8.4.15
Interview on ASEAN integration
My December 2014 (well, i think it was December) Eagle News PH interview on ASEAN integration and competition policy, that for some reason then shifted to a discussion on the 'effects' doctrine in international law. View here.
Improving thinking on Philippine trade policy
my Trade Tripper column in the 20-21 March issue of BusinessWorld:
Despite the extremely parochial topics with which Philippine national discussions have been confined to (a situation that will most likely remain until well after the 2016 elections), international trade goes on. Naturally, movement in this area has unsurprisingly stagnated, particularly the continued simplistic binary way of thinking that divides policy lines into that of protectionism and liberalization. Incidentally, this passé kind of analysis also dominates how we look at competition policy.
However, as Simon Lester of the International Economic Law and Policy Blog points out, in the area of free trade agreements, the analysis has moved beyond such bleak duality: “What is the core purpose of trade agreements? [Some simply explain that] governments make trade agreements to reduce protectionism. That is the story most people are familiar with, and take for granted. We’ve all heard of protectionism; we all have a sense of what it is, although definitions may vary.”
There is another view: “Trade agreements will never reduce protectionism as we normally understand it. Rather, the sole function of trade agreements in the Bagwell-Staiger/Grossman-Helpman model is to eliminate terms-of-trade manipulation, unilateral trade policy that aims at improving the home country’s terms of trade. Terms-of-trade manipulation is a completely distinct phenomenon from protectionism, reflecting a different governmental motivation.”
Mr. Lester further states that “there are actually some additional theories about the purpose of trade agreements. There’s the domestic commitment theory (a trade agreement ‘can serve as a commitment device for a government to close the door to domestic lobbies’), and several new theories: ‘firm-delocation’ externalities in the presence of free entry, ‘profit-shifting’ externalities, and trade-volume externalities when prices are determined by bilateral bargaining.”
The distinction in perspectives is subtle but utterly significant: “With anti-protectionism as its goal, the system can use traditional and familiar provisions... to identify and prohibit protectionist measures.”
“By contrast, with terms of trade manipulation, the scope of the system is a lot less clear... Keep in mind, the optimal tariff... is not the only measure the proponents of this view have in mind. They also envision that domestic laws and regulations could be used for terms of trade manipulation. So how would the trading system address such measures through specific legal obligations? How would the Seal Products measure, or the Tuna-Dolphin measure, or plain packaging laws be examined if the issue was whether they constitute terms of trade manipulation?”
The foregoing lays the ground for reminding us of a misunderstood (hence oft abused) reality of international trade. This is best described by former World Trade Organization Director-General Pascal Lamy when he visited the Philippines: for a country to do well in the international trade system it must have, “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.”
Verily, the overriding context is always national interest. Which a country formulates on its own and by itself.
Regarding the foregoing, one can’t help but be further reminded of a memorable “white paper” issued by the Australian government that analyzed Australia’s place in a future Asia: “There was acceptance that the big changes that had to be wrought in the Australian economy and society to manage a world in which the new Asian powers will be a dominant force in the global order was a task beyond the capacity of government or policy alone. It required participation from across the community -- including business, educational institutions, community leaders, unions -- and nothing less than a change in national mindset. There was no quick policy fix to the problem. It was a long-term task on which a national consensus had to be patiently forged, and an ongoing national conversation must be had.”
Notably, “an important element was the priority of building deeper, more comprehensive relationships with the three big new emerging powers in the region -- China, Indonesia and India. These relationships were still significantly underdone. Getting it right with China, Indonesia and India was not just a matter of tweaking established arrangements at the edge of economic, political and security exchanges. It was a far bolder ambition that required energies and talents not confined to government and shifting the culture in which these exchanges were conducted.”
Nevertheless, care must be taken that we ourselves not fall into the policymaker’s or economist’s obsession with numbers. In the end, trade agreements begin and end with people. And the Philippines has not been ideal in properly caring for the senior population and the youth. Finally, like any discussion involving law, we must recognize trade’s effect on a country’s morals, values, and culture.
Despite the extremely parochial topics with which Philippine national discussions have been confined to (a situation that will most likely remain until well after the 2016 elections), international trade goes on. Naturally, movement in this area has unsurprisingly stagnated, particularly the continued simplistic binary way of thinking that divides policy lines into that of protectionism and liberalization. Incidentally, this passé kind of analysis also dominates how we look at competition policy.
However, as Simon Lester of the International Economic Law and Policy Blog points out, in the area of free trade agreements, the analysis has moved beyond such bleak duality: “What is the core purpose of trade agreements? [Some simply explain that] governments make trade agreements to reduce protectionism. That is the story most people are familiar with, and take for granted. We’ve all heard of protectionism; we all have a sense of what it is, although definitions may vary.”
