The following is the consultation request by the Philippines for the dispute docketed as DS371:
Request for Consultations by the Philippines
The following communication, dated 7 February 2008, from the delegation of the Philippines to the delegation of Thailand and to the Chairman of the Dispute Settlement Body, is circulated in accordance with Article 4.4 of the DSU.
_______________
My authorities have instructed me to request consultations with the Kingdom of Thailand pursuant to 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 (the "GATT 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") with respect to the measures and claims set out below.
I. Claims under Article X:3(a) of the GATT 1994
1. The Philippines is a major exporter of cigarettes to Thailand. The Thai Tobacco Monopoly ("TTM") is the only business entity authorized by Thai law to produce cigarettes in Thailand. TTM has a market share of approximately 80 per cent. TTM's products are, therefore, the main competitor of the Philippines cigarettes in the Thai cigarette market.
2. There are numerous personal and institutional links between the Thai government and TTM that create serious conflicts of interests in the administration of Thai fiscal and customs legislation pertaining to cigarettes, and lead to biased, partial, and unreasonable administration of Thai law. By way of example, TTM is a business unit of the Thai Ministry of Finance, which is responsible for the administration of the value added, excise, health and "television" or "TV" taxes, as well as of customs charges. Furthermore, the Minister of Finance has authority to appoint and remove directors on the TTM Board of Directors, and the TTM Board of Directors includes or has included senior Ministry officials, such as the Director General for Excise and the Director General for Customs, who are engaged in the administration of duties and charges on cigarettes.
3. These pervasive institutional and personal links between TTM and the Thai government lead to conflicts of interest and partial and unreasonable administration of Thai fiscal and customs measures. In particular, Thailand administers in a partial and unreasonable manner:
· the customs valuation measures in paragraph 7;
· the excise tax measures in paragraph 13;
· the health tax measures in paragraph 14;
· the TV tax measures in paragraph 15; and
· the value added tax ("VAT") measures in paragraph 20.
4. In addition, in determining the guarantee or cash amount that importers of cigarettes may be required to deposit upon entry, Thailand administers its legal provisions pertaining to guarantees in a partial and unreasonable manner. In particular, Thailand administers in a partial and unreasonable manner:
· the provisions of the Customs Act B.E. 2469[1] (1926) (as amended) in respect of guarantees (specifically, Sections 112, 112 bis, 112 ter, and 112 quater);
· Customs Regulation No. 2/2550 (2007) Guideline to determine customs price valuation; and,
· any amendments, implementing measures, or measures related to the measures listed in this paragraph.
5. Thailand thereby violates Article X:3(a) of the GATT 1994.
II. Claims Pertaining to Customs Valuation
6. Between 2003 and August 2006, the Customs Department of the Kingdom of Thailand ("Thai Customs") routinely accepted as the basis for customs valuation the transaction value declared by importers on entries of imported cigarettes. However, since August 2006, Thai Customs has rejected the transaction value declared by importers on such entries as the basis for valuation, both for purposes of determining the amount of monies that importers are required to deposit as guarantees for the duties that may be payable on such entries, as well as for purposes of the final assessment of duties. Instead, on a general and prospective basis, Thai Customs arbitrarily pre-determines values that are higher than the declared transaction values and applies these values to all entries of imported cigarettes, in place of the declared transaction values. Thai Customs allows the importer to withdraw the subject goods from customs only if the importer makes a payment on the basis of the declared transaction value and deposits a guarantee of customs duties covering the difference between the declared transaction value and the applicable pre-determined value. Subsequently, Thai Customs issues a final assessment of customs value that is higher than the declared transaction value and that reflects the applicable pre-determined value, which is changed from time to time.
7. The measures at issue include:
· the general rule and/or methodology providing for the systematic rejection of transaction value, and the imposition of a higher pre-determined value, including any calculation methodology underpinning the pre-determined value. This measure (or measures) applies at the time of entry as well as at the time of final assessment;
· individual determinations made by Thai Customs for entries of cigarettes exported from the Philippines and landed between 4 August 2006 and today, including:
(a) the Notices of Assessment for the entries listed in Annex I to this request; and,
(b) the assessments of value for purposes of setting the guarantee or cash deposit at the time of entry for the entries listed in Annex II to this request;
· Customs Act, B.E. 2469 (1926) , including all amendments;
· Ministerial Regulation No. 132 B.E. 2543 (1990) issued under authority of the Customs Act B.E. 2469 (1926) and the amending Ministerial Regulation No. 145 B.E. 2547 (2004) and Ministerial Regulation No. 146 B.E. 2550 (2007):
· Notification No. 23/2549 (2006) of Thai Customs, containing guidelines on customs valuation;
· Customs Regulation No. 2/2550 (2007) Re: amendment of the Customs Formalities and Guidelines Code B.E. 2544 (2001) re: Customs formalities to prevent Customs value duty evasion, and amendment of Customs Department Regulation No. 14/2549 (2006) re: Guideline for Fixing of Customs Value;
· Customs Regulation No. 14/2549 (2006), re Guideline for Fixing of Customs Value, as amended by Customs Regulation No. 2/2550 (2007);
· Customs Notification No. 29/2549 (2006) Procedure in requesting duty fee assessment; and
· any amendments, implementing measures, or measures related to the measures listed in this paragraph.
8. As a result of these measures, Thailand fails to use transaction value as the basis for customs value, contrary to Articles 1.1, 1.2(a), and 1.2(b) of the Customs Valuation Agreement and the interpretative Notes to these provisions, as well as paragraphs 1 and 2 of the General Introductory Commentary. In so doing, Thailand fails to communicate the grounds for considering that the relationship between the parties influenced the declared price, as required by Article 1.2(a). Thailand also fails to conform to the sequence of valuation methods mandated by the Customs Valuation Agreement, and uses a valuation method that has no basis in the Customs Valuation Agreement. These actions are inconsistent with Articles 2, 3, 4, 5, 6, and 7, as well as the relevant interpretative Notes. These measures are also inconsistent with Article 13 of the Customs Valuation Agreement, as well as Article II:1(b) and II:3 of the GATT 1994.
9. Thailand has failed to provide an explanation for the determination of the pre-determined values applied to entries at the time of importation and at the time of final assessment, breaching its obligations under Article 16 of the Customs Valuation Agreement.
10. The Philippines considers that, for all these reasons, Thailand acts inconsistently with Articles VII:1, VII:2(a), VII:2(b), and VII:2(c) of the GATT 1994. Moreover, Thailand fails to publish the bases and methods for determining the value of cigarettes imported from the Philippines. This is in violation of Article VII:5 of the GATT 1994.
11. Further, Thai government officials appear to have publicly disclosed CIF values of imported cigarettes in the Thai media. The public disclosure of such business-confidential information is in violation of Article 10 of the Customs Valuation Agreement.
III. Claims pertaining to the Excise Tax, Health Tax and TV Tax regimes
12. Thailand imposes an ad valorem excise tax, health tax, and "television" or "TV" tax, on both imported and domestic cigarettes. For imported cigarettes, the basis for all these taxes is the CIF customs value as determined by the Thai customs authorities, whereas for domestic cigarettes, it is an ex-factory price determined by the Director-General for Excise.
