my Trade Tripper column in the 10-11 September 2016 issue of BusinessWorld:
Disappointing, of course, was the previous administration’s act of arbitral initiation against China but not bothering to develop a coordinated diplomatic, media, political, and legal strategy in case of victory. Then and now, even without the benefit of hindsight, the case was a forgone conclusion considering the inherent strength of the Philippines’ legal position, an outcome all the more certain once the jurisdictional hurdles were overcome.
Even assuming a follow-through strategy was indeed formulated, since it was not presented to the Filipino people’s evaluation (or at least their elected representatives) then it just doesn’t exist.
There was effectively no preparation done beyond the short-term gratification of seeing China beaten. Realizing this, commentary following the victory was diverted to pointing out that the rule of law was upheld and of the ruling’s long-term significance to international law, whatever that means.
In the meantime, while the legality of the Philippine claim was indeed solidified (as if it needed more solidifying), China’s belligerent construction in the disputed islands remained unabated, reinforcing their possession of those areas.
At most, wishful thinking focused on the strategy (if one can call it that) of “name and shame”; or the hope that other countries would file similar arbitral cases; or (as a variation of the first two) that the ruling would soften China’s will, with ensuing popular support for the Philippines rendering China pliant.
Unfortunately, those desired scenarios are still searching for clear footing: both the Philippines and China (depending on which source one reads) substantially having equal quality of support.
But for the most significant area for the Philippines, South-east Asia, the level of support unfortunately remains ambiguous.
One reason is China’s continuing economic importance. In China’s Economic Ties with ASEAN (Association of Southeast Asian Nations) : A Country-by-Country Analysis (prepared by the staff of the US-China Economic and Security Review Commission, March 2015), the Philippines’ erstwhile adversary “consistently appears among the top five trade partners for ASEAN members.”
And China as a source of economic opportunity apparently seems far from being tapped out: “although its outbound direct investment has been rising rapidly, China is still marginal to ASEAN’s overall FDI (Foreign Direct Investment) receipts.” Still, “even allowing for the possibility that MOFCOM [Ministry of Commerce] may be undercounting actual flows (for example, by not factoring in investment originating in Hong Kong), the fact remains China is not yet a major investor in ASEAN.”
What is even more interesting is this: “the degree of dependence on China as a source of exports, imports, or both varies. Where wealthier ASEAN countries have a diverse set of trading partners, poorer ASEAN countries depend heavily on China, especially as a source of imports. Vietnam’s share of Chinese export and import flows with ASEAN has increased substantially, while Singapore’s share has dropped.”
Now that is worth pondering upon as it jives with other research seemingly revealing of Chinese thinking regarding foreign relationships and the response of other countries: “previous studies confirmed that only the rich natural resources and the weak institutions countries attracted China’s OFDI (Outward Foreign Direct Investment). However, we found out that, in recent years, not only weak institutions but also good institutions with rich natural resources countries attracted China’s OFDI.” (Chinese Outward Foreign Direct Investment: Is ASEAN a New Destination?, Nguyen Thi Tuong Anh and Doan Quang Hung, May 2016, SECO/WTI Academic Cooperation Project Working Paper Series, June 2016)
The Philippines generally hasn’t felt this down to the psychological because of the continuing level of comfort we have regarding our concentrated trade with Japan and the US, and considering that China’s FDI to the Philippines remains relatively conservative.
It’s also gratifying for those taking the more hawkish position that though “Philippine balance of trade with China deteriorated in 2013, going from a decade of surplus to a $1.6-billion deficit,” standing in stark contrast to “the country’s surplus with the Asia region as a whole,” such has not been apparently disastrous for the Philippines.
Nevertheless, even though the aforementioned 2015 paper acknowledges that the Philippines “is more important to China in the political than the economic realm” and that while “Chinese FDI in the Philippines totaled only $692 million in 2012... individual deals suggest far more investment is actually flowing into the country.” And furthermore, “the Philippines has actually made investments in mainland China. The investors include the snack food company Oishi, the San Miguel brewery, and real estate businesses like Ding Feng Real Estate Co., which specializes in mixed-use developments such as condominiums, shopping malls, and hotels.”
The key, commonsensically and strategically, now, today, at this present time, is to find common ground.
First step is to re-acknowledge that there are two decades worth of agreements that the Philippines entered into with China, covering the economic to military cooperation, which the last administration seems to have short-sightedly scrapped.
It’s also important for the two countries to tune out all nondiplomatic noise and allow each side to have the space to find a mutually beneficial solution in the future.
Showing posts with label china. Show all posts
Showing posts with label china. Show all posts
28.10.16
12.9.16
Our China policy: separating movies from reality
my Trade Tripper column in the 11-12 June 2016 issue of BusinessWorld:
An interesting phenomena common enough in politics is the difficulty people have with differentiating reality from wishful thinking. True and without fault, everyone would like the world to be something better. But it is one thing to work towards an objective, and another mistaking a hoped for ideal as the present state and then proceeding as if the illusion were true.
The same goes for foreign policy.
Because no matter how developed our talent for imagination may be, we simply do not have the capability and resources, including military strength necessary, to back up our declared policy objectives.
Our aerial territory is open to any foreign plane whizzing by (detected or not), the waters we claim are plugged with enough holes that to declare archipelagic sea-lanes is almost comical, and our official borders are so dysfunctional that drugs, other contraband, and even illegal aliens can go in and out at will.
These are some of the parameters hedging the Philippines in when dealing with China, which the US military recently described (US Department of Defense, Military and Security Developments Involving the People’s Republic of China 2016) as having improved: “its ability to fight short-duration, high-intensity regional conflicts at greater distances from the Chinese mainland.”
Furthermore, “China demonstrated a willingness to tolerate higher levels of tension in the pursuit of its interests, especially in pursuit of its territorial claims in the East and South China Sea.”
Unfortunately, the excessively belligerent attitude (frankly, by all sides) raised the possibility of armed conflict all too sadly real.
The US Council for Foreign Relations (Contingency Planning Memorandum No. 14, April 2015) thus warns of a possible “conflict between China and the Philippines over natural gas deposits, especially in the disputed area of Reed Bank, located eighty nautical miles from Palawan. Oil survey ships operating in Reed Bank under contract have increasingly been harassed by Chinese vessels. Reportedly, the United Kingdom-based Forum Energy plans to start drilling for gas in Reed Bank this year, which could provoke an aggressive Chinese response. Forum Energy is only one of fifteen exploration contracts that Manila intends to offer over the next few years for offshore exploration near Palawan Island. Reed Bank is a red line for the Philippines, so this contingency could quickly escalate to violence if China intervened to halt the drilling.”
Simply put, “the United States could be drawn into a China-Philippines conflict because of its 1951 Mutual Defense Treaty with the Philippines.”
Publicly, the US has been declaring repeatedly its refusal to take any side in the ongoing territorial dispute in the region.
Couple that with the US Defense Department’s recognition that “China still seeks to avoid direct and explicit conflict with the United States.”
Unfortunately, not many in the Philippines are taking the hint regarding this, a foolishness ironically forcing everybody’s hand in the matter.
So, despite the US’ utter good sense, perception-wise its “failure to respond would not only set back US relations with the Philippines but would also potentially undermine US credibility in the region with its allies and partners more broadly. A US decision to dispatch naval ships to the area, however, would risk a US-China naval confrontation.”
A quite key consideration is that China’s ambition to be the respected primary world leader hinges on possessing secure economic dominance. Which, had there been no problems, needed a half century more of peaceful co-existence with other countries.
Note that trade in the West Philippine Sea/South China Sea region is almost $6 trillion, nearly a fifth of that generated by the US.
Certainly, the Philippines may have its allies, particularly in trumpeting the virtues of the “rule of law.” But also do remember that our ASEAN partners, as well as Japan and South Korea, are getting closer to economic dependence on China than they have ever been before.
Unfortunately, China’s economy is suspected of being on the back heel.
The Economist (The Coming Debt Bust, 7 May 2016) pointing out that “the country’s debt has increased just as quickly over the past two years as in the two years after the 2008 crunch. Its debt-to-GDP ratio has soared from 150% to nearly 260% over a decade, the kind of surge that is usually followed by a financial bust or an abrupt slowdown. China will not be an exception to that rule.”
So to put it mildly: the possibility of China’s dreams being dashed because of an economic cock-up could motivate the latter to induce everybody into a scenario that no sane country could want.
All the more if a country (i.e., the Philippines) is nowhere near physical and mental readiness for it.
What’s interesting about the foregoing is that you can be sure both China and the US know this. And you can also be sure that both countries know there is a one in four chance things could go deadly wrong.
Gratifyingly, the incoming administration seems to know it as well.
An interesting phenomena common enough in politics is the difficulty people have with differentiating reality from wishful thinking. True and without fault, everyone would like the world to be something better. But it is one thing to work towards an objective, and another mistaking a hoped for ideal as the present state and then proceeding as if the illusion were true.
The same goes for foreign policy.
Because no matter how developed our talent for imagination may be, we simply do not have the capability and resources, including military strength necessary, to back up our declared policy objectives.
Our aerial territory is open to any foreign plane whizzing by (detected or not), the waters we claim are plugged with enough holes that to declare archipelagic sea-lanes is almost comical, and our official borders are so dysfunctional that drugs, other contraband, and even illegal aliens can go in and out at will.
These are some of the parameters hedging the Philippines in when dealing with China, which the US military recently described (US Department of Defense, Military and Security Developments Involving the People’s Republic of China 2016) as having improved: “its ability to fight short-duration, high-intensity regional conflicts at greater distances from the Chinese mainland.”
Furthermore, “China demonstrated a willingness to tolerate higher levels of tension in the pursuit of its interests, especially in pursuit of its territorial claims in the East and South China Sea.”
Unfortunately, the excessively belligerent attitude (frankly, by all sides) raised the possibility of armed conflict all too sadly real.
The US Council for Foreign Relations (Contingency Planning Memorandum No. 14, April 2015) thus warns of a possible “conflict between China and the Philippines over natural gas deposits, especially in the disputed area of Reed Bank, located eighty nautical miles from Palawan. Oil survey ships operating in Reed Bank under contract have increasingly been harassed by Chinese vessels. Reportedly, the United Kingdom-based Forum Energy plans to start drilling for gas in Reed Bank this year, which could provoke an aggressive Chinese response. Forum Energy is only one of fifteen exploration contracts that Manila intends to offer over the next few years for offshore exploration near Palawan Island. Reed Bank is a red line for the Philippines, so this contingency could quickly escalate to violence if China intervened to halt the drilling.”
Simply put, “the United States could be drawn into a China-Philippines conflict because of its 1951 Mutual Defense Treaty with the Philippines.”
Publicly, the US has been declaring repeatedly its refusal to take any side in the ongoing territorial dispute in the region.
Couple that with the US Defense Department’s recognition that “China still seeks to avoid direct and explicit conflict with the United States.”
Unfortunately, not many in the Philippines are taking the hint regarding this, a foolishness ironically forcing everybody’s hand in the matter.
So, despite the US’ utter good sense, perception-wise its “failure to respond would not only set back US relations with the Philippines but would also potentially undermine US credibility in the region with its allies and partners more broadly. A US decision to dispatch naval ships to the area, however, would risk a US-China naval confrontation.”
A quite key consideration is that China’s ambition to be the respected primary world leader hinges on possessing secure economic dominance. Which, had there been no problems, needed a half century more of peaceful co-existence with other countries.
