oil exporting countries generate uncertainties for the near future."

How does the foregoing relate to human rights? Human rights deal with individual dignity, reasonable standards of living, employment and proper work conditions, education, the right to information and access to media, protection of the environment, healthcare, maternity rights and benefits, security of life and property, and so on. All that requires money. And international trade, despite the occasional hiccups, has proven very adept at boosting the economies of countries in the world. Not to mention the transparency that the multilateral trading system brings. No protectionist rhetoric will ever be able to deny that fact. As WTO Director-General Pascal Lamy more elegantly puts it: "The opening of markets creates efficiency, stimulates growth and helps spur development, thereby contributing to the implementation of the fundamental human rights that are social and economic rights. One could almost claim that trade is human rights in practice!"

The OECD posits that a "10% increase in trade is associated with a 4% rise in per capita income; an ‘open’ foreign direct investment climate could be expected to yield a 3/4% increase in OECD area GDP per capita; lower regulatory barriers to competition could result in a 2-3% increase in OECD area GDP per capita; full tariff liberalization in agriculture and industrial goods could increase global welfare a further 100 billion USD."

The problem with the Philippines is not that we trade, it’s that we don’t trade enough to be able to override our problem of profound inequality. Because whatever benefits the Philippines may have had from trade were prevented from reaching our poor and instead were selfishly gobbled up by our oligarchic elite. US Secretary of State Hillary Clinton was spot-on when she declared that the Philippine problem lies in the fact that "the elite in business and politics basically call the shots, and there’s not much room for someone who’s hardworking, but not connected."

Hence, one sees 40% of Filipino kids below 5 years old being severely undernourished, with an estimated 8.1 million families (around 43% of the population) self-rating themselves as "poor." More objective numbers aren’t better. An ADB study ("Poverty in the Philippines") reported that the number of poor Filipinos increased to 27.6 million. The World Bank found "the overall incidence of poverty" upped to 32.9%.

If we want to uphold human rights, we should encourage greater trade coupled with "solid social policies to redistribute wealth" (to borrow Lamy’s words). As Jagdish Bhagwati, with marvelous common sense, pointed out: "slowly growing or stagnant economies cannot rescue the poor from their poverty."

Reaction from EU Ambassador

2011-06-02T06:26:00.000-07:00

Here’s the reaction by Ambassador Guy Ledoux, Head of Delegation of the European Union to an article of mine in BusinessWorld:

Jemy Gatdula (in his article "No to the ICC," April 2) admits himself that the ICC is "a good idea," yet claims that it should not be "something the Philippines should be concerning itself with right now." This conclusion is not only unfortunate, but fails to convince.

Mr. Gatdula argues that ratifying the Rome Statue would not serve the national interest, as the chances of the Philippines making use of the ICC to protect its citizens is minimal, in particular as many host states of Filipino Overseas Workers are not (yet) party to the Rome Statute. This argument misses the wider implications of supporting the only permanent international criminal court. In order to truly reach our common goal of ensuring that perpetrators of heinous crimes are always, without exception, brought to justice, it is crucial to continue working for universal acceptance of the Statute and the Court. On our way, the distribution of justice might at times seem to be uneven, maybe even unfair, but our response to this challenge cannot be less justice, backing away from the great achievements already made. Instead, we must continue down the path we have chosen and intensify our efforts for more justice.

Mr. Gatdula equally argues that while human rights should be "aggressively protected," also the national interests of the Philippines should be upheld. In reality, however, there is no such thing as a trade-off between peace and justice. Peace and stability are bound to fall apart sooner rather than later if the wounds of the past are left to fester.

Debates on whether issues of war and peace take precedence over questions of crime and punishment are not confined to the Philippines. Nor is the ICC, as is often alleged, a place where the West judges the rest. We in Europe know from first hand what is at stake. The story of the International Criminal Tribunal for the former Yugoslavia (ICTY) holds many parallels with the debate which surrounds these days the potential ratification of the Rome Statue by the Philippines. There too, the chief prosecutor was always seen as an agent of foreign powers meddling in the internal affairs of a sovereign nation.

But the lessons to be drawn from the ICTY’s history are, in the end, very clear: it has impressed on national courts and leaders the need for serious legal proceedings. As the ICC acts only as a court of last resort, the primary responsibility for bringing offenders to justice lies with states themselves -- and this is where it should lie. In that respect, the Philippine Act on Crimes Against International Humanitarian Law, Genocide, and Other Crimes Against Humanity, is a clear sign that the Philippines is committed to justice and moving in the right direction. Since what happens in court is not just about whether or not some individuals end up behind bars, it is about changing a culture of impunity, but beyond that it is about the victims, the ones who bear the scars of the crimes and had suffered the brutality of the criminals.

Short quick response to Angsioco article

2011-05-28T21:34:00.000-07:00

Here’s a short, suggested response to this nonsense:

> The Church is not rich. By her logic, the Philippines is rich. And yet, why doesn’t she ask that the Philippines, being the 13th largest economy in Asia and the 33rd largest economy in the world by purchasing power parity according to the International Monetary Fund in 2010, with a GDP - purchasing power parity of $373.6 billion in 2010, yet sees 33% of its people under poverty line.

> In fact, by that logic, then we should be demanding that the Philippine government, all the pharmaceutical companies, and even international organizations like the UN and WHO, or even large local companies like ABS-CBN or the Lopez Group of Companies, to dispose of all their assets, buildings, etc. and donate them to the poor. But presumably that would be wrong because these organizations apparently do more good to Filipinos if they are existing and operating. Well, the same could be said for the Church and more. The argument regarding supposed Church wealth is very old and very dumb. It’s not that you own a lot it’s what you do with what you own. And the Church has been more effective than any other institution in dealing with poverty, not merely locally but globally.

> The Catholic Church supports faithful from all over the world. And each Catholic Church is financially independent. The local Catholic Church does not get any financial support from the Vatican or it's own diocese. Rather, it’s the local church that supports the Vatican. Besides, being a 2000 year old institution, it has accumulated assets, including lands or buildings, many through donations, of which many are quite old.

> Even then, these assets are not liquid assets. Most are held in trust for the people of the world to use or simply look at. So when a socialite writer, just for example, wants to go touring Rome and see the valuable paintings at the Sistine Chapel, it must be remembered that the huge upkeep for these treasures are shouldered by the Vatican (with funds from either donations or minimal museum fees; note that there are even days you can visit the museum for free), which in the end is a non-profitable endeavour to it.

> A lot of the physical assets such as cathedrals, chapels, etc. are not built for the benefit or vanity of the priests but because the believers themselves (who are human beings and can be reached through the senses) would hopefully be inspired to see through their surroundings and by it seek to know more and be closer to the One who created all. The same reasoning goes for museums, they are done in such a way to provoke interest (even inspiration) for history. And this has to be emphasized again: Church property is not so much owned but rather is held in trust by the present for those faithful to come in the future.

> Any profit (or any asset, in fact) that the Church owns is utilized for the costs needed by the faithful the world over. Aside from the upkeep for maintaining churches, masses, priests, etc., it must be emphasized that the Catholic Church is the leading charity in the world. It has, at any given time, donated more money, effort, goods, than any other multinational organization, charitable organization, or even governments.

> This bears worth emphasizing: no pharmaceutical company or international org or government has done more than the Catholic Church in terms of charity, education, health and hospital care, scientific research, poverty alleviation. Bill Gates can actually learn from the Church on how to conduct charity.

> In the US alone (simply because these are the easily available figures), the Catholic Church educates 2.6 million students everyday at no cost to taxpayers. But this does cost the Church 10 billion US dollars. Note that enrollment in all of these schools is open to all religious faiths. It also operates in the US 637 hospitals which account for hospital treatment of 1 out of every 5 people not just Catholics in the United States today, all shouldered by the Church.

Now clearly the foregoing was merely scribbled hastily and is obviously not meant to be an authoritative source on the charitable and beneficial works of the Church. But what it does at least demonstrate is that there is a very apparent and real benefit that the Church gives to the world’s poor. Note that the social, material realm is not even the primary focus of the Church, its overriding purpose is to save souls. Poverty alleviation and social development is primarily the duty of governments. It is significant, however, that even in this aspect it is the Church that leads the way.

Nevertheless, I have no illusions as to the effect of this blog entry. Proverbs 23:9 is most instructive: "Don't waste your breath on fools, for they will despise the wisest advice." At the least, should this blog entry help fellow believers and defenders of the faith, then all is well.

(Addendum: note from my friend Ipe Salvosa of BusinessWorld. This is merely from Caritas Manila financial report for 2009, it does not include the rest of the activities of the Church in the Philippines: "A total of 146,139 families affected by tropical cyclones Ondoy and Pepeng were given relief assistance. It was made possible by the outpouring of cash and in-kind donations from domestic donors and from other countries and the thousands of volunteers that participated. Caritas Damay Kapanalig typhoon program for Ondoy and Pepeng raised over PhP 57 million (Cash = PhP 39,336,757.91 and in-kind = PhP24,099,285.52)."