13. The Philippines understands that Thailand operates the excise tax regime through measures including:
· the Tobacco Act B.E. 2509 (1966), Section 5 ter;
· Notices of Director-General for Excise, setting out the ex-factory prices. The currently applicable ex-factory prices are set out in the Notice B.E. 2550 (2007) of 29 August 2007; and,
· any amendments, implementing measures, or measures related to the measures listed in this paragraph.
14. The Philippines further understands that Thailand operates the health tax regime through measures including the Health Promotion and Foundation Act, B.E. 2544 (2001), in particular Sections 11, 12, and 13 thereof, and any amendments, implementing measures or other related measures.
15. The Philippines further understands that Thailand operates the TV tax regime through measures including the Thai Public Broadcasting Service Act 2551 (2008), in particular Sections 12, 13, and 14 thereof, and any amendments, implementing measures or other related measures.
16. As developed in Section II, Thailand determines excessive customs values for Philippine exports of cigarettes inconsistently with the Customs Valuation Agreement, and because these customs values serve as the tax basis for imposing the excise tax, the health tax and the TV tax, Thailand imposes a higher tax burden on imported products than on like and/or directly competitive or substitutable domestic products.
17. By so doing, Thailand acts inconsistently with Article III:2, first and second sentence. This discrimination against imported cigarettes is compounded by the fact that Thai law contains no procedure for cigarette importers to claim a refund of the portion of the excise tax, health tax and TV tax paid as a result of the excessive customs valuation. The failure of Thailand to provide for such a refund procedure results in a violation of Article III:2, first and second sentence. It also constitutes partial and unreasonable administration of the measures referred to in paragraphs 13, 14, and 15, contrary to Article X:3(a) of the GATT 1994.
18. Thailand also has not published the regulations pertaining to the determination of the ex-factory prices, which constitute the tax basis for Thailand's imposition of the excise, health and TV taxes on domestic cigarettes. As a result, Thailand is in violation of Article X:1 of the GATT 1994, which requires governments to publish trade laws and regulations of general application.
IV. Claims Pertaining to Thailand's Value-Added Tax ("VAT") Regime
A. Thailand's VAT regime
19. Under Thailand's fiscal regime, VAT on cigarettes is calculated by reference to brand-specific maximum retail selling prices ("MRSPs"). These MRSPs are determined by the Thai Government through executive acts applying solely to domestic cigarettes on one hand, and separate executive acts applying solely to imported cigarettes on the other hand. The MRSPs are modified from time to time. In the last two and a half years, the MRSPs for imported cigarettes have been changed more frequently than those for domestic cigarettes.
20. The Philippines understands that Thailand operates the VAT regime for cigarettes through measures including:
· Sections 79/5 and 81 of the Revenue Code of Thailand;
· Section 23 of the Tobacco Act B.E. 2509 (1966);
· Royal Decree, issued under the Revenue Code, Governing the Reduction of the Value Added Tax Rates (No. 465), B.E. 2550 (2007);
· Royal Decree issued under the Revenue Code Governing Exemption from Value Added Tax (No. 239) B.E. 2534 (1991);
· Order of the Revenue Department No. Por 85/2542 (1999);
· Notification of the Director-General of the Revenue Department on VAT (No. 10);
· MRSP Notices issued by the Director-General for Excise. The currently applicable MRSPs are set out in the Notice B.E. 2550 (2007) of 29 August 2007 (for domestic products) and in the Notice B.E. 2550 (2007) of 29 August 2007 together with Notice B.E. 2550 (2007) of 18 December 2007 (for imported products); and
· any amendments, implementing measures or other measures related to the measures listed in this paragraph.
21. The MRSPs for imported brands of cigarette, including those exported by the Philippines, are set at significantly higher levels than the MRSPs for like and/or directly competitive or substitutable domestic brands. Moreover, the MRSPs for imported cigarettes are set significantly above the actual retail selling price of those cigarettes, whereas the MRSPs for domestic cigarettes are set at the level of the actual retail selling price of those cigarettes. The higher MRSPs for imported products result in a higher fiscal burden for these products than for like and/or directly competitive or substitutable domestic products, and thereby afford protection to the domestic products. Therefore, the Philippines considers that the VAT imposed on imported products as a result of these measures is inconsistent with Article III:2, first and second sentence, of the GATT 1994.
22. Thailand also has not published the regulations pertaining to the determination of the MRSPs, which constitutes the tax base for Thailand's imposition of VAT on domestic and imported cigarettes. This failure is a violation of Article X:1 of the GATT 1994.
B. Other VAT-related requirements
23. Thailand imposes different VAT-related requirements on wholesale and retail sellers of cigarettes, depending on whether they sell domestic or imported products. In particular, these sellers are subject to VAT when they sell imported products but are exempt when they sell like and/or directly competitive or substitutable domestic products. Moreover, because wholesale and retail sellers of imported cigarettes are subject to VAT, whereas wholesale and retail sellers of domestic cigarettes are not, the former are also subject to VAT administrative requirements that are not imposed on sellers of the like and/or directly competitive or substitutable domestic product. The Philippines understands that the measure in which these discriminatory requirements are contained include Section 81 of the Revenue Code, Royal Decree issued under the Revenue Code Governing Exemption from Value Added Tax (No. 239) B.E. 2534 (1991), and Order of Revenue Department Por 85/2542, and any amendments, implementing measures or other related measures.
24. The Philippines considers that these measures are inconsistent with Articles III:4 and III:2, first and second sentence, of the GATT 1994.
V. Claims Pertaining to Retail Licensing Requirements
25. Thailand requires that tobacco and/or cigarette retailers hold separate licenses to sell domestic and imported cigarettes, respectively. The Philippines understands that the measure in which these discriminatory requirements are contained include the Excise Department Announcement by the Director-General of Excise, dated 12 September 1991, issued pursuant to Article 4, Ministerial Regulation No. 17 B.E. 2534 (1991) under the Tobacco Act B.E. 2509 (1966) , and any amendments, implementing measures or other related measures.
26. The Philippines considers that this dual license requirement, based purely on the origin of the products sold, is inconsistent with Article III:4 of the GATT 1994, because it provides less favourable treatment for imported products than for like domestic products.
* * * * *
The Philippines reserves its right to raise further factual claims and legal matters during the course of consultations.
We look forward to receiving your reply to the present request and to fixing a mutually convenient date for consultations.
[1] The "B.E" year number designates the year in the Buddhist calendar. The year number in parentheses designates the corresponding year A.D.
ANNEX I
LIST OF ENTRIES FOR WHICH DEFINITIVE ASSESSMENT NOTICES
HAVE ALREADY BEEN ISSUED
ANNEX II
LIST OF ENTRIES FOR WHICH VALUE HAS BEEN ASSESSED
FOR PURPOSES OF SETTING THE GUARANTEE OR CASH DEPOSIT
AT THE TIME OF ENTRY AND FOR WHICH DEFINITIVE ASSESSMENT NOTICES
HAVE NOT YET BEEN ISSUED
The case is now awaiting "consultations" in accordance with the WTO DSU procedures and the reported venue of the same is Bangkok, Thailand.
