... is the first article for the year in my Trade Tripper column appearing in this Friday-Saturday issue of BusinessWorld. Just this once, an article posted in its entirety (for the rest of the year, please buy BusinessWorld!):
"As a lot of you know, it’s been almost two decades since James Fallows wrote A Damaged Culture: A New Philippines? Some pundits have recently dissected this essay, with all the usual sound and fury signifying nothing. Many Filipinos - in one form or another - nevertheless still believe in this damaged culture theory, with differences essentially arising on whom to blame for the damage (i.e., inherent damage or foreign influenced?).
Another essay that a number of Filipinos love referring to is Nick Joaquin’s A Heritage of Smallness, where the respected writer has been found to say that “society for the Filipino is a small rowboat”. This has sent a lot of Filipinos happily shaking their heads at the mediocrity of their countrymen. In fact, googling this essay would find a horde accepting our so-called “smallness” as a people. One person actually referred to it as his “favorite”.
This is nonsense. I agree when one academic once said that there are no “damaged cultures but only damaged individuals”. For me, these damaged individuals are “Filipinos who believe and encourage others to believe that Americans, Japanese, Europeans, or Chinese are better than us.” Worse are those who reject their being Filipinos and imagine themselves as American or Chinese.
As for the “heritage of smallness”, many people seem to forget (or want to ignore) the fact that Joaquin wrote another article entitled “Junking the Heritage”, where the national artist pointed out that Filipinos are moving away from their peasant attitudes, discarding timidity, and becoming more and more worldly in outlook.
We should therefore stop putting ourselves down. We should stop apologizing for who we are. We should stop thinking that other cultures and countries are superior to ours.
We should stop doing all that for the simple reason that they have no rational, factual, historical, actual basis whatsoever.
We have a great history, a beautiful culture, an enviable set of values, and a truly admirable character. As much as I can illustrate into this 800 word article: we pioneered republicanism in Asia, we wrote the Noli, we have the happiest Christmas celebrations, our family relationships are the healthiest, our ability to laugh in the face of adversity is unsurpassed [our suicide rate is among the lowest in the world and we've always ranked among the highest in happiness indexes], our food and entertainment are an amalgamation of the world’s best, our effortless creativity and stylishness miles away from most. We produced Flash Elorde, Eugene Torre, HV Dela Costa, Florentino Feliciano, and Bata Reyes.
Sure we have our downside but which country doesn’t? For every accusation of crimes here, other countries would have crackpots shooting up malls or serial killers collecting victims. We have human rights violations? Watch In The Name of the Father or Schindler's List or remember the My Lai Massacre, then ponder the fact that post-colonial Manila never suffered a race riot. We have corruption? Watch Serpico or American Gangster. Our vegetables and fruits no good? Then why the billions on farm subsidies or SPS measures applied by those you know who just to keep their farmers above water. Our politics stupid? Watch The Daily Show. Or Leno. Our politics violent? We’ve never had a presidential candidate or president assassinated, or ethnic cleansing or genocide. [Gender equality is not as big an issue here as in other countries. Women relatively have always had prominent public roles in our society. Unlike some countries, we have no qualms or make a big deal of having a woman as lead news anchor or president] And you have to be deranged to think we’re the only country that has smog, traffic jams, and rude waiters. I can think of one rich country that is actually proud of their rude waiters.
Here’s an interesting Wiki fact that Filipinos need to know:
“The first Austronesian speakers are believed to have originated on the island of Taiwan x x x [From there] settlers landed in northern Luzon in the Philippines. x x x their descendants started to spread south to the rest of the Philippine islands, Celebes (modern-day Sulawesi), northern Borneo, Moluccas (modern-day Maluku), and Java.
The settlers in Moluccas sailed eastward and began to spread to the islands of Melanesia and Micronesia between 1200 B.C. and 500 B.C. respectively. Those that spread westward reached Sumatra, the Malay peninsula and southern Vietnam by 500 B.C.
The oceanic Austronesians had reached Remote Polynesia by 1000 B.C and spread to its three extremities Hawaii by 400 A.D. New Zealand by 1300 A.D. and Easter Island between 300 A.D. In the Indian Ocean they reached Madagascar.”
From the above one can see that it was the Philippines that gave a number of countries the basis for their language and perhaps culture. We gave. From there, to being among the first democracies, Christians, people power advocates, to our overseas managers, workers and nurses, we keep giving to the world and the world keeps on becoming the better for it.
So, be proud of being a Filipino and be proud of your fellow Filipinos. Remember, people get the leaders they deserve. If you want to finally have a leader that will love and work hard for this country, we have to love and work hard for this country first."
4.1.08
4.11.07
Still on the elite
I still stand by my views on the utter underlying reason for what ails Philippine society which is our selfish and narrow minded elite.
To readers, it should be pointed out that I'm not even making a claim to originality as far as the ideas on the elite are concerned. I refer readers to far more thorough writers on the subject and a recommended list of books are as follows, for which Studwell's books should be read alongside with (and notably is merely the most recent on the subject):
> An Anarchy of Families,
> The Anti-Development State,
> The Rulemakers,
> The Modern Principalia,
> Booty Capitalism,
> Sugar and the Origins of Modern Philippine Society, and
> Democracy and Discipline.
Anybody can buy a copy of the above books at Fully Booked, Powerbooks, National Book Store, and i strongly suggest readers to do so and make their own conclusions regarding the matter.