Note that trade in the West Philippine Sea/South China Sea region is almost $6 trillion, nearly a fifth of that generated by the US.
Certainly, the Philippines may have its allies, particularly in trumpeting the virtues of the “rule of law.” But also do remember that our ASEAN partners, as well as Japan and South Korea, are getting closer to economic dependence on China than they have ever been before.
Unfortunately, China’s economy is suspected of being on the back heel.
The Economist (The Coming Debt Bust, 7 May 2016) pointing out that “the country’s debt has increased just as quickly over the past two years as in the two years after the 2008 crunch. Its debt-to-GDP ratio has soared from 150% to nearly 260% over a decade, the kind of surge that is usually followed by a financial bust or an abrupt slowdown. China will not be an exception to that rule.”
So to put it mildly: the possibility of China’s dreams being dashed because of an economic cock-up could motivate the latter to induce everybody into a scenario that no sane country could want.
All the more if a country (i.e., the Philippines) is nowhere near physical and mental readiness for it.
What’s interesting about the foregoing is that you can be sure both China and the US know this. And you can also be sure that both countries know there is a one in four chance things could go deadly wrong.
Gratifyingly, the incoming administration seems to know it as well.
For a strategic, coherent Philippine foreign policy
my Trade Tripper column in this 28-29 May 2016 issue of BusinessWorld:
For foreign policy, perhaps it’s time for a reset. And resets need a plan. And plans involve a consideration of where one is and going to. That is why international relations fundamentally should be conducted in complete unity with the identity and values of the Philippines.
Or put another way, our foreign policy should be but the mere extension of our domestic, also recognizing that these are matters strategically, patiently, and deliberately played out in decades, and that there is more to foreign relations than just facilitating the documentation and regulation of our overseas workers.
For a start, this means a healthy regard for the rule of law. This is particularly true as we are pushing that principle in relation to China and the West Philippine Sea. If extra-judicial measures are resorted to, even de facto, as domestic policy, we can’t reasonably expect the Chinese to do the same.
It also means respecting human rights, particularly freedom of expression and religion. Considerably so, when there’s around 2.5 million of our countrymen abroad who we do not want discriminated against for being Filipinos (or acting or speaking or believing as they do).
This includes not raising the issue of the death penalty at this time, with about 80 Filipinos on death row overseas. It’s simply incongruous to request clemency for fellow Filipinos when we are putting them to death ourselves.
Going back to China, the incoming administration’s declared policy of reaching out and focusing on the positives of our relationship with it is the correct step.
Discussions and agreements should be hashed out allowing for mutual exploration and use of the disputed areas and resources, without necessarily prejudicing sovereignty claims at a more opportune future time.
Enhanced trade arrangements should be raised, particularly with the Philippines supporting and joining the Regional Comprehensive Economic Partnership agreement led by China. Along with the Silk Road aspirations of the latter.
Preferably, all that be at least initiated before the Hague arbitral tribunal releases its decision in our case against China.
As for Mindanao and the ongoing Bangsamoro issue, one fundamental change that should definitely be done is to overtly and declaratively categorize the same as a domestic matter. This includes having the Department of the Interior and Local Government leading negotiations from now on.
Further on that: revival of the BIMP-EAGA is a definite priority, along with a viable transport system among the trading countries. Long-term investment and tax incentives should be given, encouraging Filipino businesses from all over the country and overseas to set up in the area.
We need to strengthen our relationship with Russia. Trade between our two countries hovers around $1 billion, with around 4,500 overseas Filipinos working there (mostly in Moscow). Even adding tourism in, the economic aspect of the relationship is quite anemic considering that we are the closest tropical country to Russia (at least its eastern part) and pales in comparison with other APEC countries (of which Russia is a part of).
Nevertheless, the Philippines and Russia have always been generally in good terms: the former being the first democratic country to reach out to the then Soviet Union during the Cold War (the effort led by then Executive Secretary Alex Melchor and then Major Joe Almonte). In 2012, Russian naval vessels made a goodwill visit to the Philippines, signifying the potential for a deepening of relations between the two countries.
Also suggested are acquiring defense pacts with our longtime trading partners: Japan, Australia, New Zealand, and South Korea.
The Philippines and Australia already have a working arrangement on protection of our transport systems; we have an understanding with Japan on maritime security; and our military history with South Korea peaked with the 1950’s Philippine Expeditionary Forces to Korea.
Incoming president Duterte did well to reiterate the strong relationship the Philippines has with the United States. The shared political and cultural values are too embedded for us not to do so.
Though we should definitely join the Trans-Pacific Partnership, we must also encourage the US to commit itself to leading a revived multilateral trading arrangement through the World Trade Organization.
Furthermore, we should also realize that historically and geographically, we have the potential to play a significant role similar to that of Great Britain vis-à-vis the US and Europe. Perhaps more so.
Our location in the Pacific is not only strategic but also freed us from the various intra-continental conflicts between Vietnam, Thailand, Malaysia, Singapore, and Indonesia. This makes us not only the perfect conduit for the US towards Asia but also a pragmatically objective mediator for our neighbors.
Finally, even in diplomacy, talk is futile unless one has the muscle and will to back it up. Our foreign policy must be partnered with a strong, robust military.
Indeed, increasing defense spending and reviving mandatory military service for all college-age students is ironically a good first step towards a coherent, strategic foreign policy.
For foreign policy, perhaps it’s time for a reset. And resets need a plan. And plans involve a consideration of where one is and going to. That is why international relations fundamentally should be conducted in complete unity with the identity and values of the Philippines.
Or put another way, our foreign policy should be but the mere extension of our domestic, also recognizing that these are matters strategically, patiently, and deliberately played out in decades, and that there is more to foreign relations than just facilitating the documentation and regulation of our overseas workers.
For a start, this means a healthy regard for the rule of law. This is particularly true as we are pushing that principle in relation to China and the West Philippine Sea. If extra-judicial measures are resorted to, even de facto, as domestic policy, we can’t reasonably expect the Chinese to do the same.
It also means respecting human rights, particularly freedom of expression and religion. Considerably so, when there’s around 2.5 million of our countrymen abroad who we do not want discriminated against for being Filipinos (or acting or speaking or believing as they do).
This includes not raising the issue of the death penalty at this time, with about 80 Filipinos on death row overseas. It’s simply incongruous to request clemency for fellow Filipinos when we are putting them to death ourselves.
Going back to China, the incoming administration’s declared policy of reaching out and focusing on the positives of our relationship with it is the correct step.
Discussions and agreements should be hashed out allowing for mutual exploration and use of the disputed areas and resources, without necessarily prejudicing sovereignty claims at a more opportune future time.
Enhanced trade arrangements should be raised, particularly with the Philippines supporting and joining the Regional Comprehensive Economic Partnership agreement led by China. Along with the Silk Road aspirations of the latter.
Preferably, all that be at least initiated before the Hague arbitral tribunal releases its decision in our case against China.
As for Mindanao and the ongoing Bangsamoro issue, one fundamental change that should definitely be done is to overtly and declaratively categorize the same as a domestic matter. This includes having the Department of the Interior and Local Government leading negotiations from now on.
Further on that: revival of the BIMP-EAGA is a definite priority, along with a viable transport system among the trading countries. Long-term investment and tax incentives should be given, encouraging Filipino businesses from all over the country and overseas to set up in the area.
We need to strengthen our relationship with Russia. Trade between our two countries hovers around $1 billion, with around 4,500 overseas Filipinos working there (mostly in Moscow). Even adding tourism in, the economic aspect of the relationship is quite anemic considering that we are the closest tropical country to Russia (at least its eastern part) and pales in comparison with other APEC countries (of which Russia is a part of).
Nevertheless, the Philippines and Russia have always been generally in good terms: the former being the first democratic country to reach out to the then Soviet Union during the Cold War (the effort led by then Executive Secretary Alex Melchor and then Major Joe Almonte). In 2012, Russian naval vessels made a goodwill visit to the Philippines, signifying the potential for a deepening of relations between the two countries.
Also suggested are acquiring defense pacts with our longtime trading partners: Japan, Australia, New Zealand, and South Korea.
The Philippines and Australia already have a working arrangement on protection of our transport systems; we have an understanding with Japan on maritime security; and our military history with South Korea peaked with the 1950’s Philippine Expeditionary Forces to Korea.
Incoming president Duterte did well to reiterate the strong relationship the Philippines has with the United States. The shared political and cultural values are too embedded for us not to do so.
Though we should definitely join the Trans-Pacific Partnership, we must also encourage the US to commit itself to leading a revived multilateral trading arrangement through the World Trade Organization.
Furthermore, we should also realize that historically and geographically, we have the potential to play a significant role similar to that of Great Britain vis-à-vis the US and Europe. Perhaps more so.
Our location in the Pacific is not only strategic but also freed us from the various intra-continental conflicts between Vietnam, Thailand, Malaysia, Singapore, and Indonesia. This makes us not only the perfect conduit for the US towards Asia but also a pragmatically objective mediator for our neighbors.
Finally, even in diplomacy, talk is futile unless one has the muscle and will to back it up. Our foreign policy must be partnered with a strong, robust military.
Indeed, increasing defense spending and reviving mandatory military service for all college-age students is ironically a good first step towards a coherent, strategic foreign policy.
Making ASEAN our neighborhood and our business
my Trade Tripper column in the 21-22 May 2016 issue of BusinessWorld:
The best thing we could do now really is to set our sights a little bit closer to home. And our home is in ASEAN.
At the outset, let me explain that there is a difference between our government entering into further trade agreements without adjustment on the capacity of the bureaucracy (and by extension, the private sector) and private sector initiative to take advantage of already opened markets.
The latter is what we should be doing.
Most of our population isn’t even aware of the developments in ASEAN, much less their overall significance. So enmeshed are we with domestic politics that we fail to give proper focus to a region that forges on regardless of what happens in the Philippines internally but definitely significant impact the lives of its citizens.
ASEAN constitutes almost 20% of our trade: with exports at least $9 billion, while imports around $15 billion. The trade deficit of $6 billion should be seen as an opportunity for the Philippines and not a minus for ASEAN. Thirty-five percent of our ASEAN trade is interestingly with Singapore, a country of minimal resources but maximum talent.
As I’ve said before, trade may be perceived as global but geography is still paramount. Around 60% of our total trade is with Asian countries, with Japan and China leading the pack.
Competition from the other ASEAN countries shouldn’t even make Filipinos hesitate. ASEAN products have not obliterated Philippine business. And this is so even though tariffs for almost all products (except sugar and rice) have been down to nothing, true even way before the touted 2015 ASEAN integration.
If ever there’s a hurdle that needs to be overcome is the need to diversify Philippine product offerings.
If one looks at the top products traded within ASEAN, they consist almost of the same products that the Philippines primarily offers: mineral fuels and oils, electrical machinery, sound and television equipment, precious metals and jewelry; rubber and plastics; and chemicals.
Aside from foreign direct investment, tourism is positively one area for improvement, considering that the top five country visitors to the Philippines (i.e., South Korea, US, China, Japan, Australia), none are from ASEAN. Singapore comes in at 8th and Malaysia at 10th.
Another significant hurdle deals essentially with mind-set: that we do not consider ASEAN as “domestic.”
By this, I mean that we have not imbibed the thinking that ASEAN is our neighborhood, that we are part of this community.
This should change.