There is another view: “Trade agreements will never reduce protectionism as we normally understand it. Rather, the sole function of trade agreements in the Bagwell-Staiger/Grossman-Helpman model is to eliminate terms-of-trade manipulation, unilateral trade policy that aims at improving the home country’s terms of trade. Terms-of-trade manipulation is a completely distinct phenomenon from protectionism, reflecting a different governmental motivation.”
Mr. Lester further states that “there are actually some additional theories about the purpose of trade agreements. There’s the domestic commitment theory (a trade agreement ‘can serve as a commitment device for a government to close the door to domestic lobbies’), and several new theories: ‘firm-delocation’ externalities in the presence of free entry, ‘profit-shifting’ externalities, and trade-volume externalities when prices are determined by bilateral bargaining.”
The distinction in perspectives is subtle but utterly significant: “With anti-protectionism as its goal, the system can use traditional and familiar provisions... to identify and prohibit protectionist measures.”
“By contrast, with terms of trade manipulation, the scope of the system is a lot less clear... Keep in mind, the optimal tariff... is not the only measure the proponents of this view have in mind. They also envision that domestic laws and regulations could be used for terms of trade manipulation. So how would the trading system address such measures through specific legal obligations? How would the Seal Products measure, or the Tuna-Dolphin measure, or plain packaging laws be examined if the issue was whether they constitute terms of trade manipulation?”
The foregoing lays the ground for reminding us of a misunderstood (hence oft abused) reality of international trade. This is best described by former World Trade Organization Director-General Pascal Lamy when he visited the Philippines: for a country to do well in the international trade system it must have, “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.”
Verily, the overriding context is always national interest. Which a country formulates on its own and by itself.
Regarding the foregoing, one can’t help but be further reminded of a memorable “white paper” issued by the Australian government that analyzed Australia’s place in a future Asia: “There was acceptance that the big changes that had to be wrought in the Australian economy and society to manage a world in which the new Asian powers will be a dominant force in the global order was a task beyond the capacity of government or policy alone. It required participation from across the community -- including business, educational institutions, community leaders, unions -- and nothing less than a change in national mindset. There was no quick policy fix to the problem. It was a long-term task on which a national consensus had to be patiently forged, and an ongoing national conversation must be had.”
Notably, “an important element was the priority of building deeper, more comprehensive relationships with the three big new emerging powers in the region -- China, Indonesia and India. These relationships were still significantly underdone. Getting it right with China, Indonesia and India was not just a matter of tweaking established arrangements at the edge of economic, political and security exchanges. It was a far bolder ambition that required energies and talents not confined to government and shifting the culture in which these exchanges were conducted.”
Nevertheless, care must be taken that we ourselves not fall into the policymaker’s or economist’s obsession with numbers. In the end, trade agreements begin and end with people. And the Philippines has not been ideal in properly caring for the senior population and the youth. Finally, like any discussion involving law, we must recognize trade’s effect on a country’s morals, values, and culture.
7.4.15
The Bangsamoro's international law gambit
my Trade Tripper column in the 13-14 March issue of BusinessWorld:
It has long been my position that whatever draft Bangsamoro Basic Law is passed by Congress, it would ultimately be inutile for the reason that there exists the quite unconstitutional Comprehensive Agreement on the Bangsamoro (which, along with the Framework Agreement and other related agreements, shall hereafter be referred to as the CAB). Or put another way: the debate about the Basic Law’s constitutionality is a false flag, a distraction.
To repeat: our government, by agreeing to terms in the CAB like “armed conflict,” “self-governance,” “combatants,” the “justness” and “legitimacy” of the “cause of the Bangsamoro,” “internal waters,” “core territories,” and the unwitting use of the term “self-determination” (which under international law is essentially “secession”), contributed to elevating the CAB to arguably an international agreement.
Also, allowing Malaysia’s “witnessing” of the CAB is definitely eccentric. Aside from bolstering the internationalization of the CAB argument, it also raises questions of prudence: Malaysia, after all, is contesting our ownership of Sabah.
Then there is the Department of Foreign Affairs’ leading role in this issue. Autonomous local governments have always been under the Department of the Interior and Local Governments. This is so even for other countries: Native American issues were placed under the United States Department of the Interior; for a time, the Northern Ireland issue was under the United Kingdom’s Home Office. There was no reason why the same thing could not have been done relative to the Bangsamoro. This is not a mere administrative question. The consequence is the public signal that our government sees the Bangsamoro as a “foreign affairs” issue.