"And although 2009’s highlight was the Caritas Damay Kapanalig Ondoy and Pepeng relief and rehabilitation efforts, throughout the course of the year Caritas Manila continued with its highly committed social services and development efforts. 5,463 scholars were maintained under the Youth Servant Leadership and Education Program or YSLEP. 98,552 patients were attended to through the different Caritas charity clinics in Mega Manila. Under preventive health care, 58,118 patients were given health counselling. 12,180 children were fed and monitored under the Caritas Hapag-Asa Feeding Program. 107 inmates were released through paralegal assistance under the Caritas Restorative Justice Program or Caritas RJ. These are just some of the notable accomplishments for 2009.")

A legal disobedience

2011-05-26T06:11:00.000-07:00

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

To everything, a reasonable basis is needed. One just can’t act like a spoiled brat and do or say anything because he felt like saying it. And the basis must have a logical connection to the action done or contemplated. All of which is founded on law. Because we are supposedly a society of laws and not caprice. Because, simply put, that is what a sane society does and should be.

Calling for civil disobedience, for example in relation to the RH Bill, may be said to be justified under constitutional law. Not to mention history. The most probable legal rationale for which can be found in the Constitution’s Articles II and III. There is also the Supreme Court ruling validating the Cory Aquino government. Following the 1986 People Power uprising (a good example of civil disobedience which, incidentally, was first called by the Catholic Church), the Supreme Court recognized in Lawyers League vs. Aquino that the new government is indeed de jure rather than merely de facto.

In fact, threatening imprisonment against those organizing civil disobedience could be tantamount to the "chilling effect" that is frowned upon by our laws. The case of Chavez vs. Gonzales is but one recent legal basis for this, as well as the "overbreadth doctrine" and the "freedom from subsequent punishment principle."

Civil disobedience could possibly also find eloquent basis in Estrada vs. Escritor, which tolerated non-application of the law on the basis of "sincere religious belief." The ruling recognizes the "religious nature of Filipinos" and the "elevating influence of religion in society." Considering the highly dubious necessity of the RH Bill, this ruling arguably provides the basis for refusing to pay taxes due to religious conviction. As the Supreme Court declared: "man stands accountable to an authority higher than the State." After all, if civil disobedience calling for a change in government (as Cory Aquino did in 1986) could be legally acceptable, then all the more should civil disobedience in the mere form of non-payment of taxes.

An interesting aside is Fr. James Reuter’s call for those teaching in a Catholic school to leave if they are preaching support for the RH Bill. Indeed, it’s quite insane to insist in teaching in a Catholic institution while publicly going against the doctrines of that institution. This is covered under Article XIV of the Constitution. Also in Supreme Court rulings such as Miriam College vs. CA, Camacho vs. Coresis, and UP vs. CSC, as well as guiding foreign opinions such as Sweezy vs. New Hampshire (cited by Supreme Court Justice Antonio Nachura in his Political Law Reviewer). It is the academic institution’s prerogative to decide "who may teach [and who may continue to teach], what may be taught, how it shall be taught, and who may be admitted to study."

For Catholics, the foregoing should definitely not be construed as restricting academic freedom. This point has been addressed in Ex Corde Ecclesiae. As superbly explained by then Cardinal Joseph Ratzinger: "As you see with, a medical faculty, you have complete academic freedom, but the discipline is such that the obligation of what medicine is determines the exercise of this freedom. As a medical person, you cannot do what you will ... Catholic theology is not individual reflection but thinking with the faith of the church. If you will do other things and have other ideas of what God could be or could not be, there is the freedom of the person to do it, clearly. But one should not say this is Catholic theology."

Of course, there’s that weird argument that Catholic teaching proscribing contraception is not an infallible but rather "reformable" Church teaching. Whoever said that need to consult more knowledgeable theologians. Giovanni Montini, Karol Wojtyla, Joseph Ratzinger, George Weigel, Steve Ray, John Murray, John Hardon, William Most, Jimmy Akin, Scott Hahn, Janet Smith, Mike Aquilina, Roberto Latorre, Mark Shea, Charles Chaput -- one cannot get a better set of theologians than that and all uphold that the doctrine against contraception is an ordinary "universal" Magisterium of the Church. One can see this clearly from Humanae Vitae, Theology of the Body lectures, the Catechism of the Catholic Church, and Caritas in Veritate.

Finally, the authority of priests to refuse to give Communion to anyone deemed unqualified is protected by Article III of the Constitution, elaborated upon by the Supreme Court in cases such as Austria vs. NLRC and Taruc vs. Bishop De la Cruz. Accordingly, matters relating to doctrine or enforcement thereof are left to the discretion of the bishops or priests. Canon 915 of the Code of Canon Law also affirms the priests’ authority to refuse Communion to those publicly disagreeing with Church teaching.

In any event, to have "Communion" means to be at "one" with the Church. I don’t see the logic of one publicly and obstinately going against Church teaching and then wanting to have Communion. That’s just plain childish. And stupid.

Some comments to Fr. Bernas’ stand on the RH Bill

2011-05-24T05:21:00.000-07:00

Here’s a good article e-mailed to me by a friend that I’d like to share. It’s by Fr. Julio Penacoba of Sampaloc, Manila:

I will limit myself to the issue of the Bill promoting contraception. This is presented mostly in points First and Second of Fr Bernas article.

As I understand it, Fr Bernas attempts to explain why it would be possible to accept the teachings of the Church (that says that contraception is wrong) and yet to support the RH Bill that promotes contraception.

His line of argument may be put like this: The rules of the Church apply to Catholics but should not be imposed on others.In my understanding that line of argument is very valid for religious issues that is, for matters related to faith and worship. For example, the Church has rules coming from his worship such as the obligation of attending Sunday Mass, or the prohibition of eating meat on Ash Wednesday, or the obligation to follow canon law provisions regarding marriage. The Church should not demand that the State impose those obligations to non Catholics.

However, Fr Bernas line of argument is not applicable on ethical issues. On those matters, the Church does not have ethical rules for Catholics only but declarations of the ethical values inherent to the dignity of any human person. Thus, when the Church speaks against corruption, bigamy or drunkenness she is not stating rules for Catholics only. Neither is she imposing limitations on the goods of others. She is simply offering a moral evaluation of certain behaviors for all men of good will who mind the dignity of the whole person including his ethical dignity.

In my perception, Fr Bernas position seems to treat contraception as it were a religious issue (a Church’s rule) rather than an ethical issue. For example, the first quotation that he cites in his Second point (Compendium of Social Doctrine, n.423) belongs to the section entitled Religious Freedom and not about morality or ethical issues. Any intelligent reader can see that it is talking of rights and privileges on the area of practicing ones religion --clearly not applicable to ethical issues. Regarding the second quotation from the same Compendium (n. 169); it belongs to a discussion on how the State should seek the effective good of all and not only of the majority but of the minorities as well. To apply that text to the discussion on contraception would assume that everybody agrees that contraception is an ethical good and therefore it should be given not only to the majority but to the minorities as well.

Since both quotes are from the Compendium of the Social Doctrine of the Church, may I quote now from the section (n.234) where that document refers directly to the debate going on.

All programmes of economic assistance aimed at financing campaigns of sterilization and contraception, as well as the subordination of economic assistance to such campaigns, are to be morally condemned as affronts to the dignity of the person and the family. The answer to questions connected with population growth must instead by sought in simultaneous respect both of sexual morals and of social ethics, promoting greater justice and authentic solidarity so that dignity is given to life in all circumstances, starting with economic, social and cultural conditions. [[italics in the original, the emphasis is mine]]

Why the “population debate” will continue to be a debate

2011-05-22T20:27:00.000-07:00

Here’s a very informative and well thought through article by my good friend Luis Dumlao, which, although appearing in the 27 October 2008 issue of BusinessWorld, is still highly relevant for analyzing the RH Bill issue:

There are basically three fronts in the debate, whether high population growth drags economic development (the position of the “pros” henceforth) or the opposite (the position of the “cons” henceforth). These are theory, evidence and policy sense.

Let’s go to theory. The most classical model that attempts to explain the negative effect of population on developing economies is the Malthusian population trap model, named after English professor of political economy and demographer Thomas R. Malthus (1766-1834). Accordingly, the economy has three possible equilibriums: the poverty trap equilibrium or the Malthusian population trap, the unstable threshold equilibrium and the high per capita income equilibrium. The pros would argue that the Philippines is in the Malthusian population trap. As soon as the economy booms, population grows rapidly to offset the boom, keeping it trapped in poverty. Metaphorically, the increase of limited food to share is offset by the increase of people who would share the food. The solution is to control the increase of people so that the share of each will be bigger. The recommendation therefore is population control policy that the pros relentlessly support. Does it mean that the pros win? The answer depends on the evidence.

A more recent theoretical model that pros use to establish their position is the neoclassical growth model. The theory is that increase of population while everything else is held constant causes an increase of output. The availability of more workers obviously improves the economy’s ability to produce. But because of the congestion and other consequential inefficiencies of having too many people, the increase of output is not able to catch up with the increase of people to feed – thus calling for population control policy.