In terms of job opportunities, our co-ASEAN members should open doors for Filipinos. Consider that Singapore’s jobless rate is at less than 2%. Malaysia’s at around 3.4%, with a poverty rating of less than 1%. Indonesian unemployment is less than 6%, with poverty 11.3%. Even Vietnam registered unemployment of less than 2.5%, with poverty at above or high 12%.
The point is that the Filipinos, confronted with an unemployment rate of around 6.5%, (SWS surveys peg it somewhat at 22%) and poverty above 25%, could certainly do with a little bit more opportunities and those opportunities perhaps lie with ASEAN.
Furthermore, there is also the matter of taxes, with the income tax regimes generally amongst other ASEAN countries certainly more desirable now than that of the Philippines.
So with regard to Filipino employment, particularly with a population whose average age is around 23-years old, ASEAN could be key.
Most people look to Central Asia, Europe, or the US for work when ASEAN has an array of Mutual Recognition Agreements for licensed physicians, dentists, nurses, architects, engineers, accountants, surveyors, and tourism professionals that pass certain conditions.
With their talent, creativity, and training, comparative advantage of Filipinos seemingly lead to skilled or managerial positions, rather than the unskilled (of which there is an abundant competition right now admittedly from other ASEAN countries).
And quite excitingly, the opportunities don’t end with ASEAN but actually could be said to begin with it.
ASEAN already has free trade agreements with South Korea, Japan, Australia, New Zealand, China, and India. Combined, ASEAN and its trading partners offer Filipino products and services a market the size of almost half of the world’s population.
The trick though is not to think in terms of capturing the market singularly but rather in recognizing that international trade patterns have changed, and that Filipino companies have greater chances of slipping in the production chain rather than being the primary manufacturer of a finished product.
For Filipino companies in a position to be that kind of manufacturer, then a familiarity with ASEAN’s various offerings should allow for a more diverse sourcing of raw materials and talent.
It would definitely benefit Filipinos to learn more about ASEAN, the provisions and intricacies of the various agreements surrounding it, as well as the differing political and legal systems of each of the members.
Indeed, it is ironic that Filipinos pride themselves in being cosmopolitan yet are quite unfamiliar with the possibilities in their very own neighborhood.
The best thing we could do now really is to set our sights a little bit closer to home. And our home is in ASEAN.
At the outset, let me explain that there is a difference between our government entering into further trade agreements without adjustment on the capacity of the bureaucracy (and by extension, the private sector) and private sector initiative to take advantage of already opened markets.
The latter is what we should be doing.
Most of our population isn’t even aware of the developments in ASEAN, much less their overall significance. So enmeshed are we with domestic politics that we fail to give proper focus to a region that forges on regardless of what happens in the Philippines internally but definitely significant impact the lives of its citizens.
ASEAN constitutes almost 20% of our trade: with exports at least $9 billion, while imports around $15 billion. The trade deficit of $6 billion should be seen as an opportunity for the Philippines and not a minus for ASEAN. Thirty-five percent of our ASEAN trade is interestingly with Singapore, a country of minimal resources but maximum talent.
As I’ve said before, trade may be perceived as global but geography is still paramount. Around 60% of our total trade is with Asian countries, with Japan and China leading the pack.
Competition from the other ASEAN countries shouldn’t even make Filipinos hesitate. ASEAN products have not obliterated Philippine business. And this is so even though tariffs for almost all products (except sugar and rice) have been down to nothing, true even way before the touted 2015 ASEAN integration.
If ever there’s a hurdle that needs to be overcome is the need to diversify Philippine product offerings.
If one looks at the top products traded within ASEAN, they consist almost of the same products that the Philippines primarily offers: mineral fuels and oils, electrical machinery, sound and television equipment, precious metals and jewelry; rubber and plastics; and chemicals.
Aside from foreign direct investment, tourism is positively one area for improvement, considering that the top five country visitors to the Philippines (i.e., South Korea, US, China, Japan, Australia), none are from ASEAN. Singapore comes in at 8th and Malaysia at 10th.
Another significant hurdle deals essentially with mind-set: that we do not consider ASEAN as “domestic.”
By this, I mean that we have not imbibed the thinking that ASEAN is our neighborhood, that we are part of this community.
This should change.
In terms of job opportunities, our co-ASEAN members should open doors for Filipinos. Consider that Singapore’s jobless rate is at less than 2%. Malaysia’s at around 3.4%, with a poverty rating of less than 1%. Indonesian unemployment is less than 6%, with poverty 11.3%. Even Vietnam registered unemployment of less than 2.5%, with poverty at above or high 12%.
The point is that the Filipinos, confronted with an unemployment rate of around 6.5%, (SWS surveys peg it somewhat at 22%) and poverty above 25%, could certainly do with a little bit more opportunities and those opportunities perhaps lie with ASEAN.
Furthermore, there is also the matter of taxes, with the income tax regimes generally amongst other ASEAN countries certainly more desirable now than that of the Philippines.
So with regard to Filipino employment, particularly with a population whose average age is around 23-years old, ASEAN could be key.
Most people look to Central Asia, Europe, or the US for work when ASEAN has an array of Mutual Recognition Agreements for licensed physicians, dentists, nurses, architects, engineers, accountants, surveyors, and tourism professionals that pass certain conditions.
With their talent, creativity, and training, comparative advantage of Filipinos seemingly lead to skilled or managerial positions, rather than the unskilled (of which there is an abundant competition right now admittedly from other ASEAN countries).
And quite excitingly, the opportunities don’t end with ASEAN but actually could be said to begin with it.
ASEAN already has free trade agreements with South Korea, Japan, Australia, New Zealand, China, and India. Combined, ASEAN and its trading partners offer Filipino products and services a market the size of almost half of the world’s population.
The trick though is not to think in terms of capturing the market singularly but rather in recognizing that international trade patterns have changed, and that Filipino companies have greater chances of slipping in the production chain rather than being the primary manufacturer of a finished product.
For Filipino companies in a position to be that kind of manufacturer, then a familiarity with ASEAN’s various offerings should allow for a more diverse sourcing of raw materials and talent.
It would definitely benefit Filipinos to learn more about ASEAN, the provisions and intricacies of the various agreements surrounding it, as well as the differing political and legal systems of each of the members.
Indeed, it is ironic that Filipinos pride themselves in being cosmopolitan yet are quite unfamiliar with the possibilities in their very own neighborhood.
11.4.16
The West Philippine Sea: pride and consequence
was my Trade Tripper column in the 11-12 March 2016 issue of BusinessWorld:
Just because one can doesn’t mean one should. And just because one has the right doesn’t mean one is always correct to act on that right. Something to think about considering that the international arbitral tribunal deciding the Philippine case against China on the West Philippine Sea may release its decision this April or May. Leading to another thing to ponder on and that is: be careful of what you wish for.
Right now, we really need to demand knowing from the government the benefits it expected from this case vis-à-vis the risks that will certainly arise. Note that due to the technicalities inherent in the UN Convention on the Law of the Sea, the claim filed by the Philippines never involved asking the tribunal for a determination of who owns what.
Rather, the case is merely about the Hague-based arbitrators declaring whether certain areas qualify (or not) under specific concepts provided by the law of the sea. Doubtless, the findings will have consequences but consequences is exactly the point of this article.
Precisely being asked of the tribunal are the following: What is this “9-dash line” the Chinese keep citing as the basis for their maritime claims? Because it’s a thing not found in international law and the Chinese themselves have not bothered to define it as well.
The other questions raised can be grouped as a set of inquiries regarding the character of certain land formations scattered over the disputed areas. Specifically, these are Mischief Reef, McKennan Reef, Gavin Reef, Subi Reef, Scarborough Shoal, Johnson South Reef, Cuarteron Reef, and Fiery Cross Reef.
The first four are being claimed by the Chinese as rocks, while the Philippines is claiming they are merely “low tide elevations.” The significance of this (as per provisions Article 121 of the UNCLOS and later clarified and confirmed by the International Court of Justice in Nicaragua vs Columbia, 2012) is that land features not visible at high tide (hence, called “low tide elevations”) cannot be entitled to waters that an island or rock has under international law.
As for the last four, the Chinese claim the features are “islands,” while the Philippines say they are merely “rocks.” Islands are entitled to their own 12 nautical mile territorial sea, a contiguous zone of 24 nautical miles (from the low water mark), an exclusive economic zone, and a continental shelf. Rocks, on the other hand, merely have a territorial sea and contiguous zone.
With the foregoing, one can now understand the reason for the Chinese frenzy of construction activities in the disputed areas: apparently, they are rushing to pour concrete and other materials on the LTE’s to convert them into rocks and to make the rocks into islands.
Admittedly, this appears ridiculous, legally speaking, when one sees the UNCLOS clearly providing that an “island is a naturally formed area of land, surrounded by water, which is above water at high tide.” The crucial word here is “natural”. As for rocks, though the UNCLOS is silent regarding it, international law commentators are fairly unanimous in saying that the natural formation requirement should also apply to rocks.
Which leads us to the crux of the issue: a tribunal win for the Philippines is -- I dare say -- a foregone conclusion. There is no doubt that the country’s legal position is strong. The real question we should be asking is how do we handle that victory?
From there, one sees the practical rationale behind China’s provocative activities, obviously designed to cushion the impact of the loss that will inevitably be dealt them by the international tribunal.
As for the Philippines, what next? Shame China -- a permanent member of the UN Security Council -- into giving up what it now possesses? Such is a dangerously naive tactic against a country that just admitted it will undergo economic insecurities this 2016: lowering its growth forecasts to 6.5% amidst weakened trade, and cuts in demand for its steel and coal industries.
The theory bandied about in media is that a Philippine win will embolden other countries to stand up against China. This thinking is flawed on three counts: it assumes other countries will actually do so (see Thailand’s holding joint military exercises with China last year), second, even if they do, such stance will likely not follow the Philippine model of closed-minded confrontation (see Vietnam’s quite sophisticated maneuverings) and, finally, assuming the other countries do speak up against China, such does not automatically mean it will redound to the benefit of the Philippines.
In the end, this is what it all boils down to: the Chinese know what they want and the US does too, only too well. And the Americans and Chinese certainly know what they’re going to do as far as that is concerned. The question is: do we?
Because loudly throwing the dice and then hope the other countries come to our rescue cannot seriously be considered a foreign policy.
Just because one can doesn’t mean one should. And just because one has the right doesn’t mean one is always correct to act on that right. Something to think about considering that the international arbitral tribunal deciding the Philippine case against China on the West Philippine Sea may release its decision this April or May. Leading to another thing to ponder on and that is: be careful of what you wish for.
Right now, we really need to demand knowing from the government the benefits it expected from this case vis-à-vis the risks that will certainly arise. Note that due to the technicalities inherent in the UN Convention on the Law of the Sea, the claim filed by the Philippines never involved asking the tribunal for a determination of who owns what.
Rather, the case is merely about the Hague-based arbitrators declaring whether certain areas qualify (or not) under specific concepts provided by the law of the sea. Doubtless, the findings will have consequences but consequences is exactly the point of this article.
Precisely being asked of the tribunal are the following: What is this “9-dash line” the Chinese keep citing as the basis for their maritime claims? Because it’s a thing not found in international law and the Chinese themselves have not bothered to define it as well.
The other questions raised can be grouped as a set of inquiries regarding the character of certain land formations scattered over the disputed areas. Specifically, these are Mischief Reef, McKennan Reef, Gavin Reef, Subi Reef, Scarborough Shoal, Johnson South Reef, Cuarteron Reef, and Fiery Cross Reef.