And it does not help that a number of Constitutional Commission members to the 1987 Constitution issued a January 2015 statement expressing support for the “creation of the Bangsamoro Autonomous Region” and that it “can become part of international law” upon “its acceptance by the community of nations.” Why should such a “region” need acceptance by other countries? This is a purely internal matter about and between Filipinos.
But then, the Moro Islamic Liberation Front (MILF) clearly viewed the CAB as an international agreement. Reacting to a statement of Senator Miriam Defensor-Santiago that the CAB needs Senate approval, MILF Vice-Chairman Ghazali Jaafar disagreed, saying in a phone interview with GMA News that the nature of the agreement that the MILF signed with the government is an “executive agreement.”
Now the difference between an executive agreement and a treaty is that the latter requires Senate approval (executive agreements do not). But this must be emphasized: under both international law and Philippine law, an “executive agreement” is an international agreement.
What is the significance of this? Huge.
It renders any effort on the part of Congress to “fix” the Basic Law futile. Because it is in the nature of international agreements that they are not to be thwarted by local laws and institutions (including the Constitution).
So even if Congress does produce a Basic Law that conforms to the Constitution, the MILF can disregard that by saying that such a Basic Law does not comply with a binding international agreement that is the CAB.
This also reduces any eventual pronouncement by the Supreme Court as irrelevant. Because any ruling the Supreme Court has is only applicable within the territory and jurisdiction of the Philippines.
Besides, the MILF can also argue (by logical extension) that it has international personality and not within the coverage of Philippine jurisdiction.
As to a possible counter-argument that the MILF agreed for the CAB to go through Philippine constitutional processes before it becomes effective, it must be remembered that the MILF’s stated position is that it understood “it was negotiating with the totality of the Philippine government or ‘whole government,’ especially since, among other reasons, the commander-in-chief powers of the President allow him to bind the whole of government, including its different branches.” (See the Dec. 29, 2014, letter of MILF Chairman Al Haj Murad Ebrahim to the House ad hoc committee on the Basic Law.)
In other words, the MILF has taken the position that it acted upon our government representation that the Executive speaks for the other two branches, and thus the contra-constitutional CAB is effective upon signing.
Thus, this: if the Basic Law doesn’t conform to the contra-constitutional CAB, the MILF now has the diplomatic and international law cover to seek foreign assistance (whether it be international organizations or tribunals or countries) in “correcting” the Philippines’ alleged violation of an international obligation.
All these explain why the Constitution is barely mentioned in the CAB (just once, and only to bizarrely say that the Constitution should be amended to conform to the CAB).
Interestingly, the Basic Law (if passed as currently drafted) will be the only Philippine law ever that is subject not only to the Constitution but also to “international law,” “system of life prescribed by [Muslim] faith,” and “harmony with our customary laws, cultures, traditions.”
To be charitable, the CAB doesn’t seem well thought through.
It has long been my position that whatever draft Bangsamoro Basic Law is passed by Congress, it would ultimately be inutile for the reason that there exists the quite unconstitutional Comprehensive Agreement on the Bangsamoro (which, along with the Framework Agreement and other related agreements, shall hereafter be referred to as the CAB). Or put another way: the debate about the Basic Law’s constitutionality is a false flag, a distraction.
To repeat: our government, by agreeing to terms in the CAB like “armed conflict,” “self-governance,” “combatants,” the “justness” and “legitimacy” of the “cause of the Bangsamoro,” “internal waters,” “core territories,” and the unwitting use of the term “self-determination” (which under international law is essentially “secession”), contributed to elevating the CAB to arguably an international agreement.
Also, allowing Malaysia’s “witnessing” of the CAB is definitely eccentric. Aside from bolstering the internationalization of the CAB argument, it also raises questions of prudence: Malaysia, after all, is contesting our ownership of Sabah.
Then there is the Department of Foreign Affairs’ leading role in this issue. Autonomous local governments have always been under the Department of the Interior and Local Governments. This is so even for other countries: Native American issues were placed under the United States Department of the Interior; for a time, the Northern Ireland issue was under the United Kingdom’s Home Office. There was no reason why the same thing could not have been done relative to the Bangsamoro. This is not a mere administrative question. The consequence is the public signal that our government sees the Bangsamoro as a “foreign affairs” issue.
And it does not help that a number of Constitutional Commission members to the 1987 Constitution issued a January 2015 statement expressing support for the “creation of the Bangsamoro Autonomous Region” and that it “can become part of international law” upon “its acceptance by the community of nations.” Why should such a “region” need acceptance by other countries? This is a purely internal matter about and between Filipinos.