The pros’ argument however is too focused on the short term and neglects the long run implication of the theory. In the long run, it is not just population that grows, for capital and productivity also grow. As such, the cons would argue that the pros are “barking up the wrong tree.” Population growth is irrelevant. The more relevant issue is why capital and productivity are not able to outpace population.

A more recent, elegant and mathematical theory that goes beyond the neoclassical theory is the endogenous growth model. A two-hour mathematical lecture to doctoral students in economics would do to show the dragging effect of population. But extending the lecture to three hours of mathematics would show otherwise; that population growth actually boosts national output. Does it mean that the cons win the debate? Of course not! It only shows that three hours of mathematics would support the cons’ position, but four hours would probably support the pros’ position. The contest is no longer a population debate, but a contest of who has better mathematics. So in theory, the population debate is not settled and remains a debate.

Let’s go to evidence. If the economy is stuck in the Malthusian population trap, the debate would strongly support the pros’ position of adopting a population control policy. But whether the Philippines is actually on the poverty trap equilibrium is not clear. If the economy is in the trap, an increase of income should result in increase of population growth to cause an offset. But that has not been the case. As a first example, per capita income grew faster in the 1970s because average income growth was extremely higher and not because population growth was low. As the second example, per capita income grew slower in the 1980s because average income growth was extremely lower and not because population growth was higher. As third example, in the boom years from 1993 to 1996, population growth rate remained relatively the same. If anything, the data only reveal that population growth rate does not change with economic booms and busts.

Perhaps the most used evidence that the pros use would be cross-comparisons. In cross country-comparisons , the most developed economies tend to have the lowest population growths while the poorest economies tend to have the opposite. In cross-income group comparisons, the more affluent families tend to have less children while poorer families tend to have more. The problem with this evidence is that it is evidence of correlation and not of causality. One cannot automatically assume that population growth causes lack of development; lack of development might just be the reason why population growth is high. One cannot just say that having more children makes one poorer; poverty and lack of education may be the reason why poor families have more children.

Consider another angle. If a couple is irresponsible, there is a good chance that they are jobless and poor. If a couple is irresponsible, there is also a good chance that they do not family plan. Irresponsibility and poverty have causal relation because the former ultimately leads to the latter. Irresponsibility and number of children may have causal relation because the former may lead to the latter. Poverty and number of children have correlation, but one does not cause the other and vice-versa. So in this given example, it does not make sense to support the pros’ policy recommendation.

We can look at another angle. Over 500 years before the 1970s, population growth had coincided with economic prosperity. Compare population growth in the glory postwar years of the US up to the 1960s compared to Europe . The same goes for the US’s and Britain ’s population growth in the industrial revolution of the late 1800s compared to the population growth for rest of the world. In the colonial period, compare the population growth rates of “mother” countries to the growth rates of the colonies. There are countless comparisons and all show that low population growth had historically coincided with poverty and stagnation. Does this mean that population growth was the key to economic prosperity? Does the cross-country evidencesof the past 40 years justify the claim that population control policy is needed for development? The answers to these questions are debatable.

Let’s go to policy sense. Assume for the sake of argument that indeed population growth drags economic development and population control programs would fulfill their intended outcomes. Is it really optimal to put, say PhP1 billion a year, in population control programs? Alternatively, is it more optimal to put that same PhP1 billion a year in public school education, social services and other health programs? Hypothetically, putting PhP1 billion in population control programs would fulfill the program intentions. But putting the same in education and others might fulfill numerous other intentions. These include improved productivity, economic self reliance, self esteem and responsibility, knowledge for the sake of knowledge, and even population management. So where should government spend that PhP1 billion a year? Now that is truly debatable.

(Luis F. Dumlao, PhD, is Associate Professor at the Ateneo de Manila University; after studying in Cambridge University, he is also a Post- Doctoral Fellow of Fordham University, New York.)

Killing Bin Laden

2011-05-19T07:03:00.001-07:00

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

One problem with public discussions is that it’s filled with so-called analyses that actually were warped by the commentator’s ideology, insecurity, or bias. Objectivity is usually thrown away, and logic and common sense along with it. The problem is further compounded when those proffering their opinions have no idea of what they’re talking about. The alleged analysis by the Pro-RH (and liberation theology) crowd is a good example. Another is that unquestionably condemning the illegality of Osama bin Laden’s killing.

One crucial factor that must be considered in determining whether Bin Laden’s killing was legal is the nature of international law itself. Public international law is a very misunderstood field, innately nebulous and complex, quite different from domestic law. International law is highly fluid, demanding that one makes various considerations from several disciplines within a conjectured context and time. Domestic law, comparatively, is simple as one is normally provided with a basic starting point: what the law is on a specific case. It then becomes a mere task of determining under what law a defined set of facts fall.

International law works far differently. Not only are we uncertain what’s the actual law, we have to construct that law from various sources while identifying prevailing relevant conditions. For example, what’s written in a treaty is only binding upon states party to that treaty and what’s contained in that treaty may not necessarily be what international law really is. This becomes important particularly when determining what the law is then between those states not party to the treaty. Not only that but the law could and does change through time, without any apparent or clear benchmark indicating that a change (or even a new international law) has actually occurred.

Ironically, another thing that distinguishes international law from domestic law, despite it having a sinuous, even ambiguous nature, is the incredible degree of precision analysis that it requires. To get a remote feel of what I’m talking about, try reading a foreign published article by Florentino Feliciano, James Crawford, or Ian Brownlie. Nowhere else will you find a field of law that contains such a superb balance of broad synthesis and minutely fine delineation of concepts and ideas.

That is why, for me, anybody prone to making blanket conclusions on matters involving international law either does not (despite foreign schooling) actually "get" international law, or is letting his peculiar ideological bias screw his analysis, or is simply out to get popularity by posturing before the media. Such are all constituting a disservice to the public and leads them to being unfortunately misinformed.

Which leads me back to this question: Is the killing of Osama bin Laden legal? An obvious point that must be made is that none of us making a public discourse on the matter was actually there when it happened and a substantial amount of facts will most likely be kept secret by the US for national security reasons. This alone puts an automatic crutch on the analysis. But proceeding from the scarce information we do have, an argument could be made -- contrary to what has been published in other local newspapers -- that such is legal.

Legal from the viewpoint of US domestic law. Any local prohibition there may be regarding assassinations under Executive Order 122333 could be argued as inapplicable. Bin Laden has been consistently labeled by the US as an enemy combatant during an armed conflict. This puts him within the ambit of the US’ 2001 Authorization to Use Military Force Act.

Under international law, the same could still be argued as legal. And again, it could be maintained that this is not an "assassination." Taking the argument that the "War on Terror" is a case of armed conflict (and who can conclusively argue that it isn’t when several countries aside from the US have consistently maintained that it is and remembering the nature of international law?), then the killing of an enemy combatant is clearly permitted. Did it matter he was unarmed? No, because he was in a state of combat (that’s Bin Laden’s problem considering he was promising further attacks on the US). What if he tried to surrender? There were no indications that he wanted to. Didn’t this attack violate Pakistan’s sovereignty? Well, Pakistan apparently went along with it (either before or after the attack, the effect is the same). But didn’t an Israeli court rule that assassinations are illegal? So what? Very basic international law tells us that rulings of domestic tribunals are not binding at the international law level. And, again, this is not an assassination but the killing of an enemy combatant during armed conflict.

The point I’m making is not that we should conclude Bin Laden’s killing was legal but that valid arguments for both sides could be reasonably made. While it would be fun to play crusading lawyer before the public, frankly, I’ll take clear-headed thinking anytime.

The rule of law

2011-05-12T06:15:00.000-07:00

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

Everybody talks about the need for the rule of law. But I doubt if anyone actually understands what it means. And if people do begin to realize the implications of the rule of law then would they still want to have it? Because, in the end, the rule of law simply represents two things that seem to contradict the national character: the need to abide by a standard and the discipline to enforce that standard.

Whether this could be had is, frankly, doubtful. When you have our own head of state wanting to teach our public prosecutors how to shoot their way out of troubles or when a public official down South is publicly lauded for his brand of vigilante justice, the problem is obvious. Indeed, the intentions of the two afore-cited examples may be laudable, but, as they say, the road to hell is paved, gilded, and furnished with good intentions.

The dilemma, however, also comes down to the proper definition of what the "rule of law" is. Clearly, any person with half a brain who managed to finagle funding from his rich family for foreign schooling could pick up a foreign textbook and say that the rule of law is: "a principle of governance in which all persons, institutions and entities, public and private, including the State itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with international human rights norms and standards."

That definition is from a former secretary-general of the United Nations. The question now is: how appropriate is that definition for the Philippines, with its Asian context, multiple invaded and colonized background, and strange amalgam of democratic and personalistic/paternalistic type of politics? However, it would be quite sloppy to immediately come to the conclusion that compliance with the rule of law is weak in this part of the world. Wikipedia itself is evidence for and source of this type of analysis. A member of the Asian Human Rights Commission, for example, was quoted regarding his assessment on the "weak or nonexistent" application of the rule of law in Asia.