The first four are being claimed by the Chinese as rocks, while the Philippines is claiming they are merely “low tide elevations.” The significance of this (as per provisions Article 121 of the UNCLOS and later clarified and confirmed by the International Court of Justice in Nicaragua vs Columbia, 2012) is that land features not visible at high tide (hence, called “low tide elevations”) cannot be entitled to waters that an island or rock has under international law.
As for the last four, the Chinese claim the features are “islands,” while the Philippines say they are merely “rocks.” Islands are entitled to their own 12 nautical mile territorial sea, a contiguous zone of 24 nautical miles (from the low water mark), an exclusive economic zone, and a continental shelf. Rocks, on the other hand, merely have a territorial sea and contiguous zone.
With the foregoing, one can now understand the reason for the Chinese frenzy of construction activities in the disputed areas: apparently, they are rushing to pour concrete and other materials on the LTE’s to convert them into rocks and to make the rocks into islands.
Admittedly, this appears ridiculous, legally speaking, when one sees the UNCLOS clearly providing that an “island is a naturally formed area of land, surrounded by water, which is above water at high tide.” The crucial word here is “natural”. As for rocks, though the UNCLOS is silent regarding it, international law commentators are fairly unanimous in saying that the natural formation requirement should also apply to rocks.
Which leads us to the crux of the issue: a tribunal win for the Philippines is -- I dare say -- a foregone conclusion. There is no doubt that the country’s legal position is strong. The real question we should be asking is how do we handle that victory?
From there, one sees the practical rationale behind China’s provocative activities, obviously designed to cushion the impact of the loss that will inevitably be dealt them by the international tribunal.
As for the Philippines, what next? Shame China -- a permanent member of the UN Security Council -- into giving up what it now possesses? Such is a dangerously naive tactic against a country that just admitted it will undergo economic insecurities this 2016: lowering its growth forecasts to 6.5% amidst weakened trade, and cuts in demand for its steel and coal industries.
The theory bandied about in media is that a Philippine win will embolden other countries to stand up against China. This thinking is flawed on three counts: it assumes other countries will actually do so (see Thailand’s holding joint military exercises with China last year), second, even if they do, such stance will likely not follow the Philippine model of closed-minded confrontation (see Vietnam’s quite sophisticated maneuverings) and, finally, assuming the other countries do speak up against China, such does not automatically mean it will redound to the benefit of the Philippines.
In the end, this is what it all boils down to: the Chinese know what they want and the US does too, only too well. And the Americans and Chinese certainly know what they’re going to do as far as that is concerned. The question is: do we?
Because loudly throwing the dice and then hope the other countries come to our rescue cannot seriously be considered a foreign policy.
War is what we make of it
my Trade Tripper column in the 4-5 March 2016 issue of BusinessWorld:
Something that needs to be said repeatedly, hoping the next president of the Republic takes it to heart: “The prime duty of the Government is to serve and protect the people.” Simply put, to defend the State is his main job. If he fails in that, nothing else matters. Any talk of social justice is useless if the Philippines can’t protect and keep its people and territory from both internal and external threats.
Unfortunately, defense has been woefully neglected the past few years. The 2015 budget’s 4.4% for the military is scandalous. This all the more when one considers the territorial dangers, conventional and asymmetrical, faced by the country. And while the 2016 budget’s P117.521 billion is an improvement, in relative terms it still falls behind in priority compared to Education, Public Works, Local Government, and Health. Defense and education spending should always be at the top.
The next administration is strongly encouraged to commit thoroughly to reviving the Self-Reliant Defense Posture of the Marcos years (as well as Ramos’), implemented through Presidential Decree 415, amended by PD 1081.
The SRDP program, “initiated in 1974, took the development of a domestic defense industry as its objective. Defense officials contracted SRDP projects with the government arsenal and local manufacturers, encouraging the use of indigenous raw materials and production capacity. Projects included domestic production of small arms, radios, and assorted ammunition. One of the most significant SRDP operations was the manufacture of the M-16A1 rifle under license from Colt Industries, an American company. According to a 1988 statement by the Philippine armed forces chief of staff, the SRDP not only increased Philippine self-reliance, but also cut costs, provided jobs, and saved much-needed foreign-exchange funds.” (see photius.com, citing the Library of Congress Country Studies and CIA World Factbook)
The policy is practically a neglected tradition for the country. Danilo Lazo and Juanita Mercader (“The AFP Self-Reliant Defense Posture (SRDP) Program: Leading The Nation Towards A New Direction”; Asian Studies, 1989) point to traces of the self-reliant defense posture in “Commonwealth Act No. 138, otherwise known as the Flag Law,” requiring preference for locally manufactured items in government procurement.
Furthermore, considering the much talked about Filipino talent in computer programming, then the same should be harnessed for the country’s defense. Interestingly enough, Filipino hackers have been reportedly retaliating, with some degree of effectiveness, against countries hostile to the Philippines. Defense planning from now on should include creating an actual contingent within the AFP whose sole purpose is to defend the country from cyber attacks.
The foregoing has to be coupled with upgrading our reserve corps, including the revival of compulsory military service by making such a requirement for all graduating college students. With 70% of the population under 30 years of age, this would definitely help in our national development. Note that under the Constitution, “citizens may be required, under conditions provided by law, to render personal military or civil service.”
Finally, we must develop a comprehensive national defense strategy. Because, believe it or not, we don’t have one.
That fact also probably explains our somewhat puzzling recent buying pattern of foreign military hardware. The purchase of sophisticated aircraft is actually futile because warfare essentially boils down to mathematics, i.e., who has more of what. And as far as external threats go, that is a contest we can’t win. The only people benefiting from our recent spending habits are Western defense companies able to offload their products to poor countries like us.
No. If we do buy weaponry from abroad, then the same should be done solely with the focus of neutralizing efficiently any internal threat at hand (including being able to guard against smuggling and fisheries poaching). For such purposes, hi-tech (thus expensive) weaponry is not necessary. Functioning workhorse type aircraft, speedboats, and land-armored vehicles should be enough.
For external threats, it is simply non-sensical to even try matching the military resources of those countries challenging the Philippines.
But what the Philippines does have are thousands of islands, an abundance of forests, caves, and miles and miles of confusing streets.
At this stage of our country’s development we can’t fight a war hoping to beat the other country. This includes not making our defense strategy hinge on the assistance of allies. We shouldn’t waste spending and the developing of our plans on such thinking.
What we can do is build our national defense strategy around the idea of attrition and guerilla warfare: to make going to war against the Philippines an island per island matter, complicated, never-ending, so costly in terms of human and material resources that it would practically outweigh any benefit -- that any country would have to think twice if it’s worth attacking us at all.
In the end, diplomacy is always the best option for everyone. And our national defense strategy should be built around the idea that countries are better off talking to us rather than shooting us.
Something that needs to be said repeatedly, hoping the next president of the Republic takes it to heart: “The prime duty of the Government is to serve and protect the people.” Simply put, to defend the State is his main job. If he fails in that, nothing else matters. Any talk of social justice is useless if the Philippines can’t protect and keep its people and territory from both internal and external threats.
Unfortunately, defense has been woefully neglected the past few years. The 2015 budget’s 4.4% for the military is scandalous. This all the more when one considers the territorial dangers, conventional and asymmetrical, faced by the country. And while the 2016 budget’s P117.521 billion is an improvement, in relative terms it still falls behind in priority compared to Education, Public Works, Local Government, and Health. Defense and education spending should always be at the top.
The next administration is strongly encouraged to commit thoroughly to reviving the Self-Reliant Defense Posture of the Marcos years (as well as Ramos’), implemented through Presidential Decree 415, amended by PD 1081.
The SRDP program, “initiated in 1974, took the development of a domestic defense industry as its objective. Defense officials contracted SRDP projects with the government arsenal and local manufacturers, encouraging the use of indigenous raw materials and production capacity. Projects included domestic production of small arms, radios, and assorted ammunition. One of the most significant SRDP operations was the manufacture of the M-16A1 rifle under license from Colt Industries, an American company. According to a 1988 statement by the Philippine armed forces chief of staff, the SRDP not only increased Philippine self-reliance, but also cut costs, provided jobs, and saved much-needed foreign-exchange funds.” (see photius.com, citing the Library of Congress Country Studies and CIA World Factbook)
The policy is practically a neglected tradition for the country. Danilo Lazo and Juanita Mercader (“The AFP Self-Reliant Defense Posture (SRDP) Program: Leading The Nation Towards A New Direction”; Asian Studies, 1989) point to traces of the self-reliant defense posture in “Commonwealth Act No. 138, otherwise known as the Flag Law,” requiring preference for locally manufactured items in government procurement.
Furthermore, considering the much talked about Filipino talent in computer programming, then the same should be harnessed for the country’s defense. Interestingly enough, Filipino hackers have been reportedly retaliating, with some degree of effectiveness, against countries hostile to the Philippines. Defense planning from now on should include creating an actual contingent within the AFP whose sole purpose is to defend the country from cyber attacks.
The foregoing has to be coupled with upgrading our reserve corps, including the revival of compulsory military service by making such a requirement for all graduating college students. With 70% of the population under 30 years of age, this would definitely help in our national development. Note that under the Constitution, “citizens may be required, under conditions provided by law, to render personal military or civil service.”
Finally, we must develop a comprehensive national defense strategy. Because, believe it or not, we don’t have one.
That fact also probably explains our somewhat puzzling recent buying pattern of foreign military hardware. The purchase of sophisticated aircraft is actually futile because warfare essentially boils down to mathematics, i.e., who has more of what. And as far as external threats go, that is a contest we can’t win. The only people benefiting from our recent spending habits are Western defense companies able to offload their products to poor countries like us.
No. If we do buy weaponry from abroad, then the same should be done solely with the focus of neutralizing efficiently any internal threat at hand (including being able to guard against smuggling and fisheries poaching). For such purposes, hi-tech (thus expensive) weaponry is not necessary. Functioning workhorse type aircraft, speedboats, and land-armored vehicles should be enough.
For external threats, it is simply non-sensical to even try matching the military resources of those countries challenging the Philippines.
But what the Philippines does have are thousands of islands, an abundance of forests, caves, and miles and miles of confusing streets.
At this stage of our country’s development we can’t fight a war hoping to beat the other country. This includes not making our defense strategy hinge on the assistance of allies. We shouldn’t waste spending and the developing of our plans on such thinking.
What we can do is build our national defense strategy around the idea of attrition and guerilla warfare: to make going to war against the Philippines an island per island matter, complicated, never-ending, so costly in terms of human and material resources that it would practically outweigh any benefit -- that any country would have to think twice if it’s worth attacking us at all.
In the end, diplomacy is always the best option for everyone. And our national defense strategy should be built around the idea that countries are better off talking to us rather than shooting us.
12.10.15
Paying for the Philippines' new normal
my Trade Tripper column in the 9-10 October 2015 issue of BusinessWorld:
The problem is disconnect. The disconnect between what our current government leaders say (and swear to) and what they actually do. Like that presidential candidate who dismisses taking an oath renouncing Philippine citizenship as a mere scrap of paper. And this resulted in the Republic lurching from one reactive policy to another, the government imposing measures that are far detached from the people’s will or the national interest.
One symptom of the disconnect is the present Administration trying to (or at least acts like it wants to) direct people to the good life. But experience shows how unhinged this is from reality. And under our constitutional system, that shouldn’t even be government’s primary focus. Thus, the principles of “common good” (the individual’s right to human flourishing) and “subsidiarity” (the people deciding for themselves how to attain that common good), embodied in our Constitution, but which the ruling political class keeps ignoring.