But then, the Moro Islamic Liberation Front (MILF) clearly viewed the CAB as an international agreement. Reacting to a statement of Senator Miriam Defensor-Santiago that the CAB needs Senate approval, MILF Vice-Chairman Ghazali Jaafar disagreed, saying in a phone interview with GMA News that the nature of the agreement that the MILF signed with the government is an “executive agreement.”
Now the difference between an executive agreement and a treaty is that the latter requires Senate approval (executive agreements do not). But this must be emphasized: under both international law and Philippine law, an “executive agreement” is an international agreement.
What is the significance of this? Huge.
It renders any effort on the part of Congress to “fix” the Basic Law futile. Because it is in the nature of international agreements that they are not to be thwarted by local laws and institutions (including the Constitution).
So even if Congress does produce a Basic Law that conforms to the Constitution, the MILF can disregard that by saying that such a Basic Law does not comply with a binding international agreement that is the CAB.
This also reduces any eventual pronouncement by the Supreme Court as irrelevant. Because any ruling the Supreme Court has is only applicable within the territory and jurisdiction of the Philippines.
Besides, the MILF can also argue (by logical extension) that it has international personality and not within the coverage of Philippine jurisdiction.
As to a possible counter-argument that the MILF agreed for the CAB to go through Philippine constitutional processes before it becomes effective, it must be remembered that the MILF’s stated position is that it understood “it was negotiating with the totality of the Philippine government or ‘whole government,’ especially since, among other reasons, the commander-in-chief powers of the President allow him to bind the whole of government, including its different branches.” (See the Dec. 29, 2014, letter of MILF Chairman Al Haj Murad Ebrahim to the House ad hoc committee on the Basic Law.)
In other words, the MILF has taken the position that it acted upon our government representation that the Executive speaks for the other two branches, and thus the contra-constitutional CAB is effective upon signing.
Thus, this: if the Basic Law doesn’t conform to the contra-constitutional CAB, the MILF now has the diplomatic and international law cover to seek foreign assistance (whether it be international organizations or tribunals or countries) in “correcting” the Philippines’ alleged violation of an international obligation.
All these explain why the Constitution is barely mentioned in the CAB (just once, and only to bizarrely say that the Constitution should be amended to conform to the CAB).
Interestingly, the Basic Law (if passed as currently drafted) will be the only Philippine law ever that is subject not only to the Constitution but also to “international law,” “system of life prescribed by [Muslim] faith,” and “harmony with our customary laws, cultures, traditions.”
To be charitable, the CAB doesn’t seem well thought through.
11.3.15
The new lawyer for an integrated ASEAN
my Trade Tripper column in the previous weekend issue of BusinessWorld:
Last week, the Association of Southeast Asian Nations (ASEAN) Law Association’s General Assembly had ASEAN integration as a main focus of the discussions. At the event, Senate President Franklin Drilon threw out the following query: “As the integration calls for a free exchange of resources, we must ask ourselves: what does integration mean to the legal profession? What is its impact to the practice of law? In this era of integration, the ASEAN lawyer must learn to navigate multiple legal jurisdictions.”
Indeed. And many have tried to address this evolving world, some suggesting liberalizing the legal profession (as Senator Drilon does). Others believe in making legal education “internationalized.” And some would have it specialized technically. With due respect, I believe such ideas miss the point.
First off, liberalization of the legal profession, of having a regulatory framework allowing foreign lawyers license to appear before local tribunals, is a pipe dream. Most national Bar associations will pay lip service to the idea but privately reject it. Frankly, nobody really sees the point of having a foreigner appear as counsel for a local court case. Clients won’t either.
But, the ironic thing is that lawyers have been “practicing” law in other countries for years.
This is true for many lawyers from any country: due to developments in international law and technology, law practice has long gone cross-border. Usually calling themselves “consultants,” they work in other countries giving advice or opinions on tax, customs, trade and international law issues to multinational corporations and international organizations. Foreign (including Filipino) lawyers have also risen as top executives in the Asian corporate world. All this without needing a law license from other countries.
The fact is, lawyers have outgrown courtrooms.
A study carried out by Reed Smith and KPMG finds top global corporations increasingly looking to the legal profession to fill senior management roles. Indeed, “CEOs with a legal background are currently represented on the boards of a broad range of industries including aerospace, pharma, publishing, retail, and oil and gas.”
The number of companies headed (or recently headed) by lawyers is perhaps reflective of the increasingly responsible and ethical modern business environment. A mere cursory list will include: Goldman Sachs, Bank of America, Cisco, Toys ’R’ Us, Nokia, Home Depot, Burger King, Pfizer, Fannie Mae, Delta Airlines, among others. Locally, there’s GMA-7.