But if one applies Western standards on a culture that is removed from the same, the probability of Asian countries falling short on the matter is obvious. As an intellectual exercise, it would be quite interesting to pick at random any strongly identified Asian norm and see how Western countries match up. The findings would most likely be unsurprising.

The subjectivity or bias with regard to adopting the most appropriate definition of the rule of law can be seen with regard to the reception of Lord Bingham’s famous discussion on the same. According to Lord Bingham (who wrote a widely received book on the subject and who died last year), the rule of law should contain the following features: "[1] the law must be accessible and so far as possible intelligible, clear and predictable; [2] questions of legal right and liability should ordinarily be resolved by application of the law and not the exercise of discretion; [3] the laws of the land should apply equally to all, save to the extent that objective differences justify differentiation; [4] the law must afford adequate protection of fundamental human rights; [5] means must be provided for resolving, without prohibitive cost or inordinate delay, bona fide civil disputes which the parties themselves are unable to resolve; [6] ministers and public officers at all levels must exercise the powers conferred on them reasonably, in good faith, for the purpose for which the powers were conferred and without exceeding the limits of such powers; [7] adjudicative procedures provided by the state should be fair; [8] compliance by the state with its obligations in international law."

Admittedly, Lord Bingham is a brilliant jurist, but how much of the receptivity to his ideas stem from his objection to the invasion of Iraq? Frankly, my objection to Lord Bingham’s thesis precisely stems from the eighth feature, particularly as it fails to appreciate the ambiguous and fluid nature of international law. This point becomes all the more apparent when one sees how much of the international law on human rights is based on "soft" (as opposed to "hard") law.

In any event, the need for a more sincere and considered Philippine definition of the rule of law is certain. The capacity and willingness to enforce that definition should be internalized as well. Otherwise, let’s just stop fooling ourselves that we long for a society based on the rule of law when, in the end, our manner of deliberating and deciding issues depends on whether you come from a particular family or school. Obviously, that system has damaged the country but at least let’s accept that we’d rather really want it that way. It’s less hypocritical and doesn’t waste anybody’s time of having people go through the charade that the law (and learning about it) is important.

Coffee with Jose Almonte

2011-05-10T18:55:00.001-07:00

Recently had coffee with General Jose Almonte, the former National Security Adviser during President Fidel V. Ramos’ time. This reminded me of an article I wrote about him way in 2008, which I’m reproducing below and, I believe, still well worth pondering upon:

I arrived at General Jose Almonte’s apartment on the dot, as befits a meeting with a military man. It was 13:00 and the General courtly escorted me to the dining table. His assistant, Edna Co, was there and helped serve coffee and pizza. The apartment cum office was modestly furnished but lined with numerous shelves filled with biographies, books on politics and current events. Interestingly, a number of religious books were there as well. After all, this is the guy who once declared: “I have only one hero - Jesus Christ.”

Gen. Almonte is a bulky man, with a voice to match his built. His face was lined and he had a weary air about him. He immediately went to business: “So, what is it that you want to talk about?”

The conversation, of course, focused on an area that he knew so well: that of Philippine development and the role the oligarchy plays in hindering it. One comment I’ve heard is that the oligarchy isn’t what it used to be, having diversified their businesses from mere landholdings and are now into telecommunications, manufacturing, and IT. The point is that, so the argument goes, the oligarchy isn’t the same and as pervasive as it once was. Almonte would have none of this thinking, saying that such is “misleading”. “Our economy is supposed to be a free market, but it is controlled by politics … not designed to serve the national interest, but certain families,” he says.

And therein lies the problem. For although every country has an elite, the Philippines has a significant problem with its local version as “the politics that has evolved [in our country] has no capacity to serve the nation as a whole; it only serves the oligarchy, or rather the party that serves the oligarchy.” For Almonte, it is the elite’s undeserved domination of economic and political power that is the primary cause of Philippine problems.

This observation, it must be observed, is not radical. Nor is it new. Political scientists from 1965 such as Dante Simbulan (who wrote The Modern Principalia), to politicians such as Ferdinand Marcos (Today’s Revolution: Democracy), to the writers of Anarchy of Families, and today’s journalists who reported in the book The Rulemakers, almost unanimously say the same thing. A recent book (Asian Godfathers by Joe Studwell) describes our elite as “the most selfish and self-serving in the region.” It is General Almonte, however, who provides the most colorful description: “You give Rizal to our oligarchy, they’ll shoot him.”

General Almonte is reminded of a passage in his book “We Must Level the Playing Field”, where then Commissioner William Cameron Forbes recounts that: “’[Sergio Osmena and Manuel Quezon] practically admitted to me that [the demand for immediate independence] was really a catch way of getting votes; that what they wanted was office, not independence’”. General Almonte notes dryly that “the skills that get a Filipino politician elected President are often the opposite of those qualities required for the decisive and upright administration of the state.”

General Almonte is a very charming speaker. And forceful as well. He observed that I was not touching the pizza. Hearing that from a Brigadier General who infiltrated the Viet Cong and who almost led the assault on Malacanang in 1986 with an AK-47 rifle brought home from Vietnam, I was eating in a millisecond.

Continuing on the subject, General Almonte is of the firm belief that the country doesn’t need geniuses or high intelligence in a leader. “You can get experts to make the studies and the policies”. What is needed, he says, is “a leader who will have the courage to implement the policies and with no attachment to the oligarchy and other such parties with vested interests.” Or, in the colorful Almonte-speak, “even a monkey could lead this country a whole lot better than a genius affiliated with the oligarchy.” Assuming, of course, the monkey is not attached to the elite.

“The secret to nation building is simple: just inspire the people. For a president, that is the one important thing he or she should do.” The problem is, how do you inspire the people when opportunities are closed to them by the oligarchy?

The discussion had gone on longer than expected, the General being quite generous with his time. I murmured my leave and he courteously rose to escort me out of his apartment and into the elevator. You know, he says, “a leader unattached to the oligarchy would do this country a whole lot of good. A leader with vision, values, and conviction.”

The elevator opened. Before I stepped in, the old warrior shook my hand. “Take care of our people. Our people are good and they deserve better.” It was a goosebump inducing moment. After all, he is right: our people do deserve better.

Reasons against RH

2011-05-05T08:49:00.000-07:00

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

A funny thought entered my mind during the beatification of Pope John Paul II last Sunday: how many pro-RH advocates got excited or teary eyed while watching the same? The reason is because some Catholics should be reminded that Pope John Paul II gave us the Theology of the Body Lectures, which categorically proscribed the use of contraceptives. This says a lot about the pro-RH crowd’s consistency of thought (or lack of it). However, this article is not about the theological reasons against contraceptives but on some secular grounds why the RH Bill should not pass.

A fellow lawyer-columnist recently posted in his blog that President Aquino was right to support the RH Bill because he is president not only of Catholic Filipinos but of all Filipinos. The problem with this argument is that it misses the point about the function of the presidency and the nature of the RH Bill. While the statement that President Aquino is the president of all Filipinos is obvious enough, nevertheless, he still must execute laws that are for the general interest and do not constitute grave abuse of discretion, while at the same time remaining true to his conscience.

How the RH Bill could serve the common good is beyond me. There is simply no reason why the RH Bill should be passed. Economically, no direct correlation has been made between growth and population. Studies also do not support the contention that our population size is unsustainable. In fact, our birth rates are staying at quite manageable levels. And economists have pointed out that our demographics support domestic consumption, propel our service industry, and make our relatively young citizenry competitive vis-a-vis the ageing economies of Europe, Japan, and Singapore. Finally, studies have shown that poverty here is traceable not to population size (incidentally, not to corruption also) but to the continuing unequal distribution of wealth, with most of it held by our stupid elite.

Medically, the RH Bill introduces risks to female health, as international studies, among them by the International Agency for Research on Cancer, research arm of the World Health Organization) and medical journals (such as Lancet) already attributed (particularly to oral contraceptives) dangers such as cancer (specifically breast cancer). Former Health Secretary Cabral recently publicly acknowledged this. Research has also shown that countries (such as the US and Thailand) resorting to contraceptives (condoms in particular) have actually resulted in the increase of AIDS, unwanted pregnancies, or abortions. The reason is simple: condoms, which fail at least 5% of the time, give a false sense of security, encouraging the illusion of "safe sex."

The RH Bill also violates human rights, particularly as to non-discrimination regarding one’s religion. It was argued by this lawyer-columnist that taxes cannot be argued against the RH Bill as government funds have a general (i.e., non-religious) character. But this again misses the point: Catholics are knowingly being forced to pay for a measure (designed to provide subsidies for contraceptives reportedly costing Five Billion Pesos a year) that is against not their mere opinion but their constitutionally protected religious beliefs.

Note that Catholics cannot be rightly accused of imposing their beliefs on others, as contraceptives are legally and widely available. Instead, the RH Bill is being imposed on Catholics: can’t government come up with other programs to spend money on (such as medicines against cancer or heart disease, maternal care, education, fuel subsidies) that is less divisive and does not trample on their strongly held religious beliefs? This has to be emphasized: no religion is discriminated against by the use of tax money for other purposes should the RH Bill be rejected (as no religion is insane enough to require condom use, at most other religions merely condone it) but such would not be true the other way around.