Instead, our Constitution declares that our government really has one job to do: “to serve and protect the people.”
Thus, essential are the maintenance of peace and order, and the protection of life, liberty, and property.
Our government is not mandated to directly run the country, its economy, educate the youth, and develop society. That is properly the people’s responsibility. As far as those are concerned, including attaining a just social order and social justice, the government merely “recognizes,” “promotes,” and “develops” -- serving as an assist to the work primarily carried out by the Filipino people.
In short, the government is actually supposed to keep its efforts to the minimum, limited to fostering an environment where the people are free to properly do their thing. After that, the government should just keep out of the people’s way.
If you think the foregoing is a mere academic concern better confined to the classroom, think again. This Administration has expanded the reach of government to areas that should primarily be left to the people.
By doing so, insisting in interfering with business and education through more regulations, weakening institutions like the family and the Church, and acting like the “padrone” through billions spent on the Conditional Cash Transfer, this Administration now feels entitled to increase taxes to expand its powers even more.
So now, we have a proposed 2016 budget of P3 trillion, representing a whopping 461% increase from 2000 and a nearly 300% from 2006.
The government’s “underspending” 2014 budget deficit (which meant that, despite all the underspending for necessary infrastructure, our government still spent more than it earned) is P73.1 billion.
The foregoing is within the context of the Filipino paying among the highest income tax in Asia but with the lowest wage rates in the world for work hours deemed among the longest globally.
And this is not counting the fact that Metro Manila workers suffer the longest commutes due to the now internationally recognized as the world’s worst traffic.
And with all that money being taken from ordinary taxpaying Filipino citizens (aside from an external debt of P2.042 trillion and domestic debt of P3.856 trillion, resulting in an outstanding debt of P5.898 trillion as of August 2015), what does this Administration have to show for it?
One of the world’s worst airports, the world’s worst traffic, slowest internet speed; 23.2% unemployment (80% of which belong to the 18-34 age group), around 7% student drop out rates, nearly 26% poverty incidence; water shortage (amidst floods), huge backlog in issuances of drivers licenses and car plates and passports; and a deteriorating educational system.
In the end, the “just-let-the-government-take-care-of-you” cash dole-outs, the considerable unemployment/underemployment rates, and legislation like the Kasambahay Law (that demands a professional’s pay but without the need to work professionally), all provide a clear disincentive to work and fosters an entitlement culture that could only lead to this country’s social and fiscal bankruptcy.
Yes, we seem to have improved competitiveness. But even that proves my point: an examination of this year’s and the last Global Competitiveness Index reveals the uptick attributable to private sector efforts and held back by bureaucratic red tape.
And there are still the areas of special concern remaining unaddressed: Yolanda rehabilitation and the inability to give justice to the Special Action Forces 44.
And yet, quite insanely, on the one job this government is supposed to do -- to protect our people and territory -- it bafflingly waffles between apathy, incompetence, or the downright treasonous.
Thus our country bears increased incidence of crime, increased smuggling, unchecked rise of illegal aliens (estimated at 1.3 million, posing a threat to national security, as well as stealing employment), the confused legal/diplomatic “defense” of our territory vis-a-vis China, and the almost giving away of Mindanao to a supposed “Bangsamoro”. All messes clearly intended to be left to the following administration to clean up.
Hopefully, our next set of government leaders has had a better read of our Constitution. And respect the fact that words (and oaths) do matter.
23.8.15
The Philippines' all or nothing bet on jurisdiction
my Trade Tripper column in this 24-25 July 2015 weekend issue of BusinessWorld:
Offhand, it can be said that we were brought to this situation by a series of serendipitous recent events. If it weren’t for a coastal vessel that got rammed through, if it weren’t for an International Court of Justice (ICJ) ruling defining and characterizing islands, if it weren’t for the personal peculiarities of two presidents, if it weren’t for China’s uncertain economic foundations, if it weren’t for ASEAN’s dysfunctional unity, and a whole lot more, we wouldn’t be in this conundrum we are in right now where a “victory” is a problem that necessitates careful planning.
Not that “victory” could be even easily defined. Ultimately, the Philippine case isn’t even about determining who owns the disputed territories but rather about definitions: what exactly is the nine-dash line, and what are the legal implications of certain islands that stand above the tides and whether the same could sustain habitation or not.
But for now, that is not even the main concern. It is jurisdiction. Because in international law, generally speaking (though I am unaware for the moment of exceptions, except perhaps for peace and security issues), no country can be made to submit to the jurisdiction of a tribunal without its consent. And the simple reason for this is that oft-mentioned but frequently misunderstood concept of “sovereignty.”
Both the Philippines and China, of course, are signatories to the 1984 United Nations Convention on the Law of the Sea (UNCLOS). And normally any dispute arising from the provisions of the UNCLOS would be referred to the International Tribunal for the Law of the Sea (ITLOS), which has jurisdiction over all disputes and all applications submitted to it in accordance with the convention. It also includes all matters specifically provided for in any other agreement that confers jurisdiction on the tribunal.
But as everybody knows, China has decided not to place itself under the jurisdiction of the UNCLOS dispute system when it made the following declaration upon joining the UNCLOS: “The Government of the People’s Republic of China does not accept any of the procedures provided for in Section 2 of Part XV of the Convention with respect to all the categories of disputes referred to in paragraph 1 (a)(b) and (c) of Article 298 of the Convention.”
China’s reference to Article 298 means that “it does not accept any one or more of the procedures provided for in Section 2 with respect to one or more of the following categories of disputes”: disputes concerning the interpretation or application of Articles 15, 74 and 83 relating to sea boundary delimitations, or those involving historic bays or titles; disputes concerning military activities, including military activities by government vessels and aircraft engaged in non-commercial service, and disputes concerning law enforcement activities in regard to the exercise of sovereign rights or jurisdiction excluded from the jurisdiction of a court or tribunal under Article 297; and disputes in respect of which the UN Security Council is exercising its authorized functions, unless the Security Council decides to remove the matter from its agenda or calls upon the parties to settle it by the means provided for in the UNCLOS.
The Philippines, accordingly, is relying Section 2 of Part XV, Article 286 of the UNCLOS, which in substance provides for instances where States dispute the interpretation of a certain provision of the UNCLOS and they cannot come to an agreement on the matter. One State can then unilaterally submit the issue before a court or arbitral tribunal for determination. Now this has been posited as the “compulsory dispute settlement system” under the UNCLOS.
The phrase “compulsory dispute settlement procedures” is admittedly a misleading term that has confused a lot of people. Article 287 allows States four dispute settlement options. Two are arbitration procedures: under Annex VII, and “special” arbitration under Annex VIII. Two are adjudication procedures: before the ICJ, and before ITLOS.
This is generally thought to be understood as compulsory because it refers a dispute to arbitration as the mandatory mode of settling a dispute whenever the parties have not come to an agreement as to what mode they have selected (the choices are the ICJ, ITLOS or arbitration). This presupposes, however, that the parties already agreed to bring the matter to dispute settlement. Because despite the words “compulsory” or “mandatory,” the UNCLOS dispute procedure is still consensual in nature. As we know already, the Chinese have refused our invitation to bring the matter to dispute settlement under UNCLOS rules.
Anyway, the tribunal members having been selected, its first order of business was to designate the Permanent Court of Arbitration, and adopt its rules of procedure.
In the end, the fate of the Philippine claim is irrevocably now in the hands of a Ghanaian, a German, a Pole, a Frenchman, a Dutchman, and Americans.
And I really don’t think anybody in The Hague was remotely impressed by our 35-man (some reports say 60) delegation “show of force.”
Offhand, it can be said that we were brought to this situation by a series of serendipitous recent events. If it weren’t for a coastal vessel that got rammed through, if it weren’t for an International Court of Justice (ICJ) ruling defining and characterizing islands, if it weren’t for the personal peculiarities of two presidents, if it weren’t for China’s uncertain economic foundations, if it weren’t for ASEAN’s dysfunctional unity, and a whole lot more, we wouldn’t be in this conundrum we are in right now where a “victory” is a problem that necessitates careful planning.
Not that “victory” could be even easily defined. Ultimately, the Philippine case isn’t even about determining who owns the disputed territories but rather about definitions: what exactly is the nine-dash line, and what are the legal implications of certain islands that stand above the tides and whether the same could sustain habitation or not.
But for now, that is not even the main concern. It is jurisdiction. Because in international law, generally speaking (though I am unaware for the moment of exceptions, except perhaps for peace and security issues), no country can be made to submit to the jurisdiction of a tribunal without its consent. And the simple reason for this is that oft-mentioned but frequently misunderstood concept of “sovereignty.”
Both the Philippines and China, of course, are signatories to the 1984 United Nations Convention on the Law of the Sea (UNCLOS). And normally any dispute arising from the provisions of the UNCLOS would be referred to the International Tribunal for the Law of the Sea (ITLOS), which has jurisdiction over all disputes and all applications submitted to it in accordance with the convention. It also includes all matters specifically provided for in any other agreement that confers jurisdiction on the tribunal.
But as everybody knows, China has decided not to place itself under the jurisdiction of the UNCLOS dispute system when it made the following declaration upon joining the UNCLOS: “The Government of the People’s Republic of China does not accept any of the procedures provided for in Section 2 of Part XV of the Convention with respect to all the categories of disputes referred to in paragraph 1 (a)(b) and (c) of Article 298 of the Convention.”
China’s reference to Article 298 means that “it does not accept any one or more of the procedures provided for in Section 2 with respect to one or more of the following categories of disputes”: disputes concerning the interpretation or application of Articles 15, 74 and 83 relating to sea boundary delimitations, or those involving historic bays or titles; disputes concerning military activities, including military activities by government vessels and aircraft engaged in non-commercial service, and disputes concerning law enforcement activities in regard to the exercise of sovereign rights or jurisdiction excluded from the jurisdiction of a court or tribunal under Article 297; and disputes in respect of which the UN Security Council is exercising its authorized functions, unless the Security Council decides to remove the matter from its agenda or calls upon the parties to settle it by the means provided for in the UNCLOS.
The Philippines, accordingly, is relying Section 2 of Part XV, Article 286 of the UNCLOS, which in substance provides for instances where States dispute the interpretation of a certain provision of the UNCLOS and they cannot come to an agreement on the matter. One State can then unilaterally submit the issue before a court or arbitral tribunal for determination. Now this has been posited as the “compulsory dispute settlement system” under the UNCLOS.
The phrase “compulsory dispute settlement procedures” is admittedly a misleading term that has confused a lot of people. Article 287 allows States four dispute settlement options. Two are arbitration procedures: under Annex VII, and “special” arbitration under Annex VIII. Two are adjudication procedures: before the ICJ, and before ITLOS.
This is generally thought to be understood as compulsory because it refers a dispute to arbitration as the mandatory mode of settling a dispute whenever the parties have not come to an agreement as to what mode they have selected (the choices are the ICJ, ITLOS or arbitration). This presupposes, however, that the parties already agreed to bring the matter to dispute settlement. Because despite the words “compulsory” or “mandatory,” the UNCLOS dispute procedure is still consensual in nature. As we know already, the Chinese have refused our invitation to bring the matter to dispute settlement under UNCLOS rules.
Anyway, the tribunal members having been selected, its first order of business was to designate the Permanent Court of Arbitration, and adopt its rules of procedure.