While we're on the subject, I refer readers to pages 54-67 of The Odyssey of Lorenzo Tanada (by Agnes Bailen, 1998). As an exercise, see the names of the people who were charged as collaborators with the Japanese and compare them with the names of people now in the senate, congress, or government. Of course, some may say that the issue is so last century but, if that's the case, perhaps nobody should complain then if Imelda Marcos and the 'cronies' avoid proper trial and judgment, or when Erap got pardoned. However, that is not the point why I brought up the difficulties encountered by then Senator Tanada when he was prosecuting the elite for collaboration. The point is ... why do we still have the same group of people, the same families, leading us? Why are we still relying on the same people who have let us down for so long? Why entrust our future and the solution of our problems to the same group or families who created those same problems in the first place?
That is why I keep saying we recognize the problem first, make no bones about it, admit it, then solve it. The problem is the elite, our oligarchic class. The solution is to make our country no longer rely on them, have them loosen their grip, and create a system that actually encourages more qualified people into positions of leadership.
For me, a deliberate and committed policy of greater and liberalized trade and investment, focus on education, and the refinement of our tax laws (particularly the expansion of a graduated - with big exemptions for the middle class to lower class - estate tax) would be a good start (with emphasis on the word 'start').
Overall, we need to start espousing an overall policy of having a stake in each other, that the success of our neighbor and our community is our success as well. We have to stop this slide into thinking that we are above our fellow Filipinos, of our current idea of success being to escape from our countrymen by either migrating abroad or living smugly/arrogantly in gated/fortified communities or condos.
I am not fostering a class war, it's the elites who did for selfishly insisting that they are the ruling class and the rest as merely the 'exploited'. One illustration of a country going wrong: I see people comfortably driving Jaguars and luxurious SUVs around Powerplant, then I see old women and kindergarten kids scurrying to avoid rainwater and rushing buses at the EDSA crossing, without a proper pedestrian lane or crossing, topped off by MMDA people shouting at them. Even just setting aside the NBN-ZTE issue, the Malacanang cash in bags issue, and just look at the little things would show the utter lack of care for the least of our lot. From this alone we can see how undeserving our current leaders are.
Another example is our lousy education system. The primary victims here are the poor, which obviously don't have the resources to send their kids to Harvard or Georgetown. The Philippines is all the worse for it as the best economic policy is good education. Singapore has shown you don't even need more money to have a good educational system. Singapore actually spends less on it than a lot of other countries (see here). We can do better in this regard if our leaders really wanted to and given much thought to our country's education system. They don't.
I just want a better country, where your talent and hard work matters and not your family or capacity for corruption, where you don't have to be rich to have dignity, and where you don't need to buy an army to feel secure and at peace.
But I digress. First things first, we just obviously need a better set of leaders. At 80 million people, I'm sure we can do a whole lot better than what we have right now.
To readers, it should be pointed out that I'm not even making a claim to originality as far as the ideas on the elite are concerned. I refer readers to far more thorough writers on the subject and a recommended list of books are as follows, for which Studwell's books should be read alongside with (and notably is merely the most recent on the subject):
> An Anarchy of Families,
> The Anti-Development State,
> The Rulemakers,
> The Modern Principalia,
> Booty Capitalism,
> Sugar and the Origins of Modern Philippine Society, and
> Democracy and Discipline.
Anybody can buy a copy of the above books at Fully Booked, Powerbooks, National Book Store, and i strongly suggest readers to do so and make their own conclusions regarding the matter.
While we're on the subject, I refer readers to pages 54-67 of The Odyssey of Lorenzo Tanada (by Agnes Bailen, 1998). As an exercise, see the names of the people who were charged as collaborators with the Japanese and compare them with the names of people now in the senate, congress, or government. Of course, some may say that the issue is so last century but, if that's the case, perhaps nobody should complain then if Imelda Marcos and the 'cronies' avoid proper trial and judgment, or when Erap got pardoned. However, that is not the point why I brought up the difficulties encountered by then Senator Tanada when he was prosecuting the elite for collaboration. The point is ... why do we still have the same group of people, the same families, leading us? Why are we still relying on the same people who have let us down for so long? Why entrust our future and the solution of our problems to the same group or families who created those same problems in the first place?
That is why I keep saying we recognize the problem first, make no bones about it, admit it, then solve it. The problem is the elite, our oligarchic class. The solution is to make our country no longer rely on them, have them loosen their grip, and create a system that actually encourages more qualified people into positions of leadership.
For me, a deliberate and committed policy of greater and liberalized trade and investment, focus on education, and the refinement of our tax laws (particularly the expansion of a graduated - with big exemptions for the middle class to lower class - estate tax) would be a good start (with emphasis on the word 'start').
Overall, we need to start espousing an overall policy of having a stake in each other, that the success of our neighbor and our community is our success as well. We have to stop this slide into thinking that we are above our fellow Filipinos, of our current idea of success being to escape from our countrymen by either migrating abroad or living smugly/arrogantly in gated/fortified communities or condos.
I am not fostering a class war, it's the elites who did for selfishly insisting that they are the ruling class and the rest as merely the 'exploited'. One illustration of a country going wrong: I see people comfortably driving Jaguars and luxurious SUVs around Powerplant, then I see old women and kindergarten kids scurrying to avoid rainwater and rushing buses at the EDSA crossing, without a proper pedestrian lane or crossing, topped off by MMDA people shouting at them. Even just setting aside the NBN-ZTE issue, the Malacanang cash in bags issue, and just look at the little things would show the utter lack of care for the least of our lot. From this alone we can see how undeserving our current leaders are.