Which also leads to this point: why should government and Catholic taxpayers be made to bear the burdens of a measure that is controversial, divisive, ineffective, and discriminates against a religion? As multinational pharmaceutical companies aren’t greedy, why not ask them to lower their prices? Why not have NGOs, instead of pouring all that money into lobbying and advertising campaigns, subsidize contraceptives themselves or, even better, donate the money to the poor?

Finally, this lawyer-columnist argues that the proscription against contraception is merely a Catholic thing. This is downright wrong. The reasons against contraception (aside from those above) are based on natural law. This law applies whether or not you are Catholic. Natural law, which seeks to protect human dignity, is the foundation of our Bill of Rights. President Aquino, coming from a school that has St. Thomas More as one of its patron saints, must know that his actions are to be guided by his conscience, with such conscience anchored on natural law. With all due respect, our lawyer-columnist friend should know this. More so, if he’s also a priest.

The good goals of the RH Bill

2011-04-28T06:02:00.000-07:00

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

One of the fascinating things to see is how full the churches were last weekend, what with the celebration of Easter Sunday. But what’s sad to note is that behind the facade of apparent devoutness lies a certain lukewarmness, perhaps even ignorance, of the significance of Holy Week and Easter. At worst, hypocrisy.

The events we commemorate last week are not dead events. They were meant to teach us how to lead our lives. Of the many significant events of the last week of Jesus, let us take three to ponder upon. The first had to do with Judas’ betrayal. Certainly, his motivations for turning traitor were not mentioned in the Gospels (except for John’s laconic reference of Satan entering Judas after the latter dipped bread with Christ). Some commentators claim, however, that Judas felt disappointed with Jesus when it became clearer by the day that He was not leading a political revolution. Jesus’ somewhat weird statement that His followers should eat His body and drink His blood (which actually caused a number of His disciples to leave) may also have something to do with it.

The second event is Peter’s denial. This came after Peter chopped off an ear of one of the arresting soldiers. Before that, Peter had made loud declarations of his willingness to die for Christ. However, in Peter’s zeal to be near the developments, in his eagerness to be part of the events, he pushed too much into the crowd and there he was identified as a follower of Christ. This set the stage for his denial. Upon being recognized (by servant girls no less), Peter, the supposedly bold brave man, started to fear for himself and denied knowing Jesus three times. Which resulted in him forever being depicted with a rooster on his shoulder. But I digress ...

The third event is when Pilate asked the crowd to choose between Jesus and Barabbas. This was a profound choice. Barabbas, contrary to common knowledge, was no common thief. He was a revolutionary, a rebel, who was not above using violent means to achieve what are arguably good intentions. The name of Barabbas himself gives us a clue as to his identity. Barabbas means "Son of the Father." In effect, what Pilate presented to the crowd were two Messianic figures. But the differences between the two could not be greater. The crowd, of course, chose Barabbas.

What is the point? The point is that in all three situations, Judas, Peter, and the crowd were given a choice. That choice is something we also confront every day, every single day, of our lives. The choice presented was: do we rely primarily on our expectations, plans, abilities, knowledge, and understanding? Or do we first put our trust in Him?

Judas and the crowd essentially thought that Jesus was too otherworldly, too impractical, when what was needed was decisive human action. Pilate, incidentally, was another pragmatist, who knowingly allowed an innocent man crucified to save his career. Peter, on the other hand, was too eager for action that he forgot the teachings of Christ that he made himself vulnerable to turning away from Him.

Obviously, I’m writing this article in relation to the RH Bill (now re-named Responsible Parenthood Bill). We are seemingly so eager to rely on our abilities, our intelligence, our plans that we forget to have the humility of remembering that we don’t know as much as we think we do. To solve poverty, to care for maternal health, to reduce teen pregnancy and abortions, these are all good intentions. But the means with which we seek to solve them, the reliance on contraception, are not in line with the faith that we profess as Catholics and the facts we know through human experience.

The interesting thing about this is that in the zeal of RH Bill proponents to defend the indefensible, they even essentially started resorting to that line of Pilate: "what is truth?" Because it is the truth itself that is now being questioned to justify the use of condoms: the authority of the Papal office, the primacy of natural law, the teachings of saints Jerome, Augustine, and De Sales, to Popes Pius XI, Paul VI, John Paul II, and Benedict XVI, the apostolic duty of bishops, religious freedom and the right to proselytize, the diversion of tax money from education and necessary medicines, the carcinogenic nature of many contraceptives, the fact that contraceptive use resulted in the increase of unwanted pregnancies, abortions, and sexually transmitted disease, have weakened societies, and with no proven correlation to alleviating poverty. All this has to be wrong to make contraception right.

Yes, there are problems that the RH Bill seeks to address. But the RH Bill will never be the solution. Human action unrooted in a morality, ethic, or faith will always be futile. Judas, Peter, and the crowd that chose Barabbas taught us that.

How globalization and trade created the Philippines

2011-04-27T06:26:00.000-07:00

(published in Billionaire, December 2010)

One interesting thing about all those discussions regarding trade and globalization is how they actually created a country. Not shaped or influenced or changed its course but actually created. And the Philippines was that country.

Really, when one looks at the Philippines, there is nothing about it that has not come about due to globalization and trade: the prevailing religions, its language, its attires and costumes, traditions and ethics and etiquettes, its food, its form of government, literature, music, movies, sports. In other words, it is a mix of Christian or of Muslim faiths (with a touch of animism thrown in), of a Republican government, of English or Spanish speech, of Asian, American, and Spanish cuisines, of fiestas, of rock and pop, of a people of mixed descents, of Hollywood and basketball. The Philippines, simply put, is the true child of globalization. Notably, the last time Filipinos ever really got together as a nation was when Manny Pacquiao, a Filipino who practices a sport invented in the West, fought and beat up a Brit, in the United States, through live television broadcasted through a combination of Japanese, American, and German technology.

Rice mix

Of course, not everybody would be happy with that. I once went to the National Museum’s Rice exhibit and saw its take on the “kaingin”. According to the exhibit, the kaingin was not the harmful practice that it actually was but only became so because of the demands of “the land hungry and increasingly globalized commerce”. That comment, to put it politely, was interesting.

Never mind the fact that the Philippine population increased because of better diets, better access to better medicines, better medical attention, better access to better communications (in case of emergencies). If ever kaingin became phased out as an agricultural method it was simply because it inefficiently dealt with the demands of a growing society and of change. And change - like death and taxes - is a constant and certain thing in life. Globalization doesn’t really create change, it merely offers it.

Changes demand innovation and creativity, which then breeds more changes, and so on. Changes in life patterns, culture, politics, science, philosophy, and even religion, are inevitable. Globalization doesn’t necessarily create those changes. It just makes the products of change a whole lot more accessible to a whole lot more people.

Indeed, by the exhibit’s logic, people should use horse drawn carriages and not cars (a foreign invention). Or people should start making their own clothes by needle and thread, instead of buying them from malls. Or write using pens instead of tapping away at computers. And write by candlelight (ala Rizal) and not through fluorescent. But the problem is that even such old fashioned alternatives are all products, one way or another, of globalization.

In any event, as we shall see, Filipinos should be the last people on earth to treat globalization and trade as villains. In fact, globalization and trade are the true parents of the Philippines.

A silken trade

The thing started when Magellan arrived in (not discovered) the Philippines in 1521. Due to his incompetent preparation, he was promptly killed by Lapu Lapu in the battle of Mactan. The seeds of Spanish colonization, however, was already set and, upon the founding of Manila in 1579, the Spaniards easily beat off American or other European efforts at sericulture due to the Spanish’s access advantage to South China.

As William J. Bernstein reports (in his excellent A Splendid Exchange, Grove Press, 2008):

“… two ships [in 1565] from another Spanish expedition – one under the command of Alfonso de Arellano, and another, two months later, under Friar Andres de Urdaneta – became the first ride the west-to-east system across the northern Pacific in the course of their twelve-thousand journeys from Manila to Acapulco.”

“These two ships were the forerunners of the annual ‘Manila Galleon.’ Once a year, a treasure flotilla from Mexico, usually consisting of two large merchantmen, weighed down with silver and guarded by a heavily armed galleon, ventured westward along the equatorial route, pioneered by Magellan, to Manila. The silver was exchanged for oriental luxury goods, mainly high-quality Chinese silk, which had been brought in junks from the southern coast of the Ming Empire to the Philippines, and then shipped on the Manila galleon east to Acapulco.”

“Trade diasporas soon formed around the Filipino-Mexican trade in silk and silver. Silk merchants from both the Philippines and Mexico crossed the Pacific to establish trade colonies. Those who had settled in the Philippines, called Manileños, struck first, sailing east to Mexico and making vast middleman profits from their warehouses in Acapulco and the capital.”

The volume and value of the Manila galleon trade can perhaps be best seen from the fact that, as Bernstein notes, that the viceroy in Mexico City even petitioned Spain (unsuccessfully) to have the Manila galleon trade be “forbidden entirely.”