In the end, the fate of the Philippine claim is irrevocably now in the hands of a Ghanaian, a German, a Pole, a Frenchman, a Dutchman, and Americans.
And I really don’t think anybody in The Hague was remotely impressed by our 35-man (some reports say 60) delegation “show of force.”
15.7.15
The Trans-Pacific Partnership’s far-reaching strategic significance
was my Trade Tripper column in the 10-11 July issue of BusinessWorld:
Several developments happened almost simultaneously in the international trade world, and amusingly they all involve just three letters: T, P and A. US President Barack Obama got his Trade Promotion Authority, albeit with much acrimony, and then accordingly set his sights set on the Trans-Pacific Partnership (TPP). Around about that time, the Philippines gave the clearest declaration yet that it wants to join the TPP. Naturally, without a word if the United States wants the Philippines.
On record, what needs to be done is the Philippines being able to comply with certain requirements for member countries: rule of law, opening up to foreign ownership of businesses or property, addressing State ownership of certain industries, intellectual property, and the like. The fact that the Philippines is requesting for “flexibilities” in dealing with TPP obligations isn’t also helpful.
But history is also against the Philippines, what with how we reacted in the immediate aftermath of the Cancun World Trade Organization ministerial debacle of 2003. Jubilant about the negotiation’s collapse rather than commiserating with our trade partners, particularly the US, we immediately followed this by quite unsubtly publicly rebuffing US invitations to enter into a trade partnership with it. Expectedly, the US has a long memory regarding insults.
Incidentally, the TPP currently includes as parties Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the US.
It can’t be denied that the TPP is important, at least as far as Mr. Obama’s foreign policy is concerned. As CNN points out, without the TPP “Obama’s entire Asia pivot strategy is in jeopardy. While Obama has struggled to stamp his authority on the globe, his Asia policy had until now been seen as a bright spot given the fracturing of nations in the Middle East, the rise of extremist groups such as ISIS and the return of Cold War-style hostilities with Russia. His promise to channel power and resources toward Asia was widely welcomed in the region as an antidote to China’s rising might among allies deeply concerned about Beijing’s territorial ambitions on the East and South China seas. Japan, for instance, was deeply appreciative of Obama’s forceful statement in April 2014 that US treaty commitments to its ally were ‘absolute’ amidst rising territorial tensions between Tokyo and Beijing.”
Unfortunately, despite this, the Philippines has absolutely no leverage with the US to gain admission to the TPP. Philippine policy regarding China and the West Philippine Sea, for example, is so obsequiously in line with US interests (some say, more American than the US position) that Mr. Obama would rightly see no point in even considering it. Gratitude has no place in foreign relations and no country in its right mind would pay for something it already has.
The other thing that the Philippines perhaps failed to take into account in its wishing is how dysfunctional ASEAN really is. Milton Friedman’s 1997 remarks was recently quoted in relation to the Greek financial crisis but the words practically apply to our region (just change the word “Europe” for “ASEAN”):
“Europe’s common market exemplifies a situation that is unfavorable to a common currency. It is composed of separate nations, whose residents speak different languages, have different customs, and have far greater loyalty and attachment to their own country than to the common market or to the idea of ‘Europe.’ Despite being a free trade area, goods move less freely than in the United States, and so does capital.”
Hence, why Cambodian Prime Minister Hun Sen’s lament against the TPP seems spot on. Reported by The Diplomat, he blames “the TPP for leaving half (or, more accurately, six out of 10) ASEAN countries outside of it. ‘We should review again... why the Trans-Pacific Partnership did not include 10 ASEAN members,’ Hun Sen said. “What is the purpose, real intention of establishing [the] Trans-Pacific Partnership... that they include half of ASEAN to be partners... and leaving half of ASEAN outside.”
This is despite the praises that economic commentators (and even Singapore Prime Minister Lee Hsien Loong) have heaped on the TPP. But Hun Sen’s criticism may ultimately be correct, if not for what he actually said.
The TPP is divisive not because it intentionally excludes certain countries but because, as I alluded above, it offers a divided ASEAN of differing interests an avenue to expand trade individually rather than as one. And the nature of the TPP further exacerbates these differences.
Gone are the days when trade negotiations meant the lowering of tariffs and the ridding of quotas. Right now, these are shallow considerations, and for a country like Singapore already mean nothing. But for countries like the Philippines, these will mean copyright and pharmaceutical-related measures, investment regimes, property ownership, and -- most significantly -- investment disputes. The latter effectively transfers to a foreign body the power to hold back health, sanitary, or environmental measures that the Philippines may deem necessary.
Not to be flippant, but the TPP clearly is not as easy as ABC.
Several developments happened almost simultaneously in the international trade world, and amusingly they all involve just three letters: T, P and A. US President Barack Obama got his Trade Promotion Authority, albeit with much acrimony, and then accordingly set his sights set on the Trans-Pacific Partnership (TPP). Around about that time, the Philippines gave the clearest declaration yet that it wants to join the TPP. Naturally, without a word if the United States wants the Philippines.
On record, what needs to be done is the Philippines being able to comply with certain requirements for member countries: rule of law, opening up to foreign ownership of businesses or property, addressing State ownership of certain industries, intellectual property, and the like. The fact that the Philippines is requesting for “flexibilities” in dealing with TPP obligations isn’t also helpful.
But history is also against the Philippines, what with how we reacted in the immediate aftermath of the Cancun World Trade Organization ministerial debacle of 2003. Jubilant about the negotiation’s collapse rather than commiserating with our trade partners, particularly the US, we immediately followed this by quite unsubtly publicly rebuffing US invitations to enter into a trade partnership with it. Expectedly, the US has a long memory regarding insults.
Incidentally, the TPP currently includes as parties Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the US.
It can’t be denied that the TPP is important, at least as far as Mr. Obama’s foreign policy is concerned. As CNN points out, without the TPP “Obama’s entire Asia pivot strategy is in jeopardy. While Obama has struggled to stamp his authority on the globe, his Asia policy had until now been seen as a bright spot given the fracturing of nations in the Middle East, the rise of extremist groups such as ISIS and the return of Cold War-style hostilities with Russia. His promise to channel power and resources toward Asia was widely welcomed in the region as an antidote to China’s rising might among allies deeply concerned about Beijing’s territorial ambitions on the East and South China seas. Japan, for instance, was deeply appreciative of Obama’s forceful statement in April 2014 that US treaty commitments to its ally were ‘absolute’ amidst rising territorial tensions between Tokyo and Beijing.”
Unfortunately, despite this, the Philippines has absolutely no leverage with the US to gain admission to the TPP. Philippine policy regarding China and the West Philippine Sea, for example, is so obsequiously in line with US interests (some say, more American than the US position) that Mr. Obama would rightly see no point in even considering it. Gratitude has no place in foreign relations and no country in its right mind would pay for something it already has.
The other thing that the Philippines perhaps failed to take into account in its wishing is how dysfunctional ASEAN really is. Milton Friedman’s 1997 remarks was recently quoted in relation to the Greek financial crisis but the words practically apply to our region (just change the word “Europe” for “ASEAN”):
“Europe’s common market exemplifies a situation that is unfavorable to a common currency. It is composed of separate nations, whose residents speak different languages, have different customs, and have far greater loyalty and attachment to their own country than to the common market or to the idea of ‘Europe.’ Despite being a free trade area, goods move less freely than in the United States, and so does capital.”
Hence, why Cambodian Prime Minister Hun Sen’s lament against the TPP seems spot on. Reported by The Diplomat, he blames “the TPP for leaving half (or, more accurately, six out of 10) ASEAN countries outside of it. ‘We should review again... why the Trans-Pacific Partnership did not include 10 ASEAN members,’ Hun Sen said. “What is the purpose, real intention of establishing [the] Trans-Pacific Partnership... that they include half of ASEAN to be partners... and leaving half of ASEAN outside.”
This is despite the praises that economic commentators (and even Singapore Prime Minister Lee Hsien Loong) have heaped on the TPP. But Hun Sen’s criticism may ultimately be correct, if not for what he actually said.
The TPP is divisive not because it intentionally excludes certain countries but because, as I alluded above, it offers a divided ASEAN of differing interests an avenue to expand trade individually rather than as one. And the nature of the TPP further exacerbates these differences.
Gone are the days when trade negotiations meant the lowering of tariffs and the ridding of quotas. Right now, these are shallow considerations, and for a country like Singapore already mean nothing. But for countries like the Philippines, these will mean copyright and pharmaceutical-related measures, investment regimes, property ownership, and -- most significantly -- investment disputes. The latter effectively transfers to a foreign body the power to hold back health, sanitary, or environmental measures that the Philippines may deem necessary.
Not to be flippant, but the TPP clearly is not as easy as ABC.
9.6.15
Philippine trade with US and China
was my Trade Tripper column in the 5-6 June 2015 issue of BusinessWorld:
While everybody is fixated on United States and China movements in relation to the Pacific, another set of maneuverings is happening practically unnoticed by most, and that is in the area of trade. And the effects of these could be equally significant in the longer run. It also would be a good opportunity to determine Philippine strategic thinking on such issue, particularly if there is an effective inculcation of the truism that foreign relations is but an extension of domestic policy.
The Trans-Pacific Partnership is an expanded version of the 2005 Trans-Pacific Strategic Economic Partnership Agreement and currently includes as parties Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States. The TPP is said to expand provisions of the North American Free Trade Agreement that favor US domestic industries, as well as borrowing heavily from the US-Korea Free Trade Agreement (FTA) template.
The TPP, however, is not without further controversy: the negotiations have been so secretive that many in the US complain about being in the dark regarding its contents. Zero Hedge, one of the more colorful financial blogs available online, had this interesting May 22 article en route to President Obama’s getting Trade Promotion Authority for the TPP: “While the actual contents of the TPP may be highly confidential, and their public dissemination may lead to prison time for the ‘perpetrator’ of such illegal transparency, we now know just how much it cost corporations to bribe the Senate to do the bidding of the ‘people.’ In the Supreme Court sense, of course, in which corporations are ‘people.’”
Hence, “using data from the Federal Election Commission... shows all donations that corporate members of the US Business Coalition for TPP made to US Senate campaigns between January and March 2015, when fast-tracking the TPP was being debated in the Senate. The result: it took a paltry $1.15 million in bribes to get everyone in the Senate on the same page.”
The Regional Comprehensive Economic Partnership (RCEP), on the other hand, is between the ASEAN members (Philippines, Indonesia, Malaysia, Singapore, Thailand, Brunei, Burma, Cambodia, Laos, Vietnam) and Australia, China, India, Japan, South Korea and New Zealand. It was seen as combining two prior trade proposals: the East Asian Free Trade Agreement (that had ASEAN, China, Japan and South Korea) and the Comprehensive Economic Partnership (same lineup as EAFTA but with the addition of Australia, India and New Zealand). Like the TPP, it is seen to be an FTA of high standards and comprehensiveness, including provisions that make for deeper integration between the parties.
A meeting at the ministerial level is supposed to take place in July in Kuala Lumpur, with discussions ranging from goods, services and investments, all with an eye to concluding the RCEP by 2015.
However, as East Asia Forum’s Sanchita Basu Das (“Is RCEP just the same old trade paradigm?”, Dec. 6, 2014) points out: “The RCEP agreement is plagued by the fact that participating countries are at different stages of development. Concerns have been raised that any kind of deeper economic integration could lead to huge social costs incurred by the less developed member economies. This could be due to structural adjustments and the risks of falling into a low-cost labor trap, where there is little incentive for domestic industries to move up the value chain.”