Another example is our lousy education system. The primary victims here are the poor, which obviously don't have the resources to send their kids to Harvard or Georgetown. The Philippines is all the worse for it as the best economic policy is good education. Singapore has shown you don't even need more money to have a good educational system. Singapore actually spends less on it than a lot of other countries (see here). We can do better in this regard if our leaders really wanted to and given much thought to our country's education system. They don't.
I just want a better country, where your talent and hard work matters and not your family or capacity for corruption, where you don't have to be rich to have dignity, and where you don't need to buy an army to feel secure and at peace.
But I digress. First things first, we just obviously need a better set of leaders. At 80 million people, I'm sure we can do a whole lot better than what we have right now.
21.9.07
Lamy visit and Trade Tripper
WTO Director General Pascal Lamy was here in Manila. Two days ago he gave a speech at the ADB and said that to meet the challenges of development and participation in the trading system then country vision, financing, and the role of the private sector should be focused on. With regard to national vision, he says:
“First, the importance of national vision — backed by a comprehensive strategy for getting there. No one can tell a country how to trade or become more competitive. The only successful export-led growth strategy is one which countries want themselves — that they design and implement on their own — and that remains on course over the long-term.”
Nothing to disagree about with there. I had the interesting privilege of talking to Mr. Lamy yesterday, with some of that discussion being included in today's front page article in BusinessWorld. One area I wanted to explore was the need, if any, for a revision of the present multilateral system and create in its stead a more holistic one, something like a "World Economic Organization." Mr. Lamy's answer was comprehensive and well thought of but only this portion (for reasons of space) was printed:
"BW: You mentioned before that the WTO is a medieval organization. Considering there’s been a lot of activities, is there a need to expand WTO to include finance or perhaps merge with another organization to encompass a more complete economic type of multilateral engagement?
LAMY: In my past life, I said the WTO is a medieval organization. That was some time ago in 1999.
We can improve WTO in terms of organization, institution but it’s not the present priority. The present priority is concluding the round and the reason why it’s not yet concluded has nothing to do with institutions and organization ... let’s finish the round first then we’ll have time to look at procedures that need to be improved in the organization.
Should WTO extend its limit to things covered by other international organizations? No I don’t think so, unless you totally reshuffle [the] international system which we inherited ... I don’t think members of this organization are always coherent but you know sovereignty could be monopoly of incoherence. That’s up to them but incoherence stems from incoherence of our members. If there are contradictions in what they do in trade, finance, environment, social, migration, it’s up to them to give necessary coherence within each of their organizations ...
That’s the way the system works for the moment. I don’t think enlarging the scope of WTO for the moment is the right thing to do, it would give the wrong impression that the trade dimension supersedes other dimensions of international life ..."
My Trade Tripper column today in BusinessWorld is on International Law and Philippine Law. Excerpt:
"To say that international law is to be treated within our jurisdiction as superior to our local law and our Constitution is as misleading as to say that the US embassy grounds on Roxas Boulevard is US soil (it’s not: it’s Philippine territory). As I keep saying, the faster we grasp the concept of confidently asserting our national interests vis-à-vis international law, the better international citizens we’ll be."
“First, the importance of national vision — backed by a comprehensive strategy for getting there. No one can tell a country how to trade or become more competitive. The only successful export-led growth strategy is one which countries want themselves — that they design and implement on their own — and that remains on course over the long-term.”
Nothing to disagree about with there. I had the interesting privilege of talking to Mr. Lamy yesterday, with some of that discussion being included in today's front page article in BusinessWorld. One area I wanted to explore was the need, if any, for a revision of the present multilateral system and create in its stead a more holistic one, something like a "World Economic Organization." Mr. Lamy's answer was comprehensive and well thought of but only this portion (for reasons of space) was printed:
"BW: You mentioned before that the WTO is a medieval organization. Considering there’s been a lot of activities, is there a need to expand WTO to include finance or perhaps merge with another organization to encompass a more complete economic type of multilateral engagement?
LAMY: In my past life, I said the WTO is a medieval organization. That was some time ago in 1999.
We can improve WTO in terms of organization, institution but it’s not the present priority. The present priority is concluding the round and the reason why it’s not yet concluded has nothing to do with institutions and organization ... let’s finish the round first then we’ll have time to look at procedures that need to be improved in the organization.
Should WTO extend its limit to things covered by other international organizations? No I don’t think so, unless you totally reshuffle [the] international system which we inherited ... I don’t think members of this organization are always coherent but you know sovereignty could be monopoly of incoherence. That’s up to them but incoherence stems from incoherence of our members. If there are contradictions in what they do in trade, finance, environment, social, migration, it’s up to them to give necessary coherence within each of their organizations ...
That’s the way the system works for the moment. I don’t think enlarging the scope of WTO for the moment is the right thing to do, it would give the wrong impression that the trade dimension supersedes other dimensions of international life ..."
My Trade Tripper column today in BusinessWorld is on International Law and Philippine Law. Excerpt:
"To say that international law is to be treated within our jurisdiction as superior to our local law and our Constitution is as misleading as to say that the US embassy grounds on Roxas Boulevard is US soil (it’s not: it’s Philippine territory). As I keep saying, the faster we grasp the concept of confidently asserting our national interests vis-à-vis international law, the better international citizens we’ll be."