An offer one can’t refuse

This is not to say that globalization and trade does not have a dark side. Far from it. Writing for the Financial Times (9 August 2008), Hugh Carnegy notes that:

“What is striking is that for much of history, trade was built on conquest and often violently enforced monopolies – not least when Europeans were involved. The urge to ‘truck, barter and exchange’, as Adam Smith described it, is all very well. But until recently, the much stronger urge was to grab and control by force the trade in goods needed either for basic economic and military needs or for the accumulation of wealth. Even what Bernstein calls the Pax Islamica – some seven centuries of Arab supremacy that established a settled and sophisticated trading empire from the east Mediterranean to the Far East – was built on naval supremacy and bold military action. This ended in 1498 when Vasco da Gama sailed round the southern tip of Africa to reopen European access to the Indian Ocean and beyond. ‘Free trade’ was hardly his aim: he was a greedy, religious bigot prepared to rob, murder and kidnap to get his hands on the spices and other exotica that would make a fortune for him and his Portuguese masters.

Brutality was a vital element in the development of trade and the successive empires built upon it – Roman, Arab, Mongol, Spanish, Dutch, British – culminating in the 18th- and 19th-century slave trade. Equally compelling is the sheer doggedness, courage and skill that characterised the pioneers of trade. Vasco da Gama set sail in 1497 with three tiny ships; they didn’t see land for 95 days as they battled round the Cape of Good Hope;”

Indeed, as Nick Joaquin's book Manila, My Manila makes clear, far from the idyllic scene pictured in museum diorama’s, the day "the Manila of Soliman became the Manila of Legazpi", 19 May 1571, emphasized military might. That day Miguel Lopez de Legazpi took formal possession of Manila by holding his sword in his hand and yelling "in a voice of fury, 'I have founded the City of Manila in the name of the King. If there be any there who would challenge this, let him come forward and I will measure my sword with his.'"

By that time, of course, Rajah Soliman had been soundly beaten. It must be remembered though that our repeated colonization weren’t brought about due to any moral or intellectual superiority or even due to the benignity of any foreigner but because simply the Philippines had not much use for and thus not much good at organized violence. When one looks at it, another thing, really, for the Philippines to be proud of.

‘Pistaym’ and the independence movement

In any event, globalization and trade, having driven the colonization of the Philippines, eventually fueled its independence because by the late 1920s and the early 1930s, the campaign for Philippine independence was nudged along by the fact that a lot of Philippine exports to the United States - through then existing free trade arrangements - were beating American domestic products.

Philippine sugarcane produce, cigars, coconut oil, cordage, and labor were causing worry to American domestic industries (particularly beet sugar, cottonseed oil, dairy, and cordage industries). American businessmen were therefore forced to "encourage" their US Congress to grant Philippine independence or at least grant it autonomous status, for which higher tariff rates (or quotas) could then be imposed on Philippine products.

As Carlos Quirino writes (in Quezon: Paladin of Philippine Freedom):

“In an effort to lighten their financial misery [under the Great Depression], American interests hurt by the competition of Philippine products increasingly supported the proposal to give the islands their independence. Dairy, cordage, cottonseed oil, and domestic sugar interests appeared before Congressional committees on tariff and asked for either the limitation of duty-free insular products or the abolition of all tariff concessions.” “[However], but as long as the Philippines remained a possession of the United States, a great majority of Americans themselves realized that they could not impose unfair restrictions on the Filipinos.”

Of course, it could be looked at in two perspectives: that its "comparative advantage" in the aforementioned export industries helped the cause of Philippine independence or it was American protectionist attitudes that did. Either way, Philippine participation in international trade in the 1920s and '30s helped it achieve independence.

Giving as good as it gets

That should be it then, this little meditation on how globalization and trade created the Philippines. Instead, an interesting fact (from Wiki, of all places) popped up:

“The first Austronesian speakers are believed to have originated on the island of Taiwan x x x [From there] settlers landed in northern Luzon in the Philippines. x x x their descendants started to spread south to the rest of the Philippine islands, Celebes (modern-day Sulawesi), northern Borneo, Moluccas (modern-day Maluku), and Java.

The settlers in Moluccas sailed eastward and began to spread to the islands of Melanesia and Micronesia between 1200 B.C. and 500 B.C. respectively. Those that spread westward reached Sumatra, the Malay peninsula and southern Vietnam by 500 B.C.

The oceanic Austronesians had reached Remote Polynesia by 1000 B.C and spread to its three extremities Hawaii by 400 A.D. New Zealand by 1300 A.D. and Easter Island between 300 A.D. In the Indian Ocean they reached Madagascar.”

From the above one can see that it was the Philippines that gave a number of countries the basis for their language and perhaps culture. And then something should also dawn upon the reader – the implications of which are clear and the significance clearly inspiring: for while indeed globalization and trade created the Philippines, the Philippines also created globalization and trade. While the Philippines could not have existed were it not for globalization, the same could also be said that globalization could not have happened without the Philippines. From the galleon trade, to involving the US in the Philippine’s war of independence against Spain, to its trade with a United States dealing with the Great Depression of the 1930’s, to its vital strategic importance in World War II, to being the first Christians in Asia, the first in Asia to have a democratic form of government (not to mention the first in Asia to have an airline), the first to give the world a bloodless form of revolution in People Power advocates, and to our continuing enrichment of the world through our OFWs, overseas managers, workers and nurses, the Philippines keeps giving to the world and the world keeps on becoming the better for it.

Policymakers have always thought that so the world goes, the Philippines will eventually follow. However, perhaps there is a corollary to that thought. After all, the Philippines, the first and true child of globalization, has become, through its language, history, culture, and psyche, the very epitome of globalization itself. So while indeed where the world goes so goes the Philippines, perhaps it would be also be a safe bet to say that where the Philippines goes so goes the world.

Lending ourselves to Lent

2011-04-14T06:39:00.000-07:00

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

Holy Week will be upon us next week and with it the usual dramatic, sometimes hokey, practices that come with the season. But there are a lot of misunderstood things about it, particularly with regard to the matter of penances. This article, albeit a tad late (and borrowing heavily from apologist Jimmy Akin), will discuss some of the penitential practices for Lent.

Lent actually will end this Holy Thursday, which then signals the start of the Triduum. Of course, Lent began (when else?) the midnight ushering in Ash Wednesday. For the mathematically inclined, while traditionally considered to last for 40 days, Lent really is 44 days long (technically, a little less than 44 as it ends on the evening of Holy Thursday).

Within the season of Lent, if you are between the ages of 18-60 (unless you have a medical condition making fasting hazardous), there is the obligation to fast on Ash Wednesday and Good Friday. Children, of course, are not required to fast. Nevertheless, parents are duty bound to instruct their kids on the tenets of the faith (and this includes preparing them for fasting when they’re of age). To fast means to eat only one full meal a day, plus two smaller meals. The two smaller meals should not equal into one full meal. The problem then becomes the size of the meals. But really, one should not get hung up on the latter requirement (regarding the smaller meals). If one checks the 1966 Apostolic Constitution Paenitemini, particularly Norm III.2, it says: "The law of fasting allows only one full meal a day, but does not prohibit taking some food in the morning and evening, observing -- as far as quantity and quality are concerned -- approved local custom." But then some wise guy would ask: how is the total to be determined, by units, weight, or calories? However, that would be ridiculous. As I’ve said, people should not get hung up on this -- the important thing is the intent. As we shall see, we do this not really just to comply with a set of rules. Lent is essentially a love story.

To "fast" is different from "abstention" or "to abstain." For Catholics who are above 14 years of age and not suffering from a medical condition that will be sorely aggravated by the abstinence, it is an obligation to abstain from meat on Ash Wednesday, every Friday of Lent, and Good Friday. The basis for this (aside from the Code of Canon Law, CIC 1251) is again the 1966 Apostolic constitution Paenitemini. Norm III.1 says: "The law of abstinence forbids the use of meat, but not of eggs, the products of milk or condiments made of animal fat." By "meat" is meant the flesh of land-dwelling mammals and birds. Fish is, therefore, permitted. By dint of statutory construction on Church documents, soups made from meat are now apparently not covered by the rules on abstinence.

Now don’t ask me why (this is just way too much research) but the opinion of learned theologians say that abstinence would not cover reptiles, amphibians, or insects. So to eat frog legs (particularly the yummy ones from Coral Garden) is allowed. It’s also actually okay to eat whales (unendangered ones please!) or dolphins, being water-based mammals. Gravies (which are essentially made of meat juices) are fine, as well as those made from parts (not the actual meat) of land-dwelling animals such as milk, cheese, and eggs. Jell-O (made from horse’s hooves) can be eaten during Lent.

Apparently, you can give yourself a break during the Sundays of Lent. However, it is imperative that at least once between Ash Wednesday and Trinity Sunday we receive Communion (obviously, while in a state of grace, i.e., free from mortal sin by taking the sacrament of Confession).