The point is that a fundamental change in thinking about economic and trade policy is sorely needed. Unfortunately, our response to international trade seems to be stuck in the 1990s. We fail to realize, as William H. Overholt ably pointed out, that the General Agreement on Tariffs and Trade and the World Trade Organization “were devised for a simpler era, when it was possible to think about world trade in the way Ricardo taught -- namely that a good is produced in one country and consumed also in a single country.” However, “by the last decade of the 20th century, production had become a complex global process. The logic of increasing efficiency by reducing trade barriers remained completely valid, but policy adaptation of that logic to a new era has faltered.”
This inability to recognize how trade evolved also feeds our continuing incapacity to measure it properly. An idea of this can be taken from Stephen Grenville: “Perhaps the most fundamental change in international trade in recent decades has been the development of multinational ‘supply chains.’ The production process has been ‘unbundled,’ with different stages of production taking place in different countries.”
Aside from the US-China dynamic, the complexities brought up don’t even approximate the intricate effects that global finance has on trade. As well as the forgotten area of culture.
Though your friendly neighborhood Trade Tripper still believes in multilateralism, nevertheless, the Philippines needs to wake up to realities and muster capabilities for greater degrees of calculation.
It would be useful therefore knowing what our presidential aspirants’ (and their possible economic teams) thinking on the matter.
While everybody is fixated on United States and China movements in relation to the Pacific, another set of maneuverings is happening practically unnoticed by most, and that is in the area of trade. And the effects of these could be equally significant in the longer run. It also would be a good opportunity to determine Philippine strategic thinking on such issue, particularly if there is an effective inculcation of the truism that foreign relations is but an extension of domestic policy.
The Trans-Pacific Partnership is an expanded version of the 2005 Trans-Pacific Strategic Economic Partnership Agreement and currently includes as parties Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States. The TPP is said to expand provisions of the North American Free Trade Agreement that favor US domestic industries, as well as borrowing heavily from the US-Korea Free Trade Agreement (FTA) template.
The TPP, however, is not without further controversy: the negotiations have been so secretive that many in the US complain about being in the dark regarding its contents. Zero Hedge, one of the more colorful financial blogs available online, had this interesting May 22 article en route to President Obama’s getting Trade Promotion Authority for the TPP: “While the actual contents of the TPP may be highly confidential, and their public dissemination may lead to prison time for the ‘perpetrator’ of such illegal transparency, we now know just how much it cost corporations to bribe the Senate to do the bidding of the ‘people.’ In the Supreme Court sense, of course, in which corporations are ‘people.’”
Hence, “using data from the Federal Election Commission... shows all donations that corporate members of the US Business Coalition for TPP made to US Senate campaigns between January and March 2015, when fast-tracking the TPP was being debated in the Senate. The result: it took a paltry $1.15 million in bribes to get everyone in the Senate on the same page.”
The Regional Comprehensive Economic Partnership (RCEP), on the other hand, is between the ASEAN members (Philippines, Indonesia, Malaysia, Singapore, Thailand, Brunei, Burma, Cambodia, Laos, Vietnam) and Australia, China, India, Japan, South Korea and New Zealand. It was seen as combining two prior trade proposals: the East Asian Free Trade Agreement (that had ASEAN, China, Japan and South Korea) and the Comprehensive Economic Partnership (same lineup as EAFTA but with the addition of Australia, India and New Zealand). Like the TPP, it is seen to be an FTA of high standards and comprehensiveness, including provisions that make for deeper integration between the parties.
A meeting at the ministerial level is supposed to take place in July in Kuala Lumpur, with discussions ranging from goods, services and investments, all with an eye to concluding the RCEP by 2015.
However, as East Asia Forum’s Sanchita Basu Das (“Is RCEP just the same old trade paradigm?”, Dec. 6, 2014) points out: “The RCEP agreement is plagued by the fact that participating countries are at different stages of development. Concerns have been raised that any kind of deeper economic integration could lead to huge social costs incurred by the less developed member economies. This could be due to structural adjustments and the risks of falling into a low-cost labor trap, where there is little incentive for domestic industries to move up the value chain.”
The point is that a fundamental change in thinking about economic and trade policy is sorely needed. Unfortunately, our response to international trade seems to be stuck in the 1990s. We fail to realize, as William H. Overholt ably pointed out, that the General Agreement on Tariffs and Trade and the World Trade Organization “were devised for a simpler era, when it was possible to think about world trade in the way Ricardo taught -- namely that a good is produced in one country and consumed also in a single country.” However, “by the last decade of the 20th century, production had become a complex global process. The logic of increasing efficiency by reducing trade barriers remained completely valid, but policy adaptation of that logic to a new era has faltered.”
This inability to recognize how trade evolved also feeds our continuing incapacity to measure it properly. An idea of this can be taken from Stephen Grenville: “Perhaps the most fundamental change in international trade in recent decades has been the development of multinational ‘supply chains.’ The production process has been ‘unbundled,’ with different stages of production taking place in different countries.”
Aside from the US-China dynamic, the complexities brought up don’t even approximate the intricate effects that global finance has on trade. As well as the forgotten area of culture.
Though your friendly neighborhood Trade Tripper still believes in multilateralism, nevertheless, the Philippines needs to wake up to realities and muster capabilities for greater degrees of calculation.
It would be useful therefore knowing what our presidential aspirants’ (and their possible economic teams) thinking on the matter.
11.7.14
China's dashed lying lines
my Trade Tripper column in the 27-28 issue of BusinessWorld:
Amid all the news regarding arresting senators and the expected ruling on the Disbursement Acceleration Program (DAP) by the Supreme Court, China’s attempts at territorial grab goes on. Bloomberg Businessweek reported that “in recent months, vessels belonging to the People’s Republic have been spotted ferrying construction materials to build new islands in the sea. Pasi Abdulpata, a Filipino fishing contractor who in October was plying the waters near Parola Island in the northern Spratlys, says he came across this huge Chinese ship sucking sand and rocks from one end of the ocean and blasting it to the other using a tube.”
The report goes on to say that “land reclamation work at Johnson South Reef started in February. There have been reports of Chinese activity at two other reefs in the Spratlys. ‘They are creating artificial islands that never existed since the creation of the world,’ says Eugenio Bito-onon, mayor of a sparsely populated stretch of the archipelago called Kalayaan. ‘The construction is massive and nonstop,’ he says, and could pave the way for China’s ‘total control of the South China Sea.’”
Providentially, Supreme Court Justice Antonio Carpio made a frank assessment of the Chinese claims during a lecture given at one of Manila’s universities: “Clearly, there is nothing ‘historical’ or ‘right’ about China’s nine-dashed line claim. The nine-dashed line claim is based not on historical facts but on historical lies.”
In fact, continues Justice Carpio, “neither the Spratlys nor Scarborough Shoal appeared in any Chinese dynasty maps, as obviously the Spratlys and Scarborough are several hundred miles farther south to Hainan Island.” Furthermore, “numerous ancient maps made by Westerners, and later by Philippine authorities, from 1636 to 1940, consistently showed that Scarborough Shoal, a.k.a. Panacot and Bajo de Masinloc, has always been part of Philippine territory. Scarborough Shoal has never appeared in a single ancient Chinese map throughout the long history of China. Neither is there any historical records of any Chinese expedition to Scarborough Shoal.”
Justice Carpio concludes: “China’s so-called historical facts to justify its nine-dashed lines are glaringly inconsistent with actual historical facts, based on China’s own historical maps, Constitutions, and official pronouncements. China has no historical link whatsoever to Scarborough Shoal. The rocks of Scarborough Shoal were never bequeathed to the present generation of Chinese by their ancestors because their ancestors never owned those rocks in the first place.”
This “nine-dashed line” has been a real nuisance not only for the Philippines but for all other countries wanting stability in the region. The problem with it is, not only is it based on historical inventions, not even the Chinese themselves in all likelihood know what it actually is. There has been no actual legal document specifically laying down in precise terms what the boundaries of the “lines” are.
And, as James Holmes writes (“The Nine-Dashed Line Isn’t China’s Monroe Doctrine,” The Diplomat), for the Chinese to claim that their “nine-dashed line” is merely the Chinese version of the Monroe doctrine is rubbish:
“... let’s beware of taking history lessons from representatives of a regime that managed to airbrush such misdeeds as the Great Leap Forward, the Cultural Revolution, and Tiananmen Square out of official and popular memory while casting itself as the heir to the Confucian traditions it once sought to eradicate. These are folks set on convincing you the lightning-bug is the same thing as the lightning.”
Mr. Holmes continues: “The difference between the American and Chinese visions of maritime law is the difference between the 17th-century Dutch international-law theorist Hugo Grotius and his English foil, jurist John Selden. Grotius insisted the seas weren’t subject to national sovereignty -- to ownership, in effect -- while Selden proclaimed English sovereignty over the waters lapping against the British Isles. A century ago, as now, Grotius is the face of US policy in the commons. Selden may as well be China’s prophet of maritime law.”
Finally, one point I’d like to make came to me while reading Mu Chunshan’s The Diplomat article (“Why Doesn’t Russia Support China in the South China Sea?”) and this is Russia’s silence despite the worsening conditions between China and the Philippines: “Russia also enjoys a good relationship with the Philippines. For example, two years ago, three Russian navy vessels (including the anti-submarine destroyer Admiral Panteleyev) arrived in Manila for a three-day port visit. According to Russia, this visit helped improve Russia-Philippine ties.”
I just find it ironic (and also amusing) that President Aquino has the benefit of Russia’s (for now) policy of non-interference. For that, it can thank Ferdinand Marcos (working with his Executive Secretary Alex Melchor and Aide-de-camp Jose Almonte), who decided to initiate diplomatic ties with the then Soviet Union in 1970. This at a time when US support was crucial for Marcos. A huge gamble if there ever was one, now paying off.
Amid all the news regarding arresting senators and the expected ruling on the Disbursement Acceleration Program (DAP) by the Supreme Court, China’s attempts at territorial grab goes on. Bloomberg Businessweek reported that “in recent months, vessels belonging to the People’s Republic have been spotted ferrying construction materials to build new islands in the sea. Pasi Abdulpata, a Filipino fishing contractor who in October was plying the waters near Parola Island in the northern Spratlys, says he came across this huge Chinese ship sucking sand and rocks from one end of the ocean and blasting it to the other using a tube.”
The report goes on to say that “land reclamation work at Johnson South Reef started in February. There have been reports of Chinese activity at two other reefs in the Spratlys. ‘They are creating artificial islands that never existed since the creation of the world,’ says Eugenio Bito-onon, mayor of a sparsely populated stretch of the archipelago called Kalayaan. ‘The construction is massive and nonstop,’ he says, and could pave the way for China’s ‘total control of the South China Sea.’”
Providentially, Supreme Court Justice Antonio Carpio made a frank assessment of the Chinese claims during a lecture given at one of Manila’s universities: “Clearly, there is nothing ‘historical’ or ‘right’ about China’s nine-dashed line claim. The nine-dashed line claim is based not on historical facts but on historical lies.”