13.2.08
Freer trade, freer Philippines
“The man who has control over another man’s subsistence
also exercises control over his will.” (Alexander Hamilton)
By the foregoing definition by Hamilton, the Philippines is not a democracy. A democracy exists whereby authority is “in the hands not of the few but of the many”. However, in a country where a man cannot truly voice out his fears for the fact that he may not be able to have his family fed the next day is not truly free. One policy maker made a declaration that “we cannot live with 5 percent of the people enjoying the luxuries in this country of ours, and 75 to 80 percent living in [despondency and misery]”. That observation may be common enough for many but what is truly poignant is the fact that such observation was made thirty years ago and the numbers cited therein have not much changed.
As cited through the years by so many commentators, the problem with the Philippines is not corruption, not security risks, and not lack of abilities. The problem is and has always been the oligarchic system prevailing in this country. A system whereby a select few are allowed to selfishly exploit this country’s resources and opportunities, all the while corrupting the political process and the media, heaping poverty on the greater majority, and ignoring national interest. As one observer once put it: “The oligarchic elite manipulate the political authority and intimidate political leaders”, with the people in turn seduced into a populist type of politics. Note that not all rich are oligarchs. It is however that portion of that “5 percent” that selfishly promote their interests at the expense of the Filipino ever since (and even before) this country declared independence.
Symptom of the oligarchic system is most depressingly (but admirably) described in the book The Rulemakers. Its introductory words say it all: “Philippine legislators constitute a select and exclusive segment of society. x x x The great majority of them are also part of families whose members have been in public office for two or more generations. Those who make laws for the country are therefore hardly representative of its citizens. This book also shows how lawmakers have employed their powers to further enrich themselves and entrench their families in power.”
The foregoing brings us to the value of freer trade. If there is one thing that the oligarchs do not want it is that. Freer and fairer trade brings democratization of wealth, leading to a democratic ideal of self-reliant individuals and of a meritocratic society that the Philippines should provide its young. As the book Naked Economics put it: “trade paves the way for poor countries to get richer. x x x Is there an example in modern history of a single country successfully developing without trading and integrating with the global economy? No, there is not. Which is why Tom Friedman has suggested that the antiglobalization coalition ought to be known as ‘The Coalition to Keep the World’s Poor People Poor.”
Also, the benefits of freer trade are enjoyed not only on a macroeconomic level but directly by the poor (and not merely through the trickle down effect). Thus, in one study by experts from the World Bank poring over data from 80 countries over a span of forty years, it was found that the income of the poor generally rise as fast as overall growth. To this must be added the benefits of greater choice, better quality, transparency, and freedom.
If anyone needs a local example of how liberalization policies result in profound beneficial effect for Filipinos, one need only look back at President Ramos’ liberalization of telecommunications and banking. What we need now are similar policies for that agricultural product and that manufactured good. As Open World would put it, such “do not deserve our sympathy at all. They are … the fat cats that have gorged themselves at our expense … hopeless nationalized industries, favored companies run by cronies that have politicians’ ears (and pad out their bank accounts). By all means, help the people who work for these companies.” But not the oligarchs. We have to say enough sometime and now is as good a time as any.
also exercises control over his will.” (Alexander Hamilton)
By the foregoing definition by Hamilton, the Philippines is not a democracy. A democracy exists whereby authority is “in the hands not of the few but of the many”. However, in a country where a man cannot truly voice out his fears for the fact that he may not be able to have his family fed the next day is not truly free. One policy maker made a declaration that “we cannot live with 5 percent of the people enjoying the luxuries in this country of ours, and 75 to 80 percent living in [despondency and misery]”. That observation may be common enough for many but what is truly poignant is the fact that such observation was made thirty years ago and the numbers cited therein have not much changed.
As cited through the years by so many commentators, the problem with the Philippines is not corruption, not security risks, and not lack of abilities. The problem is and has always been the oligarchic system prevailing in this country. A system whereby a select few are allowed to selfishly exploit this country’s resources and opportunities, all the while corrupting the political process and the media, heaping poverty on the greater majority, and ignoring national interest. As one observer once put it: “The oligarchic elite manipulate the political authority and intimidate political leaders”, with the people in turn seduced into a populist type of politics. Note that not all rich are oligarchs. It is however that portion of that “5 percent” that selfishly promote their interests at the expense of the Filipino ever since (and even before) this country declared independence.
Symptom of the oligarchic system is most depressingly (but admirably) described in the book The Rulemakers. Its introductory words say it all: “Philippine legislators constitute a select and exclusive segment of society. x x x The great majority of them are also part of families whose members have been in public office for two or more generations. Those who make laws for the country are therefore hardly representative of its citizens. This book also shows how lawmakers have employed their powers to further enrich themselves and entrench their families in power.”
The foregoing brings us to the value of freer trade. If there is one thing that the oligarchs do not want it is that. Freer and fairer trade brings democratization of wealth, leading to a democratic ideal of self-reliant individuals and of a meritocratic society that the Philippines should provide its young. As the book Naked Economics put it: “trade paves the way for poor countries to get richer. x x x Is there an example in modern history of a single country successfully developing without trading and integrating with the global economy? No, there is not. Which is why Tom Friedman has suggested that the antiglobalization coalition ought to be known as ‘The Coalition to Keep the World’s Poor People Poor.”
Also, the benefits of freer trade are enjoyed not only on a macroeconomic level but directly by the poor (and not merely through the trickle down effect). Thus, in one study by experts from the World Bank poring over data from 80 countries over a span of forty years, it was found that the income of the poor generally rise as fast as overall growth. To this must be added the benefits of greater choice, better quality, transparency, and freedom.
If anyone needs a local example of how liberalization policies result in profound beneficial effect for Filipinos, one need only look back at President Ramos’ liberalization of telecommunications and banking. What we need now are similar policies for that agricultural product and that manufactured good. As Open World would put it, such “do not deserve our sympathy at all. They are … the fat cats that have gorged themselves at our expense … hopeless nationalized industries, favored companies run by cronies that have politicians’ ears (and pad out their bank accounts). By all means, help the people who work for these companies.” But not the oligarchs. We have to say enough sometime and now is as good a time as any.
4.1.08
Damaged and small Filipinos
... is the first article for the year in my Trade Tripper column appearing in this Friday-Saturday issue of BusinessWorld. Just this once, an article posted in its entirety (for the rest of the year, please buy BusinessWorld!):
"As a lot of you know, it’s been almost two decades since James Fallows wrote A Damaged Culture: A New Philippines? Some pundits have recently dissected this essay, with all the usual sound and fury signifying nothing. Many Filipinos - in one form or another - nevertheless still believe in this damaged culture theory, with differences essentially arising on whom to blame for the damage (i.e., inherent damage or foreign influenced?).
