FairTradeWeb

Wigberto Tañada, Lead Convenor

Trade negotiations and trade agreements are too important to be left in the hands of a few policy makers no matter how well-meaning and well-educated they are.   Trade policy should be a product of social consensus. It is an effective means to promote the common good, serve the general welfare and to attain the development goals of society.  Hence, a trade policy should mirror the development strategy of a country, the development aspirations of its people and the development directions of the nation.  For all this, you need a coordinative, consensus-taking and coherence-promoting trade body such as The Philippine Trade Representative Office or PTRO.

This, in brief, is the reason why we, at the Fair Trade Alliance, have been pushing for the establishment of a PTRO as early as 2003.   When the Alliance was formed in September 2001, one of the first things we learned was that the government, under various Administrations, pursued a trade liberalization program without identifying the country’s defensive and offensive interests.  The technocrats, together with the World Bank and IMF, simply assumed that the country would be a net gainer in terms of increased investments, added exports and jobs through an open-market policy.  Now it has been shown that a trade liberalization program that does not identify the country’s defensive and offensive interests is a narrow trade policy framework which has been at the roots of the collapse of many domestic industries and agricultural cropping areas at home, from the 1980s to the present, resulting in the persistence and deepening of urban and rural poverty all over the country.

Subsequently, we learned that there is a huge tangle of trade negotiations taking place at the WTO, AFTA, APEC and at the bilateral levels.  We also learned that there are so many sectoral issues at stake, in industry, agriculture, services and new areas such as domestic competition, investment, technology and so on.  And yet, the wonder of wonders, no one in government was doing the coherence work, to sort out things, to harmonize, to put an overall balance in this tangled mess and determine what is in the best interest of the nation.  For example, in the ASEAN trade negotiations, agriculture interests are sometimes neglected simply because our agricultural officials, for whatever reason, are not even consulted.  But worse, our people, our industrial producers, our workers and our farmers are hardly informed, much less consulted, of seemingly harmless trade talks conducted by officials, who are sometimes inexplicably unmindful of or insensitive to the life-and-death issues facing our people when the rules of trade and business are suddenly changed.  Very often, in the Philippine case, the rules are even altered in favor of foreign producers and exporters to the detriment of local producers, be they be producing for the home or export market.  Bakit naman ganyan?   The playing field is clearly uneven. Subalit sobra pa tayong mapagbigay. Ang liit na, kung meron man, ang pakinabang, ang laki naman ng kabayaran.

In the WTO Ministerial Conference in Cancun in 2003, we learned the sharp contrast in our trade negotiating situation with those of other countries.   The US trade delegation had several hundreds of private sector representatives representing different industries in America.  It was America, Inc. at work, under the guidance of the US Trade Representative Office or USTR.  And so was Japan, Inc. under their MITI and Fortress EU under the EU Trade Commission. In the case of the Philippines, we only had one or two private sector representatives in the official delegation, while dozens of Filipino civil society representatives were marching in downtown Cancun, together with hundreds of anti-WTO protesters.   Fortunately, the leadership of the DTI and DA then was open to dialogue with our Alliance and they coordinated their position with that of the civil society movement.   The problem is that, without any formal institutional arrangement, such enlightened partnership can be very temporary as we have witnessed in the ensuing regional and bilateral trade talks like the JPEPA.

This, in brief, is the reason why we have been pushing for the establishment of a PTRO as early as 2003.  We are thankful to the DA, particularly USEC. Serrano, for its early and enlightened support.

And so too to the Philippine Institute for Development Studies, which also marshaled a number of weighty arguments why the PTRO bill should be enacted into law.  As the PIDS put it, the PTRO  will put an end to years of misinformed decision making in the trade arena and resolve difficulties in the current negotiation set-up, which it identifies as: 1) turf mentality among government agencies that tend to paralyze inter-agency committees in coming up with an overall position that fully acknowledges trade-offs; 2) lack of appreciation of and capacity for trade research that should inform negotiating positions; 3) unclear delineation of authority; and 4) lack of suitable mechanisms for consultation and feedback on negotiation progress and impact, not only regarding tariffs but also on other items under discussion.  The ad-hoc mechanism adopted by the government in international trade negotiations must be immediately stopped for it has and will bring the Filipino producers closer to decimation.