In fact, continues Justice Carpio, “neither the Spratlys nor Scarborough Shoal appeared in any Chinese dynasty maps, as obviously the Spratlys and Scarborough are several hundred miles farther south to Hainan Island.” Furthermore, “numerous ancient maps made by Westerners, and later by Philippine authorities, from 1636 to 1940, consistently showed that Scarborough Shoal, a.k.a. Panacot and Bajo de Masinloc, has always been part of Philippine territory. Scarborough Shoal has never appeared in a single ancient Chinese map throughout the long history of China. Neither is there any historical records of any Chinese expedition to Scarborough Shoal.”
Justice Carpio concludes: “China’s so-called historical facts to justify its nine-dashed lines are glaringly inconsistent with actual historical facts, based on China’s own historical maps, Constitutions, and official pronouncements. China has no historical link whatsoever to Scarborough Shoal. The rocks of Scarborough Shoal were never bequeathed to the present generation of Chinese by their ancestors because their ancestors never owned those rocks in the first place.”
This “nine-dashed line” has been a real nuisance not only for the Philippines but for all other countries wanting stability in the region. The problem with it is, not only is it based on historical inventions, not even the Chinese themselves in all likelihood know what it actually is. There has been no actual legal document specifically laying down in precise terms what the boundaries of the “lines” are.
And, as James Holmes writes (“The Nine-Dashed Line Isn’t China’s Monroe Doctrine,” The Diplomat), for the Chinese to claim that their “nine-dashed line” is merely the Chinese version of the Monroe doctrine is rubbish:
“... let’s beware of taking history lessons from representatives of a regime that managed to airbrush such misdeeds as the Great Leap Forward, the Cultural Revolution, and Tiananmen Square out of official and popular memory while casting itself as the heir to the Confucian traditions it once sought to eradicate. These are folks set on convincing you the lightning-bug is the same thing as the lightning.”
Mr. Holmes continues: “The difference between the American and Chinese visions of maritime law is the difference between the 17th-century Dutch international-law theorist Hugo Grotius and his English foil, jurist John Selden. Grotius insisted the seas weren’t subject to national sovereignty -- to ownership, in effect -- while Selden proclaimed English sovereignty over the waters lapping against the British Isles. A century ago, as now, Grotius is the face of US policy in the commons. Selden may as well be China’s prophet of maritime law.”
Finally, one point I’d like to make came to me while reading Mu Chunshan’s The Diplomat article (“Why Doesn’t Russia Support China in the South China Sea?”) and this is Russia’s silence despite the worsening conditions between China and the Philippines: “Russia also enjoys a good relationship with the Philippines. For example, two years ago, three Russian navy vessels (including the anti-submarine destroyer Admiral Panteleyev) arrived in Manila for a three-day port visit. According to Russia, this visit helped improve Russia-Philippine ties.”
I just find it ironic (and also amusing) that President Aquino has the benefit of Russia’s (for now) policy of non-interference. For that, it can thank Ferdinand Marcos (working with his Executive Secretary Alex Melchor and Aide-de-camp Jose Almonte), who decided to initiate diplomatic ties with the then Soviet Union in 1970. This at a time when US support was crucial for Marcos. A huge gamble if there ever was one, now paying off.
25.4.14
Obama and Asia's crockpot
my Trade Tripper column for this weekend issue of BusinessWorld:
With the country expectant at US President Barack Obama’s visit to the Philippines, political commentators are looking for clues as to how the US truly sees the Philippine. Oft times, the analysis verges on two extreme ends: either indicating full support (to the point of going to war) or a more “pragmatic” view decided substantially by US’ commercial interests.
One book doing the rounds is Asia’s Cauldronby “ultra-realist” Robert Kaplan. To say that Mr. Kaplan is somewhat unimpressed by the Philippines would be a gross understatement. The Philippines, so says Mr. Kaplan, is “less a country than a ramshackle empire ruled from Luzon.” And it kind of goes downhill from there.
“‘This is still a bad Latin American economy, not an Asian one,’ a Manila-based Western economist told me. ‘It’s true that the Philippines was not much affected by the global recession of 2008, but that’s only because it was never integrated into the global economy in the first place. What you have,’ he went on, ‘is admittedly steady economic growth, lately over 6% per year, undermined by population growth of 1.7%, unlike other Pacific Rim economies that have churned ahead by almost a third higher that amount for decades, and without commensurate increases in population.’ Crucially, a ‘staggering’ 76.5% of that GDP growth in recent years went to the 40 richest Filipino families. It’s the old story, the Manila elite is getting rich at the expense of everyone else.”
Of course, the usual reaction among Filipinos is to go into a blind rage at the impertinence of this foreigner. But I myself can hardly argue with Mr. Kaplan’s assessment that in our culture, “prominent are the luxury, gated communities, inside which the wealthy can escape the dysfunctional environment through life-support systems.” In short, where our so-called “elite” can pretend that they’re Caucasians living a Spanish, American, or Mediterranean life.
The Financial Times (through book reviewer David Pilling, April 4) seems to back up Mr. Kaplan’s claims, particularly on the Philippines: “The chapter on Vietnam is strong because it draws out the historic antagonisms that underpin present frictions. Another, on the Philippines, highlights the near impossibility of a poor archipelago with a decrepit defence force -- Kaplan comes close to calling it a failed state -- being able to resist the rising power of China. The author deals in raw power, dismissing the Philippines’ appeal to international law in pursuit of its territorial claims as ‘the ultimate demonstration of weakness’.”
It is particularly here, however, on national security that I doubt the correctness of Mr. Kaplan’s views. Not that I argue against his view that our legal suit against China is indeed a sign of “weakness” but that our ally in this area -- the US -- is moving on pure amoral calculations.
As pointed out by David Feith (in his book review in the Wall Street Journal, March 25): “Less compelling is Mr. Kaplan’s confused argument about whether there is any moral dimension to China’s bid for dominance. ‘The South China Sea shows us a 21st century world void of moral struggles,’ he argues. ‘It is traditional nationalism that mainly drives politics in Asia, and will continue to do so.’ In contrast to World War II and the Cold War, ‘there is no philosophical enemy to confront.’ Yet he acknowledges that ‘Chinese dominance in Asia would be very different from American dominance,’ partly because China’s ‘authoritarian system’ is ‘less benign than the American model of government.’ No kidding.”
The fact is, the ongoing struggle (of which the Philippines is part of) right now with China is indeed moral in character. In simpler terms, it is about respect for humanity vis-à-vis love for money or power (commercial or otherwise). On a grander scale, Mr. Feith points out: “Domestically the Chinese government disdains the rule of law, denies property rights and crushes political dissent. Overseas it operates as if only might makes right, and today it is forcing confrontations across nearly all of its borders -- not just around the South China Sea but with Japan to the northeast and India to the southwest. Though Mr. Kaplan doesn’t say so, such behavior derives not from natural Chinese nationalism but from the worldview -- or moral character -- of this Chinese regime.”
What complicates the issue is Mr. Obama’s somewhat confused foreign policy and misguided cutting of its defense budget by 7.8% (which is to be contrasted to China’s increase in defense spending by 7.4%).
In the end, however, Mr. Kaplan exaggerates by labeling this area as a “cauldron.” It’s actually a crockpot: slow burning and with truly significant developments unnoticeable to Western eyes.
And I agree with The Economist’s call (“Troubled waters”, March 15): Mr. Kaplan is “too optimistic about China and enlightened authoritarianism, and China will not for a long time, if ever, replace America as the safeguarder of the global commons. Pax Sinica is still far beyond the horizon.”
With the country expectant at US President Barack Obama’s visit to the Philippines, political commentators are looking for clues as to how the US truly sees the Philippine. Oft times, the analysis verges on two extreme ends: either indicating full support (to the point of going to war) or a more “pragmatic” view decided substantially by US’ commercial interests.
One book doing the rounds is Asia’s Cauldronby “ultra-realist” Robert Kaplan. To say that Mr. Kaplan is somewhat unimpressed by the Philippines would be a gross understatement. The Philippines, so says Mr. Kaplan, is “less a country than a ramshackle empire ruled from Luzon.” And it kind of goes downhill from there.
“‘This is still a bad Latin American economy, not an Asian one,’ a Manila-based Western economist told me. ‘It’s true that the Philippines was not much affected by the global recession of 2008, but that’s only because it was never integrated into the global economy in the first place. What you have,’ he went on, ‘is admittedly steady economic growth, lately over 6% per year, undermined by population growth of 1.7%, unlike other Pacific Rim economies that have churned ahead by almost a third higher that amount for decades, and without commensurate increases in population.’ Crucially, a ‘staggering’ 76.5% of that GDP growth in recent years went to the 40 richest Filipino families. It’s the old story, the Manila elite is getting rich at the expense of everyone else.”
Of course, the usual reaction among Filipinos is to go into a blind rage at the impertinence of this foreigner. But I myself can hardly argue with Mr. Kaplan’s assessment that in our culture, “prominent are the luxury, gated communities, inside which the wealthy can escape the dysfunctional environment through life-support systems.” In short, where our so-called “elite” can pretend that they’re Caucasians living a Spanish, American, or Mediterranean life.
The Financial Times (through book reviewer David Pilling, April 4) seems to back up Mr. Kaplan’s claims, particularly on the Philippines: “The chapter on Vietnam is strong because it draws out the historic antagonisms that underpin present frictions. Another, on the Philippines, highlights the near impossibility of a poor archipelago with a decrepit defence force -- Kaplan comes close to calling it a failed state -- being able to resist the rising power of China. The author deals in raw power, dismissing the Philippines’ appeal to international law in pursuit of its territorial claims as ‘the ultimate demonstration of weakness’.”
It is particularly here, however, on national security that I doubt the correctness of Mr. Kaplan’s views. Not that I argue against his view that our legal suit against China is indeed a sign of “weakness” but that our ally in this area -- the US -- is moving on pure amoral calculations.
As pointed out by David Feith (in his book review in the Wall Street Journal, March 25): “Less compelling is Mr. Kaplan’s confused argument about whether there is any moral dimension to China’s bid for dominance. ‘The South China Sea shows us a 21st century world void of moral struggles,’ he argues. ‘It is traditional nationalism that mainly drives politics in Asia, and will continue to do so.’ In contrast to World War II and the Cold War, ‘there is no philosophical enemy to confront.’ Yet he acknowledges that ‘Chinese dominance in Asia would be very different from American dominance,’ partly because China’s ‘authoritarian system’ is ‘less benign than the American model of government.’ No kidding.”
The fact is, the ongoing struggle (of which the Philippines is part of) right now with China is indeed moral in character. In simpler terms, it is about respect for humanity vis-à-vis love for money or power (commercial or otherwise). On a grander scale, Mr. Feith points out: “Domestically the Chinese government disdains the rule of law, denies property rights and crushes political dissent. Overseas it operates as if only might makes right, and today it is forcing confrontations across nearly all of its borders -- not just around the South China Sea but with Japan to the northeast and India to the southwest. Though Mr. Kaplan doesn’t say so, such behavior derives not from natural Chinese nationalism but from the worldview -- or moral character -- of this Chinese regime.”
What complicates the issue is Mr. Obama’s somewhat confused foreign policy and misguided cutting of its defense budget by 7.8% (which is to be contrasted to China’s increase in defense spending by 7.4%).
In the end, however, Mr. Kaplan exaggerates by labeling this area as a “cauldron.” It’s actually a crockpot: slow burning and with truly significant developments unnoticeable to Western eyes.
And I agree with The Economist’s call (“Troubled waters”, March 15): Mr. Kaplan is “too optimistic about China and enlightened authoritarianism, and China will not for a long time, if ever, replace America as the safeguarder of the global commons. Pax Sinica is still far beyond the horizon.”
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