Just in the recent past, the world’s top economic institutions were all headed not by economists or bankers but by lawyers: Pascal Lamy (World Trade Organization), Robert Zoellick (World Bank), Christine Laggard (International Monetary Fund). Former US treasury secretaries (the equivalent of our finance secretary) were both lawyers: James Baker III and Robert Rubin.
University of Asia and the Pacific’s (UA&P) School of Law and Governance has been ahead of the curve in this regard, foreseeing the need to develop lawyers with the skill sets and intellectual flexibility that enable them to work in courtrooms or boardrooms, in and out of the country.
Furthermore, UA&P’s School of Law and Governance has “governance” in its name for a reason. Borrowing from Columbia Law School’s Dean David Schizer (in a Financial Times interview in 2013): “Lawyers play a critical role in policy, particularly when it comes to shaping the rules that govern business practices.”
And more significantly, Dean Schizer points out: “You want the people who run the organization to think like lawyers; and you want the lawyers to think like people who run the organization.” This, he argues, “should inform how the law is taught because graduates often end up not as practicing lawyers but running businesses.”
Hence UA&P’s brand of legal education. US Justice Felix Frankfurter once said: “No one can be a truly competent lawyer unless he is a cultivated man.” The point is a liberal arts-oriented legal education. Doubtless one must pass the Bar exams and one should indeed prepare for it. But a law career goes beyond the Bar.
And unbeknownst to many is that a liberal arts education actually better prepares a lawyer in understanding international law, and navigating the nuances of the interplay between international law and domestic law.
Of course, legal education must seek to foster analytical skills, writing, persuasion, and sound ethical and technical judgment. But this is basic.
In today’s world of economic integration and easy access across countries, a lawyer must also have finely tuned collaborative skills, which not merely means the ability to work within teams but the capacity to work with other professional disciplines. Add too financial literacy and management skills (planning, organizing and utilizing resources), as well as culture sensitivity.
Ultimately, a lawyer must have the capacity to confront issues not merely from the black-and-white legalities but also from the perspective of the corporation or organization (or community) he is a part of.
Legal education simply cannot stop at mere technical training in law. The world (and the profession itself) has become much too complicated for that.
Last week, the Association of Southeast Asian Nations (ASEAN) Law Association’s General Assembly had ASEAN integration as a main focus of the discussions. At the event, Senate President Franklin Drilon threw out the following query: “As the integration calls for a free exchange of resources, we must ask ourselves: what does integration mean to the legal profession? What is its impact to the practice of law? In this era of integration, the ASEAN lawyer must learn to navigate multiple legal jurisdictions.”
Indeed. And many have tried to address this evolving world, some suggesting liberalizing the legal profession (as Senator Drilon does). Others believe in making legal education “internationalized.” And some would have it specialized technically. With due respect, I believe such ideas miss the point.
First off, liberalization of the legal profession, of having a regulatory framework allowing foreign lawyers license to appear before local tribunals, is a pipe dream. Most national Bar associations will pay lip service to the idea but privately reject it. Frankly, nobody really sees the point of having a foreigner appear as counsel for a local court case. Clients won’t either.
But, the ironic thing is that lawyers have been “practicing” law in other countries for years.
This is true for many lawyers from any country: due to developments in international law and technology, law practice has long gone cross-border. Usually calling themselves “consultants,” they work in other countries giving advice or opinions on tax, customs, trade and international law issues to multinational corporations and international organizations. Foreign (including Filipino) lawyers have also risen as top executives in the Asian corporate world. All this without needing a law license from other countries.
The fact is, lawyers have outgrown courtrooms.
A study carried out by Reed Smith and KPMG finds top global corporations increasingly looking to the legal profession to fill senior management roles. Indeed, “CEOs with a legal background are currently represented on the boards of a broad range of industries including aerospace, pharma, publishing, retail, and oil and gas.”
The number of companies headed (or recently headed) by lawyers is perhaps reflective of the increasingly responsible and ethical modern business environment. A mere cursory list will include: Goldman Sachs, Bank of America, Cisco, Toys ’R’ Us, Nokia, Home Depot, Burger King, Pfizer, Fannie Mae, Delta Airlines, among others. Locally, there’s GMA-7.
Just in the recent past, the world’s top economic institutions were all headed not by economists or bankers but by lawyers: Pascal Lamy (World Trade Organization), Robert Zoellick (World Bank), Christine Laggard (International Monetary Fund). Former US treasury secretaries (the equivalent of our finance secretary) were both lawyers: James Baker III and Robert Rubin.
University of Asia and the Pacific’s (UA&P) School of Law and Governance has been ahead of the curve in this regard, foreseeing the need to develop lawyers with the skill sets and intellectual flexibility that enable them to work in courtrooms or boardrooms, in and out of the country.