23.7.07
The right mix
The FT's Weekend issue last, well ... weekend, featured this thought provoking piece by Martin Wolf and bolsters my view that free trade alone (but definitely not protectionism, even if the same is disguised as "fair trade") will not be enough to make this country successful but rather a combination of factors that we haven't even begun to determine, so caught up we are still in the narrow free trade/protectionist debate. Excerpts:
"The big successes of recent decades - from Hong Kong to China, South Korea to Ireland, Singapore to Taiwan, Japan to Finland - were not all free traders (though some were). Some also relied heavily on foreign direct investment (China, Ireland and Singapore), while others resisted it (Japan and South Korea). Yet all used the world economy - and therefore trade - as a central part of their development success. x x x
The argument that success will follow the overthrow of the neo-liberal consensus and the return of protection is nonsense. But the authors are right that those who argued that free trade alone is the answer were wrong. There are no magic potions for development. Developmental states can work. Many fail. But some may succeed.
Above all, developing countries should be allowed to try, and so learn from their own mistakes. Countries should be warned of the difficulties of following South Korea’s example, but allowed to do so if they wish.
Big and relatively successful developing countries, such as China and India, must participate in and be bound by global rules. They cannot be free riders. But the bulk of developing countries should be allowed to choose their own policies. Almost all will need to attract inward foreign direct investment. A few might still manage without it.
Chang is right that some of the constraints imposed upon developing countries, notably on intellectual property, are unconscionable. Most should enjoy the benefit of open markets from the rich, but be allowed to pursue their own paths, from laissez-faire to its opposite. They will make many mistakes. So be it. That is what sovereignty means.”
In this regard, it's also worthwhile to point out that the mantra of some sectors here, which is to have "fair trade, not free trade", and to have a trading system for the Philippines that is "calibrated, measured, progressive, and in synch with the country's development priorities and capacities" do not really make sense for the simple reason that they don't mean or say anything substantial or concrete.
What is "fair trade"? "Fair" for whom? For the government favored companies, with preferential treatment, at the expense of other industries and the consumers? Fair for so-called Philippine companies that are actually owned by foreigners? Or fair for companies that could never make money no matter how much favoritism is given to it? Or fair for farmers that have been victimized not by trade liberalization but by smuggling? Also, how different is "fair" from an objective, rules based trading system such as the WTO where a small country like Antigua can win in a trade dispute against the US?
Then you have "calibrated". How different is that from protectionism, of raising or maintaining tariffs, or selecting industries that have strong lobbies for purposes of giving protection? Measured? What is measured protection for companies that have been receiving subsidies, tariff protection, and other forms of government favoritism for decades and still can't make a decent business that would provide income to its workers? Or for infant industries that have been infants for decades? In any event, who does the "calibrating" and the "measuring"? Who decides who are to be the winners, those that are to be protected? Progressive? How can something be progressive when you let consumer prices rise to the detriment of the greater number of the populace, most of which are under poverty levels, just so a few companies and a few favored businessmen can hold on to their wealth and lifestyles?
The fact is, despite all attempts by these sectors to appear reasonable and thoughtful by the use of the words "fair trade" and "calibrated", the thing still boils down to protectionism which has been proven to not work and results in even greater hardship for the poor. What we need is to open the economy within a context and environment that would allow for greater maximization of the benefits of trade and a more equitable distribution of the fruits that it will bring. Finally, the word "nationalism" should not be and never be attributed solely to protectionists or so-called "fair traders". The people who espouse trade liberalization are every bit as nationalistic or patriotic, if not more so for the simple reason that they believe the Filipino can.
In any event, it's time to move the debate past the free trade/protectionist paradigm. Protectionism doesn't work, period. What we need to find out is how to have a better form of trade liberalization that fits the country's peculiar circumstances and needs and which benefits the most and not only a few.
"The big successes of recent decades - from Hong Kong to China, South Korea to Ireland, Singapore to Taiwan, Japan to Finland - were not all free traders (though some were). Some also relied heavily on foreign direct investment (China, Ireland and Singapore), while others resisted it (Japan and South Korea). Yet all used the world economy - and therefore trade - as a central part of their development success. x x x
The argument that success will follow the overthrow of the neo-liberal consensus and the return of protection is nonsense. But the authors are right that those who argued that free trade alone is the answer were wrong. There are no magic potions for development. Developmental states can work. Many fail. But some may succeed.
Above all, developing countries should be allowed to try, and so learn from their own mistakes. Countries should be warned of the difficulties of following South Korea’s example, but allowed to do so if they wish.
Big and relatively successful developing countries, such as China and India, must participate in and be bound by global rules. They cannot be free riders. But the bulk of developing countries should be allowed to choose their own policies. Almost all will need to attract inward foreign direct investment. A few might still manage without it.
Chang is right that some of the constraints imposed upon developing countries, notably on intellectual property, are unconscionable. Most should enjoy the benefit of open markets from the rich, but be allowed to pursue their own paths, from laissez-faire to its opposite. They will make many mistakes. So be it. That is what sovereignty means.”
In this regard, it's also worthwhile to point out that the mantra of some sectors here, which is to have "fair trade, not free trade", and to have a trading system for the Philippines that is "calibrated, measured, progressive, and in synch with the country's development priorities and capacities" do not really make sense for the simple reason that they don't mean or say anything substantial or concrete.
