is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
A truth universally acknowledged is that great winners never cheat. Not Jordan, Bryant, Kasparov, Pele, Gretzky, Ali, Senna, or Schumacher. They win because they have the skills and talent and drive to win. And they are great because despite their huge desire to win they still retain in themselves, buried deep within their DNA’s, a sense of fairness that may or may not be rooted in their supremely confident belief that they are the best in what they do. Maradona’s greatness is sometimes questioned because of his "fist of god" antic (amongst others). It is the mediocre ones that cheat. And it’s the losers that whine for the rules to be skewed (mid-game) in their favor. These dictums apply to lawyers as much as it does to athletes.
In the context of the impeachment proceedings, the past days have seen loud calls from certain sectors for a distancing from the so-called technical or legal or judicial approach. Such are misguided at best. While indeed there may be merit in a more "liberal" interpretation of the rules, this nevertheless presupposes the application of rules itself. 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 (or incompetent lawyers).
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? 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. The main reason why the Rules of Court (which includes evidentiary rules) are so important is because they exact objectivity.
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 are relatively cooler heads that are fighting over an issue or rights. But the rules simply become necessary when unthinking but powerful 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 impose that restraint.
This is also all the more important now that the House prosecution team has proven themselves to be not above lying, fabricating incredibly weird stories that border on the insulting of normal people’s intelligences, or using fake documents to advance their dubious cause. The rules are all the more important now that we’ve seen that not a few senator-judges have proven themselves as either being without any sense of shame in flaunting their bias or being so unbelievably arrogant (and perhaps also lacking considerable IQ points) in thinking they are the supreme power in this country.
People should not confuse the matter of admissible evidence with the standard of proof necessary to attain judgment (for a fuller discussion on the latter, please see my article Technicalities Matter http://www.jemygatdula.blogspot.com/2012/01/technicalities-matter.html, a portion of which this present article is based).
Interestingly enough, during the impeachment trial of then President Estrada, with a House Prosecution Panel that included now retired Supreme Court justice Antonio Nachura, assisted by private lawyers such as now former ombudsman and solicitor-general Simeon Marcelo, nobody complained about the impeachment trial procedures (which were practically the same as they are today). No member of the prosecution team at that time whined about the rules. And, it must be emphasized, they were prosecuting a president who, unlike a Supreme Court chief justice, has the entire resources of government at his disposal.
In the end, calls to disregard the law or rules just to convict CJ Corona only betrays the lack of respect that some self-righteous people have for the law. At the very least, nevertheless, this much is true: for the first time since 2010, smart people are now able to laugh again at stupid people.
23.2.12
17.2.12
The assault on religion
is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
The past few months have seen US President Barack Obama’s administration make repeated attempts to undermine religious rights. Even if taken from the narrow perspective of a politically beleaguered figure trying to shore up support from his core constituency, nevertheless, the same still manages to draw parallels with the Aquino administration’s obsessive insistence in pushing for the RH Bill. Ultimately, both would lead to the conclusion that the measures pushed by both governments on their respective countries have implications far beyond the ostensible objectives publicly declared of them.
Last January, the US Supreme Court dealt a significant blow to President Obama’s determined assault on religious rights. In Hosanna-Tabor Church v. Equal Employment Opportunity Commission, an employment termination case involving a woman fired for violating religious doctrine by resorting to court litigation rather than resolve her claims through church processes, the US Supreme Court declared that churches enjoy exemption from "employment discrimination laws" and that churches are entitled to hire and fire free from government interference.
The most recent from the Obama administration has to do with the so-called HHS contraceptive mandate, which requires employers to provide health insurance for their employees. Unfortunately, the mandate includes treatment such as abortions, sterilization, abortifacients, and contraceptives. All of which, clearly, go against Catholic beliefs for being immoral and against natural law.
After encountering huge public outcry against the mandate, as well as a lawsuit filed by the Eternal Word Television Network (EWTN) at the US District Court in Birmingham, Alabama petitioning to declare the federal rule unconstitutional [for full disclosure, I am legal counsel for the EWTN Foundation here in the Philippines], President Obama blinked. Or buckled under. Proposing an "accommodation" (which in actuality is really a compromise or at least President Obama’s attempt at one), the new plan supposedly relieves employers, due to religious convictions, of providing insurance coverage for abortions, sterilization, abortifacients, and contraceptives. Instead, it’s the insurance companies that will shoulder responsibility for such "treatments" and all the employer has to do is provide general insurance coverage.
Now, I bet (particularly if you’re Pro-Life or one who wants to uphold the rule of law in relation to the impeachment proceedings, and thus quicker on the uptake) it didn’t even take you readers more than a few seconds to realize what’s wrong with Obama’s "accommodation." As renowned apologetic Jimmy Akin wrote: "The idea that it will be insurance companies that pay for such services is just a shell game. Where are insurance companies going to get the money to pay for these services? They aren’t the Federal Reserve. They aren’t empowered to create money out of nothing the way the Federal Reserve is. If they’re going to pay doctors, nurses, and pharmacists to provide these things then they are going to pay for them with money they got from someone else. Who else? Why! The very same churches, church-related organizations, and individuals who are otherwise paying."
That is why the position of the US Bishops in reaction to this (quite correctly) was to reject it outright. For the US Bishops, the "only complete solution" to this issue is a rescission of the mandate. Again the US Bishops are absolutely right. A public statement signed by almost a hundred academics and intellectuals, including Robert George of Princeton, said that: "The simple fact is that the Obama administration is compelling religious people and institutions who are employers to purchase a health insurance contract that provides abortion-inducing drugs, contraception, and sterilization. This is a grave violation of religious freedom and cannot stand."