But, again, one should not view the foregoing as a series of rules but rather acts we do out of love, to share in His suffering, Him who loves us unconditionally, who taught us to love others as He loved us. The words of one priest serve as a good reminder on how to actually approach the spirit of penance not only in this season of Lent but for every day of the year: "Penance is fulfilling exactly the timetable you have fixed for yourself ... Penance means being very charitable at all times toward those around you, starting with the members of your own family ... It is to give patient answers to people who are boring and annoying ... Penance consists in putting up good-humouredly with the thousand and one little pinpricks of each day; in not abandoning your job ... For parents and, in general, for those whose work involves supervision or teaching, penance is to correct whenever it is necessary."

Indeed, Lent, the Holy Week, and the spirit of penance teaches us that the better kind of love is that directed toward others rather than merely toward ourselves.

Gokongwei: Reciprocity will bring in the tourists

2011-04-07T19:42:00.000-07:00

Here’s a good speech by Lance Gokongwei (click here) on the Open Skies issue and the need for reciprocity. Excerpt:

"Examples of lack of reciprocity

Now, let me cite a few examples of the consequences of non-reciprocity:

Seat limitations skewed to favor foreign carriers over local carriers.

The existing agreement between the Philippines and Hong Kong limits local carriers to only 2,500 seats per week on the Hong Kong-Cebu route; Hong Kong carriers get the same number. Under EO 29, Philippine carriers will still be limited to 2,500 per week but all Hong Kong carriers can now fly this route without any limit.

Exhaustion of air rights in major destinations and routes.

An early EO in 2008 declaring "open skies" sans reciprocity in Clark resulted in Hong Kong Express flying into Clark without limitations. CEB was unable to compete because air rights to Hong Kong were fully utilized at that time. CEB could not use Clark unless it reduced its HK services from Cebu. This was solved only after subsequent bilateral air talks resulted in additional air rights. This undue delay in CEB’s ability to compete with a foreign carrier should not have happened if reciprocity was in place. CEB has been flying to HK every day since and offering the lowest fares out of Clark.

Inability to offer lower fares to potential high yield tourist markets.

Japan has always been considered a major tourism market. Currently CEB flies to Osaka three times weekly. We have been asking for additional flights to Osaka which the Philippines is entitled to under the current Philippine-Japan Air Services Agreement. However our request, to this day, has not been approved. In the meantime, All Nippon Airways (ANA) was recently allowed to come in and operate flights from Tokyo to Manila under the very same Air Services Agreement. This is another example of the lack of reciprocity."

The problem is, how can we now effectively negotiate for reciprocity when we’ve unilaterally opened up our skies already? Who would pay for something that they already got for free? A better way of making policy should be had rather than this.

Told you so!

2011-04-07T06:01:00.000-07:00

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

Nobody likes a gloater. I definitely don’t, either. But there are always exceptions, right? And this is one of the few times I’m allowing myself that. The reason being is that our inability to see through China somehow disturbingly betrays perhaps a certain frailty in the national character that needs to be improved -- that money isn’t everything and a display of weakness will always lead to further abuse.

The reason why I write this has nothing to do with the three Filipino criminals that were executed by China. In that regard, China’s steadfast adherence to its own laws is to be commended and is a welcome lesson for Filipinos in learning the price of having an orderly society. This instead has to do with the Philippines standing up for its interests, as well as its (alleged) democratic and human rights values. As stated by the Wall Street Journal over the last weekend: "Appeasing a rising hegemon carries a risk that one’s national interest will disappear down its maw. This is a lesson the Philippines is only now beginning to learn."

This point has gained relevance as the Philippines seems to be increasingly servile when it comes to China. When China went hysterical over a harmless Sept. 24, 2010, joint statement between ASEAN and the US reaffirming "the importance of regional peace and stability," the Philippines was less than its normally loquacious self in defending the joint statement. The Philippines afterward famously failed to send a representative to the Nobel Peace Prize when China called for a boycott of the same. Then the Philippines decided to anger Taiwan by extraditing 14 Taiwanese citizens to China. Finally, when China aggressively violated our waters last March 2, 2011, our government obsequiously sent a representative to Beijing to discuss (explain?) the incident, rather than making China justify her actions. This was, by the way, after China pointedly snubbed our diplomatic protest.

Of course, the question is, are we actually learning that lesson? As the WSJ correctly pointed out, compared to our Asian neighbors (which "have been busy bolstering military capabilities and, more importantly, re-building diplomatic bridges with the U.S."), "Manila has been slower on the uptake." The WSJ, however, was being kind indeed to the Philippines when it noted recent "assertiveness" on the part of the Philippines. But this assertiveness must be credited instead to our military, which bravely shooed away Chinese intrusion over the Spratly islands.

And the WSJ was indeed being kind when it excused our not being the sharpest tool in the shed to the fact that we don’t share land borders with China, as well as a "post-colonial chip on the shoulder of some Filipinos that makes it more difficult for their leaders to forge closer ties with America." While that may be true, nevertheless, money plays a large part in the calculus as well. Our inability to appreciate long-term and national gain over short-term individual benefits definitely plays a part. To this must be added our peculiar insecurity when faced with other cultures, as well as our uncertainty with regard to the correctness of our values and beliefs.

In any event, all this would be beside the point if only people can overcome our seeming revulsion to admitting mistakes and correcting ourselves. In this case, whether the Philippines can sufficiently create a more stable and trusting relationship with the US. Say what you will, the reality is still there and it’s something that this writer has been positing for years and for which the WSJ recently emphasized: "the geopolitical reality of the day -- America is the only country that can preserve the status quo in Asia."

In the meantime, the best way to deal with China in a manner protective of our national interests is by simply implementing our laws. Firstly, it would be good to really clamp down on smuggling. Not the so-called "technical smuggling," which in any event at least involves goods for which tariffs are paid (albeit in smaller amounts), but on smuggling itself. Items and agricultural products that illegally enter the country, harming our farmers and at the same time posing potential hazards to health, should be stopped. This is all the more significant when one considers that our economic growth is now already showing signs of slowing down.

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. Why? Because we say we believe in them! It would be quite hypocritical of us to loudly pontificate on such only to forget them the moment some vulgarian dangles money in front of us.

No to the ICC

2011-03-31T08:14:00.000-07:00

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

This thought bears repeating as the circumstances seem to keep damnably recurring: in the world of international law, it is a truth universally acknowledged that the Philippines is indeed more popish than the pope. Really, we have created the very strong impression that we’d rather adhere to international law even over that of our own domestic laws (or interests) on any given subject.

We’re probably the only country in this planet like that. One example is the enactment of RA 9851 or the "Philippine Act on Crimes Against International Humanitarian Law, Genocide, and Other Crimes Against Humanity," considering that the necessity for it, more so the urgency with which such law was passed, is -- simply put -- not present.

Now the reason why I have to emphasize this point again is because of the recent resurgence to have the Philippines join the International Criminal Court. The Philippines signed the Rome Statute of the International Criminal Court way back in December 2000. However, past administrations (wisely, I believe) refrained from submitting it to the Senate for the latter’s concurrence, thereby effectively excluding us from the jurisdiction of the ICC.

Unfortunately, the present government seems to be intent in placing us under the authority and powers of the ICC. On the occasion of a visit a few weeks ago by Sang-Hyun Song, president of the International Criminal Court, President Noynoy Aquino was reported (in another newspaper, not BusinessWorld) to have said: "You do not even have to persuade me to join the Court. In fact, I have already sent the Rome Statute to our Senate for its concurrence." With the President, in that event, it was said, were the secretaries of the Departments of Justice and National Defense, the solicitor general, and the president’s legal team.

Whether this was done upon the urgings of some well-meaning (is there any other kind?) advocacy group or on actual, real thought through considerations is something that should be determined. Because, frankly, membership, particularly right now, in the ICC is a bad idea.

The ICC is a permanent institution, exercising jurisdiction over persons for the most serious crimes of international concern. Envisioned to operate similarly to the International Court of Justice, the court, however, exercises jurisdiction over individuals committing the crimes of genocide, aggression, serious violations of laws and customs applicable to armed conflict, crimes against humanity, and other such crimes.

The idea of an international criminal tribunal is something everybody agrees to be a good one, it’s just that nobody can conclusively say how to go about executing it properly. It must be emphasized that the Philippines is not involved in any international armed conflict and the chances of the Philippines making use of the ICC to protect its citizens is minimal. Notably, Malaysia, Indonesia, Vietnam, or China (our co-claimants to the Spratly or Kalayaan islands) or Libya, Saudi Arabia, United Arab Emirates, or Pakistan (where a lot of our OFWs are) are not parties to the ICC. This means that we can’t use the ICC to protect our soldiers defending our interests or OFW rights. In any event, there are other avenues available to the Philippines in that regard.

But the biggest problem has to do with the ICC’s jurisdiction because international criminal cases can be hurled against our police or military officers, even public officials, upon the mere instigation by any foreign or local individual. Which leads us to issues of national security and national interests. Assuming that the Philippines want to assert its rights in relation to territorial integrity, particularly in view of Mindanao, our public and military officials will now be working warily under the cloud that at any moment they could be hauled off to and imprisoned by an international court just because charges were filed by some foreigner or even by a domestic crusading lawyer out to make a name for himself.