What is "fair trade"? "Fair" for whom? For the government favored companies, with preferential treatment, at the expense of other industries and the consumers? Fair for so-called Philippine companies that are actually owned by foreigners? Or fair for companies that could never make money no matter how much favoritism is given to it? Or fair for farmers that have been victimized not by trade liberalization but by smuggling? Also, how different is "fair" from an objective, rules based trading system such as the WTO where a small country like Antigua can win in a trade dispute against the US?
Then you have "calibrated". How different is that from protectionism, of raising or maintaining tariffs, or selecting industries that have strong lobbies for purposes of giving protection? Measured? What is measured protection for companies that have been receiving subsidies, tariff protection, and other forms of government favoritism for decades and still can't make a decent business that would provide income to its workers? Or for infant industries that have been infants for decades? In any event, who does the "calibrating" and the "measuring"? Who decides who are to be the winners, those that are to be protected? Progressive? How can something be progressive when you let consumer prices rise to the detriment of the greater number of the populace, most of which are under poverty levels, just so a few companies and a few favored businessmen can hold on to their wealth and lifestyles?
The fact is, despite all attempts by these sectors to appear reasonable and thoughtful by the use of the words "fair trade" and "calibrated", the thing still boils down to protectionism which has been proven to not work and results in even greater hardship for the poor. What we need is to open the economy within a context and environment that would allow for greater maximization of the benefits of trade and a more equitable distribution of the fruits that it will bring. Finally, the word "nationalism" should not be and never be attributed solely to protectionists or so-called "fair traders". The people who espouse trade liberalization are every bit as nationalistic or patriotic, if not more so for the simple reason that they believe the Filipino can.
In any event, it's time to move the debate past the free trade/protectionist paradigm. Protectionism doesn't work, period. What we need to find out is how to have a better form of trade liberalization that fits the country's peculiar circumstances and needs and which benefits the most and not only a few.
14.6.07
Feliciano on tariffs
Yesterday I had the privilege of participating (as reactor) in a highly interesting and informative lecture given by Justice Florentino Feliciano (formerly of the Philippine Supreme Court and the Appellate Body of the WTO) at the AIM. The topic was "Constitutional Law Issues and the Tariff Regime of the Philippines". The following article, by Paul How, appears in today's issue of BusinessWorld but, unfortunately, is not available online. For the benefit of the readers, here it is:
Clearer jurisdiction over tariffs sought
A former justice of the Supreme Court yesterday called for amendments to the Tariff and Customs Code of the Philippines to better define the mandate of the Legislative and Executive in the modification of tariff rates.
Retired justice Florentino P. Feliciano, in a lecture yesterday, cited Sections 401 and 402 of the Customs Code, which had been amended in 1978 by former President Ferdinand E. Marcos to allow greater discretion on the part of the Executive to change rates. Mr. Feliciano said the two sections had to be modified “back to conformity” to the 1987 Constitution, which primarily gives Congress the authority to modify taxes, duties and tariffs.
“There has been no systematic legislative effort to rationalize comprehensively the Tariff and Customs Code of the Philippines,” the former justice said, noting that limits should be imposed on legislative delegation to the Executive to revise tariff rates. Sec. 401 of the law provides, among other things, to raise import duties by up to 100% of the present rate at any single time, and to lower these even to a 0% rate. When the law was passed back in 1957, Mr. Feliciano noted, rates could be raised by up to 500% at once, and were lowered by at most
half of the rate at the time. It also limited presidential action when Congress was not in
session.
Sec. 402, on the other hand, is the basis for the Chief Executive entering into trade agreements with foreign governments where-in import duties can be modified. Mr. Feliciano, however, said there was a “caveat” to clarifying Congress’ primary role in tariff rate revision, in that international agreements previously entered into by the President will still have to be honored. An amendment of the Customs Code, he said, “does not eliminate or mitigate international obligations. Our problem is not a defense to our liability to [other countries], and this could open us to suits.”
Ma. Lourdes A. Sereno, former Law professor of the University of the Philippines, said
the issue was not a merely “academic” one and was something affecting the present competitiveness of the country. She pointed out that while Congress has enacted two laws modifying tariff rates since 1986, the Aquino administration had ordered six of these; the Ramos administration, 15; the Estrada administration, five; and the Arroyo administration, over 20 since 2001. This, she said, was “entirely inconsistent with the constitutional design.”
She noted how tariff rates in the country were comparably lower than those of Mexico,
India, Japan, Indonesia and Malaysia. She said that, for nonagricultural imports, the Philippines was limited to imposing on average a rate of 23.4%, but the average applied rate was 4.3%. For agricultural imports covered by trade agreements, the Philippines had an average bound tariff rate of 34.7%, but only had an 8% average applied rate.
Trade lawyer Jeremy I. Gatdula, however, said tariff rates in Hong Kong and Singapore were low compared to the Philippines. But this did not mean they were performing poorly. “Malaysia may have higher average tariffs. but it’s not something we need to follow. Malaysia is essentially different from the Philippines, just as the US is different as well.” Mr. Gatdula
said discussions should not be focused on raising tariffs but on finding out “what works for
the Philippines.”
Lilia R. Bautista, a former Trade undersecretary, said it may be “misleading” to compare
Philippine tariff rates with other countries, saying that most nations normally had a high
average bound rate and a lower average applied rate. She also said that although there is
a constitutional question on the Executive’s entering into trade agreements, ratification by
Congress allowed legislative participation.