Another essay that a number of Filipinos love referring to is Nick Joaquin’s A Heritage of Smallness, where the respected writer has been found to say that “society for the Filipino is a small rowboat”. This has sent a lot of Filipinos happily shaking their heads at the mediocrity of their countrymen. In fact, googling this essay would find a horde accepting our so-called “smallness” as a people. One person actually referred to it as his “favorite”.
This is nonsense. I agree when one academic once said that there are no “damaged cultures but only damaged individuals”. For me, these damaged individuals are “Filipinos who believe and encourage others to believe that Americans, Japanese, Europeans, or Chinese are better than us.” Worse are those who reject their being Filipinos and imagine themselves as American or Chinese.
As for the “heritage of smallness”, many people seem to forget (or want to ignore) the fact that Joaquin wrote another article entitled “Junking the Heritage”, where the national artist pointed out that Filipinos are moving away from their peasant attitudes, discarding timidity, and becoming more and more worldly in outlook.
We should therefore stop putting ourselves down. We should stop apologizing for who we are. We should stop thinking that other cultures and countries are superior to ours.
We should stop doing all that for the simple reason that they have no rational, factual, historical, actual basis whatsoever.
We have a great history, a beautiful culture, an enviable set of values, and a truly admirable character. As much as I can illustrate into this 800 word article: we pioneered republicanism in Asia, we wrote the Noli, we have the happiest Christmas celebrations, our family relationships are the healthiest, our ability to laugh in the face of adversity is unsurpassed [our suicide rate is among the lowest in the world and we've always ranked among the highest in happiness indexes], our food and entertainment are an amalgamation of the world’s best, our effortless creativity and stylishness miles away from most. We produced Flash Elorde, Eugene Torre, HV Dela Costa, Florentino Feliciano, and Bata Reyes.
Sure we have our downside but which country doesn’t? For every accusation of crimes here, other countries would have crackpots shooting up malls or serial killers collecting victims. We have human rights violations? Watch In The Name of the Father or Schindler's List or remember the My Lai Massacre, then ponder the fact that post-colonial Manila never suffered a race riot. We have corruption? Watch Serpico or American Gangster. Our vegetables and fruits no good? Then why the billions on farm subsidies or SPS measures applied by those you know who just to keep their farmers above water. Our politics stupid? Watch The Daily Show. Or Leno. Our politics violent? We’ve never had a presidential candidate or president assassinated, or ethnic cleansing or genocide. [Gender equality is not as big an issue here as in other countries. Women relatively have always had prominent public roles in our society. Unlike some countries, we have no qualms or make a big deal of having a woman as lead news anchor or president] And you have to be deranged to think we’re the only country that has smog, traffic jams, and rude waiters. I can think of one rich country that is actually proud of their rude waiters.
Here’s an interesting Wiki fact that Filipinos need to know:
“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. We gave. From there, to being among the first democracies, Christians, people power advocates, to our overseas managers, workers and nurses, we keep giving to the world and the world keeps on becoming the better for it.
So, be proud of being a Filipino and be proud of your fellow Filipinos. Remember, people get the leaders they deserve. If you want to finally have a leader that will love and work hard for this country, we have to love and work hard for this country first."
"As a lot of you know, it’s been almost two decades since James Fallows wrote A Damaged Culture: A New Philippines? Some pundits have recently dissected this essay, with all the usual sound and fury signifying nothing. Many Filipinos - in one form or another - nevertheless still believe in this damaged culture theory, with differences essentially arising on whom to blame for the damage (i.e., inherent damage or foreign influenced?).
Another essay that a number of Filipinos love referring to is Nick Joaquin’s A Heritage of Smallness, where the respected writer has been found to say that “society for the Filipino is a small rowboat”. This has sent a lot of Filipinos happily shaking their heads at the mediocrity of their countrymen. In fact, googling this essay would find a horde accepting our so-called “smallness” as a people. One person actually referred to it as his “favorite”.
This is nonsense. I agree when one academic once said that there are no “damaged cultures but only damaged individuals”. For me, these damaged individuals are “Filipinos who believe and encourage others to believe that Americans, Japanese, Europeans, or Chinese are better than us.” Worse are those who reject their being Filipinos and imagine themselves as American or Chinese.
As for the “heritage of smallness”, many people seem to forget (or want to ignore) the fact that Joaquin wrote another article entitled “Junking the Heritage”, where the national artist pointed out that Filipinos are moving away from their peasant attitudes, discarding timidity, and becoming more and more worldly in outlook.
We should therefore stop putting ourselves down. We should stop apologizing for who we are. We should stop thinking that other cultures and countries are superior to ours.
We should stop doing all that for the simple reason that they have no rational, factual, historical, actual basis whatsoever.
We have a great history, a beautiful culture, an enviable set of values, and a truly admirable character. As much as I can illustrate into this 800 word article: we pioneered republicanism in Asia, we wrote the Noli, we have the happiest Christmas celebrations, our family relationships are the healthiest, our ability to laugh in the face of adversity is unsurpassed [our suicide rate is among the lowest in the world and we've always ranked among the highest in happiness indexes], our food and entertainment are an amalgamation of the world’s best, our effortless creativity and stylishness miles away from most. We produced Flash Elorde, Eugene Torre, HV Dela Costa, Florentino Feliciano, and Bata Reyes.
Sure we have our downside but which country doesn’t? For every accusation of crimes here, other countries would have crackpots shooting up malls or serial killers collecting victims. We have human rights violations? Watch In The Name of the Father or Schindler's List or remember the My Lai Massacre, then ponder the fact that post-colonial Manila never suffered a race riot. We have corruption? Watch Serpico or American Gangster. Our vegetables and fruits no good? Then why the billions on farm subsidies or SPS measures applied by those you know who just to keep their farmers above water. Our politics stupid? Watch The Daily Show. Or Leno. Our politics violent? We’ve never had a presidential candidate or president assassinated, or ethnic cleansing or genocide. [Gender equality is not as big an issue here as in other countries. Women relatively have always had prominent public roles in our society. Unlike some countries, we have no qualms or make a big deal of having a woman as lead news anchor or president] And you have to be deranged to think we’re the only country that has smog, traffic jams, and rude waiters. I can think of one rich country that is actually proud of their rude waiters.
Here’s an interesting Wiki fact that Filipinos need to know:
“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. We gave. From there, to being among the first democracies, Christians, people power advocates, to our overseas managers, workers and nurses, we keep giving to the world and the world keeps on becoming the better for it.
So, be proud of being a Filipino and be proud of your fellow Filipinos. Remember, people get the leaders they deserve. If you want to finally have a leader that will love and work hard for this country, we have to love and work hard for this country first."
4.11.07
Still on the elite
I still stand by my views on the utter underlying reason for what ails Philippine society which is our selfish and narrow minded elite.