Furthermore, UA&P’s School of Law and Governance has “governance” in its name for a reason. Borrowing from Columbia Law School’s Dean David Schizer (in a Financial Times interview in 2013): “Lawyers play a critical role in policy, particularly when it comes to shaping the rules that govern business practices.”
And more significantly, Dean Schizer points out: “You want the people who run the organization to think like lawyers; and you want the lawyers to think like people who run the organization.” This, he argues, “should inform how the law is taught because graduates often end up not as practicing lawyers but running businesses.”
Hence UA&P’s brand of legal education. US Justice Felix Frankfurter once said: “No one can be a truly competent lawyer unless he is a cultivated man.” The point is a liberal arts-oriented legal education. Doubtless one must pass the Bar exams and one should indeed prepare for it. But a law career goes beyond the Bar.
And unbeknownst to many is that a liberal arts education actually better prepares a lawyer in understanding international law, and navigating the nuances of the interplay between international law and domestic law.
Of course, legal education must seek to foster analytical skills, writing, persuasion, and sound ethical and technical judgment. But this is basic.
In today’s world of economic integration and easy access across countries, a lawyer must also have finely tuned collaborative skills, which not merely means the ability to work within teams but the capacity to work with other professional disciplines. Add too financial literacy and management skills (planning, organizing and utilizing resources), as well as culture sensitivity.
Ultimately, a lawyer must have the capacity to confront issues not merely from the black-and-white legalities but also from the perspective of the corporation or organization (or community) he is a part of.
Legal education simply cannot stop at mere technical training in law. The world (and the profession itself) has become much too complicated for that.
4.3.15
The Philippines with an ASEAN backyard
was my Trade Tripper column in the past weekend issue of BusinessWorld:
(The following are excerpts from my talk “The Philippines in the ASEAN Economic Community,” given during the Brown Bag Seminar hosted by the Embassy of the Republic of Korea, Feb. 24.)
ONE THING that policy makers and citizens really need to be reminded of is the concept of “adverse selection.” This refers -- roughly -- to a situation where a wrong decision is made due to the asymmetric information or even possession of wrong information by the parties.
(The following are excerpts from my talk “The Philippines in the ASEAN Economic Community,” given during the Brown Bag Seminar hosted by the Embassy of the Republic of Korea, Feb. 24.)
ONE THING that policy makers and citizens really need to be reminded of is the concept of “adverse selection.” This refers -- roughly -- to a situation where a wrong decision is made due to the asymmetric information or even possession of wrong information by the parties.
In the context of ASEAN, the thinking seems to be that its integration this year would bring economic benefits that the country has long hoped for. But that is not consistent with reality. ASEAN brings opportunities. But that’s all it does. And thus the challenges.
Or to put it in even blunter terms, what is the point of opened markets if we don’t have the capacity to satisfy those markets? And what is the point of opening up the country for investments if the environment does not make it attractive for investors?
We are nearly last in terms of ease of doing business compared with other ASEAN countries; our power, transport, productivity, and infrastructure are nothing to brag about; and despite alleged improvements in relation to competitiveness, the rule of law and protection of property are a concern in most major studies. Then there is traffic.
Our exports also need work: our 2013 export numbers, for example, show a mere US$54 million paltry compared with Vietnam’s (US$129), Indonesia’s (US$199), Thailand’s (US$229), and Malaysia’s (US$230.7). For FDIs, the Philippines is celebrating its 3.86 (in billions US$) showing in 2013, even though the same is spectacularly short of Vietnam’s (8.9), Malaysia’s (12.3), Thailand’s (13), Indonesia’s (18), and Singapore’s (60.6).
Furthermore, most citizens are not even aware of the developments in ASEAN and that, sooner or later, a decision would have to be made on the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
The Philippines has been so enmeshed with its domestic political developments that it failed to give proper focus to international economic developments that forge on regardless of what happens domestically and definitely have a significant impact on the lives of its citizens.
But perhaps that is the key to the problem. That many Filipinos (like many in the region) have not considered ASEAN as “domestic.” By this, I mean that we have not imbibed the mindset that ASEAN is our backyard, in the manner that Cebu or Davao is part of our neighborhood. In short, ASEAN is treated as foreign, far away, distant. This should change.
Almost 81% of our trade is with APEC, with ASEAN accounting for 20%. So while international trade, as we have been told, is global, geographic and historical realities nevertheless remain to be relevant.
And yet, technology and transportation developments have made it so that even the humblest of our citizens can engage within this setting. That they are unable to do so is not because of their lack of capacity or opportunity but because of the lack of information, which then leads to a lack of confidence.