Don’t get me wrong: I do believe that human rights in this country should be aggressively protected. I also believe that national interests should be upheld. To uphold those two concerns, at this time, is a matter I would trust fellow Filipinos (and Philippine institutions) with, who know our peculiar circumstances and interests (flawed as they may be on occasion) rather than some foreigner at The Hague. This is an aspect of us being a sovereign nation.

Besides, the ICC itself is flawed, as can be seen from the above. Cases can be filed merely from the view of political grandstanding. And there is no safeguard against the probability that prosecutions can be made against our public or military officials due to ideological or foreign-funded interests. Finally, the ICC can even override our sovereignty by claiming jurisdiction over cases that our courts are already trying under certain exceptions to the "complementarity" principle.

All in all, the ICC is a good idea. It’s just not something that the Philippines should be concerning itself with right now.

Leaders exeunt, please!

2011-03-24T06:17:00.000-07:00

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

A friend recently went to a Makati building for a business appointment. She looked up its directory, prominently displayed at the lobby, to check the company’s floor she was supposed to go to. A guard quickly went up to her and tried to shoo her away, saying -- bizarrely -- "bawal tumingin sa directory." This made me think: is there something in our water that makes people here dumber by the minute?

This thought continues after reading two excellent books over the weekend. The first is Homobono Adaza’s Leaders, which details the presidencies of Ferdinand Marcos to Gloria Arroyo. Indubitably, there are lawyers and then there are lawyers. Mr. Adaza is clearly the latter. A fearless parliamentary warrior, he was once jailed by Marcos, then later almost singlehandedly stalled the KBL juggernaut in the Batasan during the 1986 presidential tabulations. So it is with quite an interest that I read his judgment on Corazon Aquino’s presidency:

"The Cory presidency was a mistake. We should have done our best to prevent it because Cory did not have the training, experience, knowledge and the intelligence to be President just like some others who also became President of the Philippines. But we did not know any better since we did not know the lady that well. We really did not know her at all. Only the events revealed the basis for regret."

Actually, one could substitute "Cory" with another President Aquino and the entire paragraph would still be valid. With one exception: this time, we can’t say we didn’t know any better. Inasmuch as there are lots of books demonizing Marcos, it would be but fair in a democracy to objectively examine the history of the first Aquino presidency. Adaza’s Leaders is a fine addition to excellent references such as Gleeck’s Sainthood Postponed, Arillo’s Greed and Betrayal, and San Juan’s Conspiracies & Controversies.

Mr. Adaza is a frank writer, thoughtful but aggressive. But the aggressiveness lends an energetic charm in the writing and his opinions on certain public personalities like Cecilia Muñoz Palma, Franklin Drilon, Aquilino Pimentel, or Chiz Escudero, of Ninoy Aquino cheerily giving young Salvador Laurel a piece of advice that some would say is quite Marcosian ("brod ... in politics, gentlemen finish last"), are not to be missed.

Carmen Guerrero Nakpil’s Exeunt, on the other hand, is an altogether different book. But they essentially say the same thing. The difference comes from the fact that Mr. Adaza and Ms. Nakpil are two different persons and see the world from different lenses. But the situation of the Philippines is so glaringly obvious that they can’t perhaps help having a similar view.

Surprisingly, the elegant, thoughtful, witty Exeunt closes on a shatteringly depressing note, which Ms. Nakpil’s last page invocation of hope in the divine doesn’t exactly salve. And the fact is, I totally agree with what she says:

"For many years, I have believed that we Filipinos are moving inexorably toward fragmentation, not only of Mindanao but of the entire Philippine archipelagic state. Since the ‘peace-making’ activities of the Arroyo administration, the shocking Memorandum of Agreement on Ancestral Domain for the Muslims and the promotion of federalism will very likely continue to lead us into partition, secesion or drastic breakdowns... The US will try or is trying to do here what the British did to India, a vengeful partitioning into three countries, Pakistan, Bangladesh and India. I get a creepy feeling watching US diplomats in Manila and Mindanao that they haven’t finished the dirty work they started in 1898. They’ll get us yet."

"Here at home, the rot has come from within ... People don’t read newspapers anymore, but not because only a few can afford them in this brave, new, poverty-stricken world, but because people no longer think they need what newspapers provide. Their horizons have shrunk ... Knowledge is no longer power."

However, it must be said that both books ultimately do wind up being depressing because reading them one realizes how inadequate and pathetic our leaders are, how the same insane people and families keep leading in business and politics. And the tragic stupidity of Filipinos is that they keep allowing these same people to remain in power.

When one reads back on all the instances of our leaders selling us out, the collaborators, the scandals and the corruption, the incompetence and self-serving government policies, one sees that all these were instigated by the oligarchic elite, the self-described "de buena familias." Read the newspapers and then read our history textbooks: it’s the same people and families screwing the country over and over and over again. We don’t even realize how damaging our cavalier disregard for academic or individual merit is, giving importance instead to political or social connections. Try telling kids to study and work hard from now on.

This country’s rot is right in front of us. We just refuse to see them for who they are.

Law over troubled waters

2011-03-17T06:06:00.000-07:00

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

This will offend the emotionally inclined, but it just has to be asked: with what happened in Japan, the earthquake, and the tsunami, does this mean that we’ll stop conducting a review on the JPEPA? Because one never knows with this country, fueled as it is most of the time by sentiment or emotion. I mean, we stop corruption investigations simply because somebody committed suicide.

And as anybody intelligently working on international law would notice, there’s an unseemly tendency here to work for the applause of foreigners rather than solidifying our interests. Or to put it another way, we seem to be "more popish than the pope" in our desire to ensure that international law is complied with. Whatever that means.

A recent example is our timid (and tepid) response to China’s aggressive violation of our waters last 2 March 2011. While kudos should go to our military, particularly Lt. Gen. Juancho Sabban, for shooing away those pesky Chinese boats, the response of our government leaves a lot to be desired. As reported by another newspaper, international law professor Merlin Magallona noted that "there’s something wrong [with the government sending somebody to China to discuss the incident]." Considering that "the Philippines is the aggrieved party. It should not have sent someone [to China] to explain. It should be the Chinese that should do the explanation. So why are we sending someone to explain to Beijing?"

Indeed, it was reported that the Chinese boats brazenly moved against a Philippine ship, apparently with the intention of looking for an opportunity to ram it. Thankfully, Lt. Gen. Sabban deployed two warplanes, one an OV-10 bomber, causing the Chinese boats to retreat. All this happened near Reed Bank, around the Spratly Islands, and is clearly within Philippine territory.

The Spratly islands, it must be remembered, are rich fishing grounds and are believed to contain vast oil and gas reserves. It is also a crucial sea-lanes area important for commercial shipping. So credit indeed to Lt. Gen. Sabban, who was reported to have said: "It’s clearly our territory. If they’ll bully us, well, even children will fight back." This guy should be commended. There is still hope indeed yet for our military.

Predictably, the Chinese tried to belittle Magallona’s statement, saying that such "were at best individual opinions not representing those of the Philippine government." This was, it must be remembered, after China rudely snubbed our diplomatic protest. But Magallona, who was a former foreign affairs undersecretary, was right in saying that China did an international wrong directly against the Philippines, committing as it did a "breach of international obligation with the threat of force. When they used the threat of force on the Philippine vessel, that’s a very clear sign that there’s a breach of obligation." And he’s right in this regard whether or not he’s representing the government. The real question is: why isn’t our government thinking the same way?

Magallona is most likely referring to Article 2, paragraphs 3 and 4 of the United Nations Charter, which provides:

"The Organization and its Members, in pursuit of the Purposes stated in Article 1, shall act in accordance with the following Principles: xxx
"3. All Members shall settle their international disputes by peaceful means in such a manner that international peace and security, and justice, are not endangered.
"4. All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state, or in any other manner inconsistent with the Purposes of the United Nations."

Now we’ve always prided ourselves on upholding international law. So it’s ridiculous to be strict with ourselves on international law but allow others to do what they want, more so if such be against our interests.

China would later declare that it "has always maintained that the related disputes should be addressed through peaceful negotiations." Yeah, right. This from a country that went hysterical over a harmless Sept. 24, 2010, joint statement between ASEAN and the US reaffirming "the importance of regional peace and stability, maritime security, unimpeded commerce, and freedom of navigation, in accordance with relevant universally agreed principles of international law, including the United Nations Convention on the Law of the Sea (UNCLOS) and other international maritime law, and the peaceful settlement of disputes." Reacting to this in their usual fashion, China bluntly declared that it "claims sovereignty over the entire sea and all the island groups within it." The Philippine episode, in fact, was followed shortly by an incident in which a Chinese helicopter harassed a Japanese ship in the East China Sea.

Which reminds me: could we please stop referring to this body of water as the "South China Sea"? Instead, let’s call it the "North Philippine Sea" or the "Philippine Sea." It’s stupid to maintain a territorial claim against the neighborhood bully while referring to the entire area under the bully’s name.