To readers, it should be pointed out that I'm not even making a claim to originality as far as the ideas on the elite are concerned. I refer readers to far more thorough writers on the subject and a recommended list of books are as follows, for which Studwell's books should be read alongside with (and notably is merely the most recent on the subject):
> An Anarchy of Families,
> The Anti-Development State,
> The Rulemakers,
> The Modern Principalia,
> Booty Capitalism,
> Sugar and the Origins of Modern Philippine Society, and
> Democracy and Discipline.
Anybody can buy a copy of the above books at Fully Booked, Powerbooks, National Book Store, and i strongly suggest readers to do so and make their own conclusions regarding the matter.
While we're on the subject, I refer readers to pages 54-67 of The Odyssey of Lorenzo Tanada (by Agnes Bailen, 1998). As an exercise, see the names of the people who were charged as collaborators with the Japanese and compare them with the names of people now in the senate, congress, or government. Of course, some may say that the issue is so last century but, if that's the case, perhaps nobody should complain then if Imelda Marcos and the 'cronies' avoid proper trial and judgment, or when Erap got pardoned. However, that is not the point why I brought up the difficulties encountered by then Senator Tanada when he was prosecuting the elite for collaboration. The point is ... why do we still have the same group of people, the same families, leading us? Why are we still relying on the same people who have let us down for so long? Why entrust our future and the solution of our problems to the same group or families who created those same problems in the first place?
That is why I keep saying we recognize the problem first, make no bones about it, admit it, then solve it. The problem is the elite, our oligarchic class. The solution is to make our country no longer rely on them, have them loosen their grip, and create a system that actually encourages more qualified people into positions of leadership.
For me, a deliberate and committed policy of greater and liberalized trade and investment, focus on education, and the refinement of our tax laws (particularly the expansion of a graduated - with big exemptions for the middle class to lower class - estate tax) would be a good start (with emphasis on the word 'start').
Overall, we need to start espousing an overall policy of having a stake in each other, that the success of our neighbor and our community is our success as well. We have to stop this slide into thinking that we are above our fellow Filipinos, of our current idea of success being to escape from our countrymen by either migrating abroad or living smugly/arrogantly in gated/fortified communities or condos.
I am not fostering a class war, it's the elites who did for selfishly insisting that they are the ruling class and the rest as merely the 'exploited'. One illustration of a country going wrong: I see people comfortably driving Jaguars and luxurious SUVs around Powerplant, then I see old women and kindergarten kids scurrying to avoid rainwater and rushing buses at the EDSA crossing, without a proper pedestrian lane or crossing, topped off by MMDA people shouting at them. Even just setting aside the NBN-ZTE issue, the Malacanang cash in bags issue, and just look at the little things would show the utter lack of care for the least of our lot. From this alone we can see how undeserving our current leaders are.
Another example is our lousy education system. The primary victims here are the poor, which obviously don't have the resources to send their kids to Harvard or Georgetown. The Philippines is all the worse for it as the best economic policy is good education. Singapore has shown you don't even need more money to have a good educational system. Singapore actually spends less on it than a lot of other countries (see here). We can do better in this regard if our leaders really wanted to and given much thought to our country's education system. They don't.
I just want a better country, where your talent and hard work matters and not your family or capacity for corruption, where you don't have to be rich to have dignity, and where you don't need to buy an army to feel secure and at peace.
But I digress. First things first, we just obviously need a better set of leaders. At 80 million people, I'm sure we can do a whole lot better than what we have right now.
To readers, it should be pointed out that I'm not even making a claim to originality as far as the ideas on the elite are concerned. I refer readers to far more thorough writers on the subject and a recommended list of books are as follows, for which Studwell's books should be read alongside with (and notably is merely the most recent on the subject):
> An Anarchy of Families,
> The Anti-Development State,
> The Rulemakers,
> The Modern Principalia,
> Booty Capitalism,
> Sugar and the Origins of Modern Philippine Society, and
> Democracy and Discipline.
Anybody can buy a copy of the above books at Fully Booked, Powerbooks, National Book Store, and i strongly suggest readers to do so and make their own conclusions regarding the matter.
While we're on the subject, I refer readers to pages 54-67 of The Odyssey of Lorenzo Tanada (by Agnes Bailen, 1998). As an exercise, see the names of the people who were charged as collaborators with the Japanese and compare them with the names of people now in the senate, congress, or government. Of course, some may say that the issue is so last century but, if that's the case, perhaps nobody should complain then if Imelda Marcos and the 'cronies' avoid proper trial and judgment, or when Erap got pardoned. However, that is not the point why I brought up the difficulties encountered by then Senator Tanada when he was prosecuting the elite for collaboration. The point is ... why do we still have the same group of people, the same families, leading us? Why are we still relying on the same people who have let us down for so long? Why entrust our future and the solution of our problems to the same group or families who created those same problems in the first place?
That is why I keep saying we recognize the problem first, make no bones about it, admit it, then solve it. The problem is the elite, our oligarchic class. The solution is to make our country no longer rely on them, have them loosen their grip, and create a system that actually encourages more qualified people into positions of leadership.
For me, a deliberate and committed policy of greater and liberalized trade and investment, focus on education, and the refinement of our tax laws (particularly the expansion of a graduated - with big exemptions for the middle class to lower class - estate tax) would be a good start (with emphasis on the word 'start').
Overall, we need to start espousing an overall policy of having a stake in each other, that the success of our neighbor and our community is our success as well. We have to stop this slide into thinking that we are above our fellow Filipinos, of our current idea of success being to escape from our countrymen by either migrating abroad or living smugly/arrogantly in gated/fortified communities or condos.
I am not fostering a class war, it's the elites who did for selfishly insisting that they are the ruling class and the rest as merely the 'exploited'. One illustration of a country going wrong: I see people comfortably driving Jaguars and luxurious SUVs around Powerplant, then I see old women and kindergarten kids scurrying to avoid rainwater and rushing buses at the EDSA crossing, without a proper pedestrian lane or crossing, topped off by MMDA people shouting at them. Even just setting aside the NBN-ZTE issue, the Malacanang cash in bags issue, and just look at the little things would show the utter lack of care for the least of our lot. From this alone we can see how undeserving our current leaders are.
Another example is our lousy education system. The primary victims here are the poor, which obviously don't have the resources to send their kids to Harvard or Georgetown. The Philippines is all the worse for it as the best economic policy is good education. Singapore has shown you don't even need more money to have a good educational system. Singapore actually spends less on it than a lot of other countries (see here). We can do better in this regard if our leaders really wanted to and given much thought to our country's education system. They don't.
I just want a better country, where your talent and hard work matters and not your family or capacity for corruption, where you don't have to be rich to have dignity, and where you don't need to buy an army to feel secure and at peace.
But I digress. First things first, we just obviously need a better set of leaders. At 80 million people, I'm sure we can do a whole lot better than what we have right now.
21.9.07
Lamy visit and Trade Tripper
WTO Director General Pascal Lamy was here in Manila. Two days ago he gave a speech at the ADB and said that to meet the challenges of development and participation in the trading system then country vision, financing, and the role of the private sector should be focused on. With regard to national vision, he says:
“First, the importance of national vision — backed by a comprehensive strategy for getting there. No one can tell a country how to trade or become more competitive. The only successful export-led growth strategy is one which countries want themselves — that they design and implement on their own — and that remains on course over the long-term.”