The parallelisms of the religious struggles against contraception here and abroad are clear. There is nothing in our Constitution that says citizens (including government officials) shouldn’t be guided by the tenets of their faith. The Constitution, rather than discouraging religions, actually supports religions by mandating tolerance for all religions. Hence the prohibition on discriminatory treatment against or preference for any single religion. One reason why the RH Bill is offensive is because it forces Catholics to support (through the duty to pay taxes) something they believe is immoral. Note that there is no law banning the private use of contraceptives.
The foregoing also confirm that to mount civil disobedience in this country against a (presumed) RH Law is reasonably justified under our Constitution. Not to mention our history. The Supreme Court ruling validating the Cory Aquino government in Lawyers League vs. Aquino is one good example, as well as Estrada vs. Escritor where it was declared that: "Man stands accountable to an authority higher than the State." Considering the highly dubious necessity of an RH Law, the latter ruling arguably provides the basis for refusing to pay taxes due to religious conviction. After all, if civil disobedience calling for a change in government (as Cory Aquino did in 1986) is legally acceptable, then all the more should civil disobedience in the mere form of non-payment of taxes against an RH Law.
The past few months have seen US President Barack Obama’s administration make repeated attempts to undermine religious rights. Even if taken from the narrow perspective of a politically beleaguered figure trying to shore up support from his core constituency, nevertheless, the same still manages to draw parallels with the Aquino administration’s obsessive insistence in pushing for the RH Bill. Ultimately, both would lead to the conclusion that the measures pushed by both governments on their respective countries have implications far beyond the ostensible objectives publicly declared of them.
Last January, the US Supreme Court dealt a significant blow to President Obama’s determined assault on religious rights. In Hosanna-Tabor Church v. Equal Employment Opportunity Commission, an employment termination case involving a woman fired for violating religious doctrine by resorting to court litigation rather than resolve her claims through church processes, the US Supreme Court declared that churches enjoy exemption from "employment discrimination laws" and that churches are entitled to hire and fire free from government interference.
The most recent from the Obama administration has to do with the so-called HHS contraceptive mandate, which requires employers to provide health insurance for their employees. Unfortunately, the mandate includes treatment such as abortions, sterilization, abortifacients, and contraceptives. All of which, clearly, go against Catholic beliefs for being immoral and against natural law.
After encountering huge public outcry against the mandate, as well as a lawsuit filed by the Eternal Word Television Network (EWTN) at the US District Court in Birmingham, Alabama petitioning to declare the federal rule unconstitutional [for full disclosure, I am legal counsel for the EWTN Foundation here in the Philippines], President Obama blinked. Or buckled under. Proposing an "accommodation" (which in actuality is really a compromise or at least President Obama’s attempt at one), the new plan supposedly relieves employers, due to religious convictions, of providing insurance coverage for abortions, sterilization, abortifacients, and contraceptives. Instead, it’s the insurance companies that will shoulder responsibility for such "treatments" and all the employer has to do is provide general insurance coverage.
Now, I bet (particularly if you’re Pro-Life or one who wants to uphold the rule of law in relation to the impeachment proceedings, and thus quicker on the uptake) it didn’t even take you readers more than a few seconds to realize what’s wrong with Obama’s "accommodation." As renowned apologetic Jimmy Akin wrote: "The idea that it will be insurance companies that pay for such services is just a shell game. Where are insurance companies going to get the money to pay for these services? They aren’t the Federal Reserve. They aren’t empowered to create money out of nothing the way the Federal Reserve is. If they’re going to pay doctors, nurses, and pharmacists to provide these things then they are going to pay for them with money they got from someone else. Who else? Why! The very same churches, church-related organizations, and individuals who are otherwise paying."
That is why the position of the US Bishops in reaction to this (quite correctly) was to reject it outright. For the US Bishops, the "only complete solution" to this issue is a rescission of the mandate. Again the US Bishops are absolutely right. A public statement signed by almost a hundred academics and intellectuals, including Robert George of Princeton, said that: "The simple fact is that the Obama administration is compelling religious people and institutions who are employers to purchase a health insurance contract that provides abortion-inducing drugs, contraception, and sterilization. This is a grave violation of religious freedom and cannot stand."
The parallelisms of the religious struggles against contraception here and abroad are clear. There is nothing in our Constitution that says citizens (including government officials) shouldn’t be guided by the tenets of their faith. The Constitution, rather than discouraging religions, actually supports religions by mandating tolerance for all religions. Hence the prohibition on discriminatory treatment against or preference for any single religion. One reason why the RH Bill is offensive is because it forces Catholics to support (through the duty to pay taxes) something they believe is immoral. Note that there is no law banning the private use of contraceptives.
The foregoing also confirm that to mount civil disobedience in this country against a (presumed) RH Law is reasonably justified under our Constitution. Not to mention our history. The Supreme Court ruling validating the Cory Aquino government in Lawyers League vs. Aquino is one good example, as well as Estrada vs. Escritor where it was declared that: "Man stands accountable to an authority higher than the State." Considering the highly dubious necessity of an RH Law, the latter ruling arguably provides the basis for refusing to pay taxes due to religious conviction. After all, if civil disobedience calling for a change in government (as Cory Aquino did in 1986) is legally acceptable, then all the more should civil disobedience in the mere form of non-payment of taxes against an RH Law.
9.2.12
Impeaching dishonesty
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.
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.
2.2.12
’tini time!
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."
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."
26.1.12
Spirits and national treatment
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.
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.
24.1.12
Technicalities matter
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.
19.1.12
Distilled spirits lose on WTO appeal
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.
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.
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