Energy Sec. Raphael P.M. Lotilla, who was also present in the talk, said Congress may
appreciate the convenience of allowing the Executive to propose changes to tariff regimes,
leaving the legislature to ratify the agreements containing these changes. Mr. Lotilla, a former
Economic Planning official, said it may be “more cumbersome” if the legislature will
have to draft their versions of a bill based on the proposals of the Executive, adding that the
Tariff Commission also went through the process of conducting public hearings.
Tariffs, as I mentioned during my talk, are but instruments of our national will. It's effectiveness (whether it be the lowering or increase thereof) depends on how well that instrument is used in conjunction with other factors that are peculiar to our society. It is therefore not substantially worth arguing that US did this or Malaysia (which, it must be emphasized, was considered in one international ranking as having an economy more open than that of the Philippines despite the alleged higher average tariffs) or Singapore or Hong Kong or Korea did so and so because those countries are evidently not the Philippines.
I also stressed the need to create well defined rules that distinguish treaties from executive agreements, particularly as the Philippines is in the process of either negotiating or entering into a number of trade agreements within the coming months.
It's also time we stop resorting to labels, whether it be protectionists or free traders as such just denigrate the arguments into simplistic categories that do nothing to help arrive at solutions. We should therefore stop referring to protectionists as "nationalists" (as the latter doesn't necessarily follow the former) and trade liberalization advocates (not free traders) as "globalists" (most of the trade libbers I know are highly nationalistic individuals). In the end, we are all Filipinos, of different persuasions maybe, but with the same purpose (hopefully) in mind.
Clearer jurisdiction over tariffs sought
A former justice of the Supreme Court yesterday called for amendments to the Tariff and Customs Code of the Philippines to better define the mandate of the Legislative and Executive in the modification of tariff rates.
Retired justice Florentino P. Feliciano, in a lecture yesterday, cited Sections 401 and 402 of the Customs Code, which had been amended in 1978 by former President Ferdinand E. Marcos to allow greater discretion on the part of the Executive to change rates. Mr. Feliciano said the two sections had to be modified “back to conformity” to the 1987 Constitution, which primarily gives Congress the authority to modify taxes, duties and tariffs.
“There has been no systematic legislative effort to rationalize comprehensively the Tariff and Customs Code of the Philippines,” the former justice said, noting that limits should be imposed on legislative delegation to the Executive to revise tariff rates. Sec. 401 of the law provides, among other things, to raise import duties by up to 100% of the present rate at any single time, and to lower these even to a 0% rate. When the law was passed back in 1957, Mr. Feliciano noted, rates could be raised by up to 500% at once, and were lowered by at most
half of the rate at the time. It also limited presidential action when Congress was not in
session.
Sec. 402, on the other hand, is the basis for the Chief Executive entering into trade agreements with foreign governments where-in import duties can be modified. Mr. Feliciano, however, said there was a “caveat” to clarifying Congress’ primary role in tariff rate revision, in that international agreements previously entered into by the President will still have to be honored. An amendment of the Customs Code, he said, “does not eliminate or mitigate international obligations. Our problem is not a defense to our liability to [other countries], and this could open us to suits.”
Ma. Lourdes A. Sereno, former Law professor of the University of the Philippines, said
the issue was not a merely “academic” one and was something affecting the present competitiveness of the country. She pointed out that while Congress has enacted two laws modifying tariff rates since 1986, the Aquino administration had ordered six of these; the Ramos administration, 15; the Estrada administration, five; and the Arroyo administration, over 20 since 2001. This, she said, was “entirely inconsistent with the constitutional design.”
She noted how tariff rates in the country were comparably lower than those of Mexico,
India, Japan, Indonesia and Malaysia. She said that, for nonagricultural imports, the Philippines was limited to imposing on average a rate of 23.4%, but the average applied rate was 4.3%. For agricultural imports covered by trade agreements, the Philippines had an average bound tariff rate of 34.7%, but only had an 8% average applied rate.
Trade lawyer Jeremy I. Gatdula, however, said tariff rates in Hong Kong and Singapore were low compared to the Philippines. But this did not mean they were performing poorly. “Malaysia may have higher average tariffs. but it’s not something we need to follow. Malaysia is essentially different from the Philippines, just as the US is different as well.” Mr. Gatdula
said discussions should not be focused on raising tariffs but on finding out “what works for
the Philippines.”
Lilia R. Bautista, a former Trade undersecretary, said it may be “misleading” to compare
Philippine tariff rates with other countries, saying that most nations normally had a high
average bound rate and a lower average applied rate. She also said that although there is
a constitutional question on the Executive’s entering into trade agreements, ratification by
Congress allowed legislative participation.
Energy Sec. Raphael P.M. Lotilla, who was also present in the talk, said Congress may
appreciate the convenience of allowing the Executive to propose changes to tariff regimes,
leaving the legislature to ratify the agreements containing these changes. Mr. Lotilla, a former
Economic Planning official, said it may be “more cumbersome” if the legislature will
have to draft their versions of a bill based on the proposals of the Executive, adding that the
Tariff Commission also went through the process of conducting public hearings.
Tariffs, as I mentioned during my talk, are but instruments of our national will. It's effectiveness (whether it be the lowering or increase thereof) depends on how well that instrument is used in conjunction with other factors that are peculiar to our society. It is therefore not substantially worth arguing that US did this or Malaysia (which, it must be emphasized, was considered in one international ranking as having an economy more open than that of the Philippines despite the alleged higher average tariffs) or Singapore or Hong Kong or Korea did so and so because those countries are evidently not the Philippines.