Nothing to disagree about with there. I had the interesting privilege of talking to Mr. Lamy yesterday, with some of that discussion being included in today's front page article in BusinessWorld. One area I wanted to explore was the need, if any, for a revision of the present multilateral system and create in its stead a more holistic one, something like a "World Economic Organization." Mr. Lamy's answer was comprehensive and well thought of but only this portion (for reasons of space) was printed:
"BW: You mentioned before that the WTO is a medieval organization. Considering there’s been a lot of activities, is there a need to expand WTO to include finance or perhaps merge with another organization to encompass a more complete economic type of multilateral engagement?
LAMY: In my past life, I said the WTO is a medieval organization. That was some time ago in 1999.
We can improve WTO in terms of organization, institution but it’s not the present priority. The present priority is concluding the round and the reason why it’s not yet concluded has nothing to do with institutions and organization ... let’s finish the round first then we’ll have time to look at procedures that need to be improved in the organization.
Should WTO extend its limit to things covered by other international organizations? No I don’t think so, unless you totally reshuffle [the] international system which we inherited ... I don’t think members of this organization are always coherent but you know sovereignty could be monopoly of incoherence. That’s up to them but incoherence stems from incoherence of our members. If there are contradictions in what they do in trade, finance, environment, social, migration, it’s up to them to give necessary coherence within each of their organizations ...
That’s the way the system works for the moment. I don’t think enlarging the scope of WTO for the moment is the right thing to do, it would give the wrong impression that the trade dimension supersedes other dimensions of international life ..."
My Trade Tripper column today in BusinessWorld is on International Law and Philippine Law. Excerpt:
"To say that international law is to be treated within our jurisdiction as superior to our local law and our Constitution is as misleading as to say that the US embassy grounds on Roxas Boulevard is US soil (it’s not: it’s Philippine territory). As I keep saying, the faster we grasp the concept of confidently asserting our national interests vis-Ã -vis international law, the better international citizens we’ll be."
“First, the importance of national vision — backed by a comprehensive strategy for getting there. No one can tell a country how to trade or become more competitive. The only successful export-led growth strategy is one which countries want themselves — that they design and implement on their own — and that remains on course over the long-term.”
Nothing to disagree about with there. I had the interesting privilege of talking to Mr. Lamy yesterday, with some of that discussion being included in today's front page article in BusinessWorld. One area I wanted to explore was the need, if any, for a revision of the present multilateral system and create in its stead a more holistic one, something like a "World Economic Organization." Mr. Lamy's answer was comprehensive and well thought of but only this portion (for reasons of space) was printed:
"BW: You mentioned before that the WTO is a medieval organization. Considering there’s been a lot of activities, is there a need to expand WTO to include finance or perhaps merge with another organization to encompass a more complete economic type of multilateral engagement?
LAMY: In my past life, I said the WTO is a medieval organization. That was some time ago in 1999.
We can improve WTO in terms of organization, institution but it’s not the present priority. The present priority is concluding the round and the reason why it’s not yet concluded has nothing to do with institutions and organization ... let’s finish the round first then we’ll have time to look at procedures that need to be improved in the organization.
Should WTO extend its limit to things covered by other international organizations? No I don’t think so, unless you totally reshuffle [the] international system which we inherited ... I don’t think members of this organization are always coherent but you know sovereignty could be monopoly of incoherence. That’s up to them but incoherence stems from incoherence of our members. If there are contradictions in what they do in trade, finance, environment, social, migration, it’s up to them to give necessary coherence within each of their organizations ...
That’s the way the system works for the moment. I don’t think enlarging the scope of WTO for the moment is the right thing to do, it would give the wrong impression that the trade dimension supersedes other dimensions of international life ..."
My Trade Tripper column today in BusinessWorld is on International Law and Philippine Law. Excerpt:
"To say that international law is to be treated within our jurisdiction as superior to our local law and our Constitution is as misleading as to say that the US embassy grounds on Roxas Boulevard is US soil (it’s not: it’s Philippine territory). As I keep saying, the faster we grasp the concept of confidently asserting our national interests vis-Ã -vis international law, the better international citizens we’ll be."
23.7.07
The right mix
The FT's Weekend issue last, well ... weekend, featured this thought provoking piece by Martin Wolf and bolsters my view that free trade alone (but definitely not protectionism, even if the same is disguised as "fair trade") will not be enough to make this country successful but rather a combination of factors that we haven't even begun to determine, so caught up we are still in the narrow free trade/protectionist debate. Excerpts:
"The big successes of recent decades - from Hong Kong to China, South Korea to Ireland, Singapore to Taiwan, Japan to Finland - were not all free traders (though some were). Some also relied heavily on foreign direct investment (China, Ireland and Singapore), while others resisted it (Japan and South Korea). Yet all used the world economy - and therefore trade - as a central part of their development success. x x x
The argument that success will follow the overthrow of the neo-liberal consensus and the return of protection is nonsense. But the authors are right that those who argued that free trade alone is the answer were wrong. There are no magic potions for development. Developmental states can work. Many fail. But some may succeed.
Above all, developing countries should be allowed to try, and so learn from their own mistakes. Countries should be warned of the difficulties of following South Korea’s example, but allowed to do so if they wish.
Big and relatively successful developing countries, such as China and India, must participate in and be bound by global rules. They cannot be free riders. But the bulk of developing countries should be allowed to choose their own policies. Almost all will need to attract inward foreign direct investment. A few might still manage without it.
Chang is right that some of the constraints imposed upon developing countries, notably on intellectual property, are unconscionable. Most should enjoy the benefit of open markets from the rich, but be allowed to pursue their own paths, from laissez-faire to its opposite. They will make many mistakes. So be it. That is what sovereignty means.”
In this regard, it's also worthwhile to point out that the mantra of some sectors here, which is to have "fair trade, not free trade", and to have a trading system for the Philippines that is "calibrated, measured, progressive, and in synch with the country's development priorities and capacities" do not really make sense for the simple reason that they don't mean or say anything substantial or concrete.
What is "fair trade"? "Fair" for whom? For the government favored companies, with preferential treatment, at the expense of other industries and the consumers? Fair for so-called Philippine companies that are actually owned by foreigners? Or fair for companies that could never make money no matter how much favoritism is given to it? Or fair for farmers that have been victimized not by trade liberalization but by smuggling? Also, how different is "fair" from an objective, rules based trading system such as the WTO where a small country like Antigua can win in a trade dispute against the US?
Then you have "calibrated". How different is that from protectionism, of raising or maintaining tariffs, or selecting industries that have strong lobbies for purposes of giving protection? Measured? What is measured protection for companies that have been receiving subsidies, tariff protection, and other forms of government favoritism for decades and still can't make a decent business that would provide income to its workers? Or for infant industries that have been infants for decades? In any event, who does the "calibrating" and the "measuring"? Who decides who are to be the winners, those that are to be protected? Progressive? How can something be progressive when you let consumer prices rise to the detriment of the greater number of the populace, most of which are under poverty levels, just so a few companies and a few favored businessmen can hold on to their wealth and lifestyles?