Even in my own profession, which is law, there are many lawyers who still see international law as “foreign.” This despite the fact that our country, from its very inception, has always considered international law to be part of the laws of the land.
Government and policymakers (as well as media) have to encourage the mindset that these things are available, are within reach, and provide opportunities. This means having a professed international outlook paralleled by a pragmatic business orientation and competence.
Now, not to give cross-signals, we also have to point out the complexities involved in an ASEAN that encourages regional trading arrangements. Considering that local businessmen have continuously raised concerns regarding the Philippines’ capacity to keep up with its multilateral trading commitments, the increasing number of FTAs lead to a complexity that can be seen on the surface alone: the rules of origin, dispute settlement jurisdictions, non-tariff subjects such as market access and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, and (as always) the issue of smuggling. And the foregoing doesn’t even approximate the intricate effects that global finance has on trade.
My view on this has always been that the more technical and complicated a subject, the more important that someone has a generalized training that can match the complexity.
Others would go the different route: if a thing is complex, then hire specialists. But that doesn’t work for me for two reasons: hiring specialists to work on international trade will limit the nature of the analysis. It will also narrow the perspective for the recipient of the analysis, focusing on technicalities rather than on what’s really important.
Bottom line, the more complicated the environment is, get policymakers or analysts (even lawyers) with a truly well developed liberal education. They will have more analytical skills and appreciation for truth.
Or to put it in even blunter terms, what is the point of opened markets if we don’t have the capacity to satisfy those markets? And what is the point of opening up the country for investments if the environment does not make it attractive for investors?
We are nearly last in terms of ease of doing business compared with other ASEAN countries; our power, transport, productivity, and infrastructure are nothing to brag about; and despite alleged improvements in relation to competitiveness, the rule of law and protection of property are a concern in most major studies. Then there is traffic.
Our exports also need work: our 2013 export numbers, for example, show a mere US$54 million paltry compared with Vietnam’s (US$129), Indonesia’s (US$199), Thailand’s (US$229), and Malaysia’s (US$230.7). For FDIs, the Philippines is celebrating its 3.86 (in billions US$) showing in 2013, even though the same is spectacularly short of Vietnam’s (8.9), Malaysia’s (12.3), Thailand’s (13), Indonesia’s (18), and Singapore’s (60.6).
Furthermore, most citizens are not even aware of the developments in ASEAN and that, sooner or later, a decision would have to be made on the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
The Philippines has been so enmeshed with its domestic political developments that it failed to give proper focus to international economic developments that forge on regardless of what happens domestically and definitely have a significant impact on the lives of its citizens.
But perhaps that is the key to the problem. That many Filipinos (like many in the region) have not considered ASEAN as “domestic.” By this, I mean that we have not imbibed the mindset that ASEAN is our backyard, in the manner that Cebu or Davao is part of our neighborhood. In short, ASEAN is treated as foreign, far away, distant. This should change.
Almost 81% of our trade is with APEC, with ASEAN accounting for 20%. So while international trade, as we have been told, is global, geographic and historical realities nevertheless remain to be relevant.
And yet, technology and transportation developments have made it so that even the humblest of our citizens can engage within this setting. That they are unable to do so is not because of their lack of capacity or opportunity but because of the lack of information, which then leads to a lack of confidence.
Even in my own profession, which is law, there are many lawyers who still see international law as “foreign.” This despite the fact that our country, from its very inception, has always considered international law to be part of the laws of the land.
Government and policymakers (as well as media) have to encourage the mindset that these things are available, are within reach, and provide opportunities. This means having a professed international outlook paralleled by a pragmatic business orientation and competence.
Now, not to give cross-signals, we also have to point out the complexities involved in an ASEAN that encourages regional trading arrangements. Considering that local businessmen have continuously raised concerns regarding the Philippines’ capacity to keep up with its multilateral trading commitments, the increasing number of FTAs lead to a complexity that can be seen on the surface alone: the rules of origin, dispute settlement jurisdictions, non-tariff subjects such as market access and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, and (as always) the issue of smuggling. And the foregoing doesn’t even approximate the intricate effects that global finance has on trade.
My view on this has always been that the more technical and complicated a subject, the more important that someone has a generalized training that can match the complexity.
Others would go the different route: if a thing is complex, then hire specialists. But that doesn’t work for me for two reasons: hiring specialists to work on international trade will limit the nature of the analysis. It will also narrow the perspective for the recipient of the analysis, focusing on technicalities rather than on what’s really important.
Bottom line, the more complicated the environment is, get policymakers or analysts (even lawyers) with a truly well developed liberal education. They will have more analytical skills and appreciation for truth.