I also stressed the need to create well defined rules that distinguish treaties from executive agreements, particularly as the Philippines is in the process of either negotiating or entering into a number of trade agreements within the coming months.
It's also time we stop resorting to labels, whether it be protectionists or free traders as such just denigrate the arguments into simplistic categories that do nothing to help arrive at solutions. We should therefore stop referring to protectionists as "nationalists" (as the latter doesn't necessarily follow the former) and trade liberalization advocates (not free traders) as "globalists" (most of the trade libbers I know are highly nationalistic individuals). In the end, we are all Filipinos, of different persuasions maybe, but with the same purpose (hopefully) in mind.
2.5.07
globalization and labor
As I'm sure the entire world knows by now, I guested last night in The Explainer. The topic was labor. Host Manolo Quezon gave a comprehensive discussion on the labor picture here in the Philippines. Particularly interesting for me was on how the change in work distribution in the last ten years reflect the way the Philippine economy changed. Then I had to come in and ruin the show. My segment dealt on the issue of how globalization affected labor.
Some points I raised during the show and some which I forgot to raise out of sheer nervousness:
- economic studies have indicated that "the countries which find it easier to fire are the same countries which find it easier to hire." In other words, the focus here is on productivity, the ability to engage in business that would succeed. By doing so, such results in the creation of more and better jobs.
- as discussed by Manolo, the make up of labor has changed dramatically over the last ten years. The pie chart exhibited during the show sees the identity of the pie slices (representing the different sectors) changing from 1997 to 2007. What must be pointed out, however, is that not only has the pie slices changed but the pie got bigger as well over the years.
- businessmen, more than lower tariffs (or increasing tariffs, depending on whose side you are on), lowering of taxes, etc., all find secondary to the need to have consistent and stable policies upon which to plan and do business. If you have a country like the Philippines whose policy changes not only from administration to administration but from month to month or on a case by case basis, then you can understand why business finds it hard to do well here.
- business leaders (and even lawyers) must realize that they have to make a more determined effort to understand the intricacies and ramifications of what is going on in international trade. No longer are companies subject to mere national laws alone. Even at this moment, companies are subject to international rules that are either prevailing at the regional level (i.e., ASEAN) or multilateral (i.e., WTO, WIPO, WCO). In short, companies from here on end have to contend with at two sets of rules for each and every transaction: local and international. This will only get worse if the Doha Round fails as it is anticipated that there will be a proliferation of bilateral trade rules (right now, such as ASEAN, ASEAN-Korea, and ASEAN-China; with the following possibles: JPEPA, RP-US, ASEAN-India).
- Business cannot and should not rely on government for information or data or possible planning for the simple reason that it is their business. Instead, it should be the other way around. Business should be quite specific in what they want and, more importantly, be able to intelligently convey what they want in the international trading arena. This won't happen unless they take the time and effort to realize that there is a need to understand or grapple with international trade rules. So far, the only industries I know who are quite consistently successful at this are sugar, cement, tuna, and poultry.
- labor should not blame (or at least not solely blame) globalization and trade for any loss of employment. There are a host of other factors, primary among them are changes in technology, which eliminates the need for certain type of workers. Another could be changes in fashion or taste. If anything else, globalization and increased trade results in more opportunities for job creation. It also generates wealth (see studies by Jeffrey Sachs) that could be used for welfare purposes, such as subsidies for workers or re-training or further education.
- legislating minimum wages and increasing taxes on the rich may not be the most effective ways in which to better the situation of labor. To legislate minimum wages is inefficient, scares off investors, and locks in resources in areas which should not be engaged in. Increasing taxes on the rich (at least to a certain extent) has the same effects. The better way is to give workers more ability to be mobile, and making business have greater productivity (which we sorely need to improve on) and competitiveness and let the benefits follow. Even then, the focus should be subsidizing workers who had to accept lower wages from reasons that could be traced to temporary dislocations caused by globalization, re-training, and better education
- finally, Filipinos should take heart in that the way the global economy is headed, greater education, intuition, language skills, quicker absorption of data, and adaptability seem to be the needed capabilities. All these are areas in which the Filipino is strong at. We should just wake up and realize that, rather than being skeptical of globalization, the Filipino is best positioned to take advantage of the benefits of and succeed in a more open world.
Thank you's to the following for their valuable insights (errors in understanding mine): Bobing Venida, Tong Buencamino, Oswald Lorenzo, Pons Intal, Ciel Habito, Dondi Teehankee, John Avila.
Some points I raised during the show and some which I forgot to raise out of sheer nervousness:
- economic studies have indicated that "the countries which find it easier to fire are the same countries which find it easier to hire." In other words, the focus here is on productivity, the ability to engage in business that would succeed. By doing so, such results in the creation of more and better jobs.
- as discussed by Manolo, the make up of labor has changed dramatically over the last ten years. The pie chart exhibited during the show sees the identity of the pie slices (representing the different sectors) changing from 1997 to 2007. What must be pointed out, however, is that not only has the pie slices changed but the pie got bigger as well over the years.
- businessmen, more than lower tariffs (or increasing tariffs, depending on whose side you are on), lowering of taxes, etc., all find secondary to the need to have consistent and stable policies upon which to plan and do business. If you have a country like the Philippines whose policy changes not only from administration to administration but from month to month or on a case by case basis, then you can understand why business finds it hard to do well here.