The fact is, despite all attempts by these sectors to appear reasonable and thoughtful by the use of the words "fair trade" and "calibrated", the thing still boils down to protectionism which has been proven to not work and results in even greater hardship for the poor. What we need is to open the economy within a context and environment that would allow for greater maximization of the benefits of trade and a more equitable distribution of the fruits that it will bring. Finally, the word "nationalism" should not be and never be attributed solely to protectionists or so-called "fair traders". The people who espouse trade liberalization are every bit as nationalistic or patriotic, if not more so for the simple reason that they believe the Filipino can.
In any event, it's time to move the debate past the free trade/protectionist paradigm. Protectionism doesn't work, period. What we need to find out is how to have a better form of trade liberalization that fits the country's peculiar circumstances and needs and which benefits the most and not only a few.
"The big successes of recent decades - from Hong Kong to China, South Korea to Ireland, Singapore to Taiwan, Japan to Finland - were not all free traders (though some were). Some also relied heavily on foreign direct investment (China, Ireland and Singapore), while others resisted it (Japan and South Korea). Yet all used the world economy - and therefore trade - as a central part of their development success. x x x
The argument that success will follow the overthrow of the neo-liberal consensus and the return of protection is nonsense. But the authors are right that those who argued that free trade alone is the answer were wrong. There are no magic potions for development. Developmental states can work. Many fail. But some may succeed.
Above all, developing countries should be allowed to try, and so learn from their own mistakes. Countries should be warned of the difficulties of following South Korea’s example, but allowed to do so if they wish.
Big and relatively successful developing countries, such as China and India, must participate in and be bound by global rules. They cannot be free riders. But the bulk of developing countries should be allowed to choose their own policies. Almost all will need to attract inward foreign direct investment. A few might still manage without it.
Chang is right that some of the constraints imposed upon developing countries, notably on intellectual property, are unconscionable. Most should enjoy the benefit of open markets from the rich, but be allowed to pursue their own paths, from laissez-faire to its opposite. They will make many mistakes. So be it. That is what sovereignty means.”
In this regard, it's also worthwhile to point out that the mantra of some sectors here, which is to have "fair trade, not free trade", and to have a trading system for the Philippines that is "calibrated, measured, progressive, and in synch with the country's development priorities and capacities" do not really make sense for the simple reason that they don't mean or say anything substantial or concrete.
What is "fair trade"? "Fair" for whom? For the government favored companies, with preferential treatment, at the expense of other industries and the consumers? Fair for so-called Philippine companies that are actually owned by foreigners? Or fair for companies that could never make money no matter how much favoritism is given to it? Or fair for farmers that have been victimized not by trade liberalization but by smuggling? Also, how different is "fair" from an objective, rules based trading system such as the WTO where a small country like Antigua can win in a trade dispute against the US?
Then you have "calibrated". How different is that from protectionism, of raising or maintaining tariffs, or selecting industries that have strong lobbies for purposes of giving protection? Measured? What is measured protection for companies that have been receiving subsidies, tariff protection, and other forms of government favoritism for decades and still can't make a decent business that would provide income to its workers? Or for infant industries that have been infants for decades? In any event, who does the "calibrating" and the "measuring"? Who decides who are to be the winners, those that are to be protected? Progressive? How can something be progressive when you let consumer prices rise to the detriment of the greater number of the populace, most of which are under poverty levels, just so a few companies and a few favored businessmen can hold on to their wealth and lifestyles?
The fact is, despite all attempts by these sectors to appear reasonable and thoughtful by the use of the words "fair trade" and "calibrated", the thing still boils down to protectionism which has been proven to not work and results in even greater hardship for the poor. What we need is to open the economy within a context and environment that would allow for greater maximization of the benefits of trade and a more equitable distribution of the fruits that it will bring. Finally, the word "nationalism" should not be and never be attributed solely to protectionists or so-called "fair traders". The people who espouse trade liberalization are every bit as nationalistic or patriotic, if not more so for the simple reason that they believe the Filipino can.
In any event, it's time to move the debate past the free trade/protectionist paradigm. Protectionism doesn't work, period. What we need to find out is how to have a better form of trade liberalization that fits the country's peculiar circumstances and needs and which benefits the most and not only a few.
14.6.07
Feliciano on tariffs
Yesterday I had the privilege of participating (as reactor) in a highly interesting and informative lecture given by Justice Florentino Feliciano (formerly of the Philippine Supreme Court and the Appellate Body of the WTO) at the AIM. The topic was "Constitutional Law Issues and the Tariff Regime of the Philippines". The following article, by Paul How, appears in today's issue of BusinessWorld but, unfortunately, is not available online. For the benefit of the readers, here it is:
Clearer jurisdiction over tariffs sought
A former justice of the Supreme Court yesterday called for amendments to the Tariff and Customs Code of the Philippines to better define the mandate of the Legislative and Executive in the modification of tariff rates.
Retired justice Florentino P. Feliciano, in a lecture yesterday, cited Sections 401 and 402 of the Customs Code, which had been amended in 1978 by former President Ferdinand E. Marcos to allow greater discretion on the part of the Executive to change rates. Mr. Feliciano said the two sections had to be modified “back to conformity” to the 1987 Constitution, which primarily gives Congress the authority to modify taxes, duties and tariffs.
“There has been no systematic legislative effort to rationalize comprehensively the Tariff and Customs Code of the Philippines,” the former justice said, noting that limits should be imposed on legislative delegation to the Executive to revise tariff rates. Sec. 401 of the law provides, among other things, to raise import duties by up to 100% of the present rate at any single time, and to lower these even to a 0% rate. When the law was passed back in 1957, Mr. Feliciano noted, rates could be raised by up to 500% at once, and were lowered by at most
half of the rate at the time. It also limited presidential action when Congress was not in
session.
Sec. 402, on the other hand, is the basis for the Chief Executive entering into trade agreements with foreign governments where-in import duties can be modified. Mr. Feliciano, however, said there was a “caveat” to clarifying Congress’ primary role in tariff rate revision, in that international agreements previously entered into by the President will still have to be honored. An amendment of the Customs Code, he said, “does not eliminate or mitigate international obligations. Our problem is not a defense to our liability to [other countries], and this could open us to suits.”
Ma. Lourdes A. Sereno, former Law professor of the University of the Philippines, said
the issue was not a merely “academic” one and was something affecting the present competitiveness of the country. She pointed out that while Congress has enacted two laws modifying tariff rates since 1986, the Aquino administration had ordered six of these; the Ramos administration, 15; the Estrada administration, five; and the Arroyo administration, over 20 since 2001. This, she said, was “entirely inconsistent with the constitutional design.”
She noted how tariff rates in the country were comparably lower than those of Mexico,
India, Japan, Indonesia and Malaysia. She said that, for nonagricultural imports, the Philippines was limited to imposing on average a rate of 23.4%, but the average applied rate was 4.3%. For agricultural imports covered by trade agreements, the Philippines had an average bound tariff rate of 34.7%, but only had an 8% average applied rate.