22.2.15
Attack of the killer Catholic Church!
was my Trade Tripper column in the recent weekend issue of BusinessWorld:
It finally happened. Two weeks ago, the respected international news magazine The Week That Wasn’t Really ran a cartoon showing Pope Francis allegedly killing a gay pigeon. How the pigeon was considered gay was not brought up, but it angered many Catholics as another example of the media’s obsession to portray the Church as villainous and intolerant.
The day after the cartoon was published, Catholic militants attacked the TWTWR office and massacred the entire staff. Reacting to the news, Salesian priest Fr. Chito Dizon urged all not to immediately label the attackers as Catholics. “So what if they shouted ‘Totus Tuus’ and then took time off during the middle of the attack to pray the Angelus at noon? That doesn’t make them necessarily Catholic. They could be Hindus. Or Rastafarian. It’s possible they merely used the name of the Church in committing the atrocity.”
Nevertheless, Fr. Bobby Magsino, a Vatican spokesman and member of the shadowy and controversial Opus Dei [Sorry, I forgot to mention “ultra-conservative” -- JG] justified the attack, describing “the encounter” as that of “freedom fighters acting in self-defense” compelled by years of “historical baggage” in the form of “media and academic oppression suffered by the Catholic Church.”
Nevertheless, Fr. Magsino urged all to instead move forward and forget the deaths ever happened. “Peace is what’s important,” he said.
Meanwhile, interviewed by EWTN, Lito Deyvid of Pro-Life Philippines denounced those asking for justice for the TWTWR victims, calling it as “grandstanding” against Catholics. They are “anti-religion and against peace,” he said. Furthermore, “those asking for total war have not lived in the poor parishes and can’t comprehend the daily insults and attacks the faithful have been subjected to.”
Arwin Hilario, congressman from McBayan partylist, was even more earnest: “Forget the killings. Criminal laws, like sovereignty or gender, are mere social constructs. The real problem is the oligarchy that imposes their non-developmental agenda. The rich know nothing about ordinary religious folk, who perform apostolate work under conditions of poverty. It’s very difficult and complicated. Also, it’s obviously Gloria Arroyo’s fault.”
“I support those Catholic militants,” added Mr. Hilario, "they spoke truth to power". When told that the TWTWR victims were ordinary poor working people, with children, he replied: “But let’s also remember that many Catholics were killed by Queen Elizabeth I. The Buddhists killed many Catholics too. The Romans fed Catholics to lions. So context, people!”
This was supported by Trina Montes, a comparative women’s rights professor from the University of the Philippines, saying that we should not be too quick to condemn the killing by the Catholics. “The Hittites, for example, were also committing massacres 3,000 years ago.”
In fact, “they were the first to use germ warfare,” she added.
Ironically, the TWTWR incident was followed by a mauling that Catholics gave to a group of Mormons last Sunday. It appears that Catholics suddenly started occupying (without permission) a portion of the Mormon Temple along White Plains. When the members of the Church of Latter Day Saints (as Mormons are officially called) started to enter their Temple last Sunday, the Catholics roving around the compound started beating them up, forcing the Mormons to go somewhere else to worship.
Ms. Haidi Dulong, chief negotiator for the Mormons, blamed the Mormons for what happened: “So what if the Catholics were squatting? The Mormons should have followed protocol and coordinated with the squatters first before entering our own compound. The Catholics were surprised. Wouldn’t you? Read my books first before you speak to me on this issue.”
When told that the Catholics still continued to beat up the Mormons for several hours even after the latter identified themselves as being there to do Sunday worship, Ms. Dulong replied: “Let’s wait for the results of the Catholic investigation. Besides, the enemy... este, Mormons were also at fault. Several Catholics suffered hurt feelings.”
Jesuit scholar Fr. Joachim Tambori predictably articulated erudition: “I wouldn’t say the Catholic Church is right on this issue. In fact, I don’t know of any issue where the Catholic Church has ever been right. There are many things to consider. We should always put ourselves in others’ shoes because people have the international human right to shoes.” Rappler readers immediately declared this made them feel happy and intelligent.
Finally, one of the Catholic militants, Erwin Richard Perez, issued a statement: “You grieve for the TWTWR dead. But many have tried to subjugate the Church, yet we’re still here. You can wage war against us but we will just baptize more babies who will grow up to continue the Crusades. So give us the peace that we demand or there’ll be violence of biblical proportions (i.e., dogs and cats living together -- mass hysteria).”
“However,” the Catholic militant was quick to add, “always remember that Christianity is the religion of peace. Anybody who disagrees with that will have the jeebus excommunicated out of him.”
[And ... I ran out of crap to write.]
[And ... I ran out of crap to write.]
Bangsamoro and the myth of historical baggage
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