- business leaders (and even lawyers) must realize that they have to make a more determined effort to understand the intricacies and ramifications of what is going on in international trade. No longer are companies subject to mere national laws alone. Even at this moment, companies are subject to international rules that are either prevailing at the regional level (i.e., ASEAN) or multilateral (i.e., WTO, WIPO, WCO). In short, companies from here on end have to contend with at two sets of rules for each and every transaction: local and international. This will only get worse if the Doha Round fails as it is anticipated that there will be a proliferation of bilateral trade rules (right now, such as ASEAN, ASEAN-Korea, and ASEAN-China; with the following possibles: JPEPA, RP-US, ASEAN-India).
- Business cannot and should not rely on government for information or data or possible planning for the simple reason that it is their business. Instead, it should be the other way around. Business should be quite specific in what they want and, more importantly, be able to intelligently convey what they want in the international trading arena. This won't happen unless they take the time and effort to realize that there is a need to understand or grapple with international trade rules. So far, the only industries I know who are quite consistently successful at this are sugar, cement, tuna, and poultry.
- labor should not blame (or at least not solely blame) globalization and trade for any loss of employment. There are a host of other factors, primary among them are changes in technology, which eliminates the need for certain type of workers. Another could be changes in fashion or taste. If anything else, globalization and increased trade results in more opportunities for job creation. It also generates wealth (see studies by Jeffrey Sachs) that could be used for welfare purposes, such as subsidies for workers or re-training or further education.
- legislating minimum wages and increasing taxes on the rich may not be the most effective ways in which to better the situation of labor. To legislate minimum wages is inefficient, scares off investors, and locks in resources in areas which should not be engaged in. Increasing taxes on the rich (at least to a certain extent) has the same effects. The better way is to give workers more ability to be mobile, and making business have greater productivity (which we sorely need to improve on) and competitiveness and let the benefits follow. Even then, the focus should be subsidizing workers who had to accept lower wages from reasons that could be traced to temporary dislocations caused by globalization, re-training, and better education
- finally, Filipinos should take heart in that the way the global economy is headed, greater education, intuition, language skills, quicker absorption of data, and adaptability seem to be the needed capabilities. All these are areas in which the Filipino is strong at. We should just wake up and realize that, rather than being skeptical of globalization, the Filipino is best positioned to take advantage of the benefits of and succeed in a more open world.
Thank you's to the following for their valuable insights (errors in understanding mine): Bobing Venida, Tong Buencamino, Oswald Lorenzo, Pons Intal, Ciel Habito, Dondi Teehankee, John Avila.
13.4.07
IEL updates
(these updates were taken from various sources)
> the US lost to Antigua and Barbuda at the WTO Panel level regarding US measures affecting the cross-border supply of gambling and betting services.
> China's continuing alleged violation of it's WTO commitments getting to the nerves of US Congressmen, this coming at a time that China has seemed to overtake the US in terms of export growth.
> Nevertheless, the US remains the biggest buyer of the world's goods, with over twice the global share of second-ranked importer Germany.
> Ministers from Brazil, the EC, India, the United States, Australia and Japan met in New Delhi to make a strong push for a successful conclusion to the Doha Round by this year. Still, things hang in the balance.
> "The reduced pace of global economic activity will imply lower trade growth which is expected to average maybe around 6 percent in 2007," the WTO's chief economist Patrick Low said. Pascal Lamy, WTO Director-General, on the other hand, stated that "a successful conclusion to the Doha Round holds great potential for boosting growth and alleviating poverty ... an agreement would also deliver more relevant trade rules, helping to establish a more stable and certain foundation for today's dynamic global marketplace."
> The WTO's Appellate Body issued its report regarding the compliance panel report in the case “United States — Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina”, and recommending that the United States implement fully the recommendations and rulings of the DSB.
* * * * * * * *
This week saw the last of my MCLE lectures on international economic law for the present cycle. Next week, I shall be in Baguio to participate in the Round Table discussion with the Justices of the Supreme Court on various legal issues with economic significance. The Round Table is a culmination of a training program held under the auspices of PhilJA to educate the judiciary on law and economic development.
> the US lost to Antigua and Barbuda at the WTO Panel level regarding US measures affecting the cross-border supply of gambling and betting services.
> China's continuing alleged violation of it's WTO commitments getting to the nerves of US Congressmen, this coming at a time that China has seemed to overtake the US in terms of export growth.
> Nevertheless, the US remains the biggest buyer of the world's goods, with over twice the global share of second-ranked importer Germany.
> Ministers from Brazil, the EC, India, the United States, Australia and Japan met in New Delhi to make a strong push for a successful conclusion to the Doha Round by this year. Still, things hang in the balance.
> "The reduced pace of global economic activity will imply lower trade growth which is expected to average maybe around 6 percent in 2007," the WTO's chief economist Patrick Low said. Pascal Lamy, WTO Director-General, on the other hand, stated that "a successful conclusion to the Doha Round holds great potential for boosting growth and alleviating poverty ... an agreement would also deliver more relevant trade rules, helping to establish a more stable and certain foundation for today's dynamic global marketplace."
> The WTO's Appellate Body issued its report regarding the compliance panel report in the case “United States — Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina”, and recommending that the United States implement fully the recommendations and rulings of the DSB.
* * * * * * * *
This week saw the last of my MCLE lectures on international economic law for the present cycle. Next week, I shall be in Baguio to participate in the Round Table discussion with the Justices of the Supreme Court on various legal issues with economic significance. The Round Table is a culmination of a training program held under the auspices of PhilJA to educate the judiciary on law and economic development.
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