Trade lawyer Jeremy I. Gatdula, however, said tariff rates in Hong Kong and Singapore were low compared to the Philippines. But this did not mean they were performing poorly. “Malaysia may have higher average tariffs. but it’s not something we need to follow. Malaysia is essentially different from the Philippines, just as the US is different as well.” Mr. Gatdula
said discussions should not be focused on raising tariffs but on finding out “what works for
the Philippines.”
Lilia R. Bautista, a former Trade undersecretary, said it may be “misleading” to compare
Philippine tariff rates with other countries, saying that most nations normally had a high
average bound rate and a lower average applied rate. She also said that although there is
a constitutional question on the Executive’s entering into trade agreements, ratification by
Congress allowed legislative participation.
Energy Sec. Raphael P.M. Lotilla, who was also present in the talk, said Congress may
appreciate the convenience of allowing the Executive to propose changes to tariff regimes,
leaving the legislature to ratify the agreements containing these changes. Mr. Lotilla, a former
Economic Planning official, said it may be “more cumbersome” if the legislature will
have to draft their versions of a bill based on the proposals of the Executive, adding that the
Tariff Commission also went through the process of conducting public hearings.
Tariffs, as I mentioned during my talk, are but instruments of our national will. It's effectiveness (whether it be the lowering or increase thereof) depends on how well that instrument is used in conjunction with other factors that are peculiar to our society. It is therefore not substantially worth arguing that US did this or Malaysia (which, it must be emphasized, was considered in one international ranking as having an economy more open than that of the Philippines despite the alleged higher average tariffs) or Singapore or Hong Kong or Korea did so and so because those countries are evidently not the Philippines.
I also stressed the need to create well defined rules that distinguish treaties from executive agreements, particularly as the Philippines is in the process of either negotiating or entering into a number of trade agreements within the coming months.
It's also time we stop resorting to labels, whether it be protectionists or free traders as such just denigrate the arguments into simplistic categories that do nothing to help arrive at solutions. We should therefore stop referring to protectionists as "nationalists" (as the latter doesn't necessarily follow the former) and trade liberalization advocates (not free traders) as "globalists" (most of the trade libbers I know are highly nationalistic individuals). In the end, we are all Filipinos, of different persuasions maybe, but with the same purpose (hopefully) in mind.
Clearer jurisdiction over tariffs sought
A former justice of the Supreme Court yesterday called for amendments to the Tariff and Customs Code of the Philippines to better define the mandate of the Legislative and Executive in the modification of tariff rates.
Retired justice Florentino P. Feliciano, in a lecture yesterday, cited Sections 401 and 402 of the Customs Code, which had been amended in 1978 by former President Ferdinand E. Marcos to allow greater discretion on the part of the Executive to change rates. Mr. Feliciano said the two sections had to be modified “back to conformity” to the 1987 Constitution, which primarily gives Congress the authority to modify taxes, duties and tariffs.
“There has been no systematic legislative effort to rationalize comprehensively the Tariff and Customs Code of the Philippines,” the former justice said, noting that limits should be imposed on legislative delegation to the Executive to revise tariff rates. Sec. 401 of the law provides, among other things, to raise import duties by up to 100% of the present rate at any single time, and to lower these even to a 0% rate. When the law was passed back in 1957, Mr. Feliciano noted, rates could be raised by up to 500% at once, and were lowered by at most
half of the rate at the time. It also limited presidential action when Congress was not in
session.
Sec. 402, on the other hand, is the basis for the Chief Executive entering into trade agreements with foreign governments where-in import duties can be modified. Mr. Feliciano, however, said there was a “caveat” to clarifying Congress’ primary role in tariff rate revision, in that international agreements previously entered into by the President will still have to be honored. An amendment of the Customs Code, he said, “does not eliminate or mitigate international obligations. Our problem is not a defense to our liability to [other countries], and this could open us to suits.”
Ma. Lourdes A. Sereno, former Law professor of the University of the Philippines, said
the issue was not a merely “academic” one and was something affecting the present competitiveness of the country. She pointed out that while Congress has enacted two laws modifying tariff rates since 1986, the Aquino administration had ordered six of these; the Ramos administration, 15; the Estrada administration, five; and the Arroyo administration, over 20 since 2001. This, she said, was “entirely inconsistent with the constitutional design.”
She noted how tariff rates in the country were comparably lower than those of Mexico,
India, Japan, Indonesia and Malaysia. She said that, for nonagricultural imports, the Philippines was limited to imposing on average a rate of 23.4%, but the average applied rate was 4.3%. For agricultural imports covered by trade agreements, the Philippines had an average bound tariff rate of 34.7%, but only had an 8% average applied rate.
Trade lawyer Jeremy I. Gatdula, however, said tariff rates in Hong Kong and Singapore were low compared to the Philippines. But this did not mean they were performing poorly. “Malaysia may have higher average tariffs. but it’s not something we need to follow. Malaysia is essentially different from the Philippines, just as the US is different as well.” Mr. Gatdula
said discussions should not be focused on raising tariffs but on finding out “what works for
the Philippines.”
Lilia R. Bautista, a former Trade undersecretary, said it may be “misleading” to compare
Philippine tariff rates with other countries, saying that most nations normally had a high
average bound rate and a lower average applied rate. She also said that although there is
a constitutional question on the Executive’s entering into trade agreements, ratification by
Congress allowed legislative participation.
Energy Sec. Raphael P.M. Lotilla, who was also present in the talk, said Congress may
appreciate the convenience of allowing the Executive to propose changes to tariff regimes,
leaving the legislature to ratify the agreements containing these changes. Mr. Lotilla, a former
Economic Planning official, said it may be “more cumbersome” if the legislature will
have to draft their versions of a bill based on the proposals of the Executive, adding that the
Tariff Commission also went through the process of conducting public hearings.
Tariffs, as I mentioned during my talk, are but instruments of our national will. It's effectiveness (whether it be the lowering or increase thereof) depends on how well that instrument is used in conjunction with other factors that are peculiar to our society. It is therefore not substantially worth arguing that US did this or Malaysia (which, it must be emphasized, was considered in one international ranking as having an economy more open than that of the Philippines despite the alleged higher average tariffs) or Singapore or Hong Kong or Korea did so and so because those countries are evidently not the Philippines.
I also stressed the need to create well defined rules that distinguish treaties from executive agreements, particularly as the Philippines is in the process of either negotiating or entering into a number of trade agreements within the coming months.
It's also time we stop resorting to labels, whether it be protectionists or free traders as such just denigrate the arguments into simplistic categories that do nothing to help arrive at solutions. We should therefore stop referring to protectionists as "nationalists" (as the latter doesn't necessarily follow the former) and trade liberalization advocates (not free traders) as "globalists" (most of the trade libbers I know are highly nationalistic individuals). In the end, we are all Filipinos, of different persuasions maybe, but with the same purpose (hopefully) in mind.
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