I need not elaborate on these points.   However, let me dwell a bit on research.  How can we indeed negotiate without any data to back up our trade positions and come up with a more scientific projection of the trade-development scenario once an agreement is finalized? The glaring problem of the absence of credible trade studies was brought home to us in our engagement work on fair trade.  We learned, for example, that majority of our past trade agreements were signed without the trade negotiators even identifying the likely losers and the needed adjustments that they should adopt.   Thus, amazingly, the negotiators did not even provide for the sequencing, calibration and information dissemination of trade liberalization measures.

With the PTRO, we hope all this can be cured.   We note that a recent study commissioned by the Department of Trade and Industry with the assistance of the USAID referred to insufficient resources and limited training capacity of the support staff for our trade officials. To quote :

“Surprisingly, it was revealed that some of the support staff of negotiators lacks the proper training and to a great extent not able to take advantage of available training opportunities due to the need for them to perform other responsibilities that overlap with their trade polic-related activities. In relation to this, others lamented that training is not given a priority in their agency, in terms of resources or fund allocation and delay in the approval to participate in available training programs or to some extent not getting the approval or support from their supervisors to be sent to training programs abroad. This results in limited skills and even incompetent manpower to sustain the technical capacity of most government agencies concerning trade policies. The status is even exacerbated by the fact that government people involved in this initiative are not focused mainly because the task is just part of the regular work that they do, resulting in unclear job description and for trade policies to be a non-priority.”

These findings confirm the results of the earlier study made by Dr. Gloria Pasadilla and Ms. Christine Marie Liao for PIDS. How many more studies do we have to commission and fund to convince this government and our leaders that we urgently need a PTRO?

The Philippine Trade Representative Office will address all these concerns through Trade Research Services, Data Collection, Analysis and Dissemination. Sec. 12 of HB 5971 states that the PTRO will be tasked to conduct impact assessments at both  sectoral and macrolevels, collaborate with government and non-government research institutions in researches concerning trade and investment policies, and most important of all, it will be tasked to provide  the general public access to  trade data and information and other relevant  documents.

Continue reading ‘Why PTRO? Enhancing National Capacity in International Trade Negotiations*’

By Dennis D. Estopace
Published in the 4 June 2009 issue of the Business Mirror

THERE’S a lobby for the Philippines to “clone” its former colonizer, the United States, to hopefully consolidate the country’s trade negotiations with other countries.

Former senator Wigberto Tañada of the Fair Trade Alliance said the current system of trade policy formulation and conduct of trade negotiations is in shambles, risking the country’s trade competitiveness and future.

Tañada scored the current system as inefficient and prone to institutional failures. “Without identifying the country’s offensive and defensive interests causes us to lose opportunities and means sustaining poverty.”

Supporting him in this view is the Congressional Planning and Budget Department  (CPBD) of the House of Representatives that helped formulate House Bill 5971, proposing the creation of a Philippine Trade Representative Office (PTRO).

The bill, according to CPBD director Rodolfo Vicerra, was approved without opposition by lawmakers in March.

Tañada said, when negotiating at the World Trade Organization, countries like the US, Japan and the European Union had trade representatives.

“The current system of negotiation births a turf mentality, preventing the creation of an encompassing, unified and cross-industry trade policy.”

A paper by the Philippine Legislators’ Committee on Population (PLCPDI) and Development Foundation Inc. said the current trade negotiations system is handled by the Tariff and Related Matters Committee (TRMC), the Philippine Coordinating Committee (for the country’s trade negotiations with Japan) and the Department of Foreign Affairs.

“The absence of a clear-cut hierarchy, mandate and delineation of authority has often led to confusion,” the PLCPDI said in its paper.

Continue reading ‘Lobbyists bat for central RP trade office’

By Jessica Anne Hermosa
Published in the June 2, 2009 issue of Business World

THE FAIR TRADE Alliance yesterday pressed for the prompt creation of a Philippine Trade Representative Office to coordinate efforts to draft trade policies and negotiating positions.

Such a system, the group said, will also institutionalize consultations with affected industry groups prior to free trade talks. Fair Trade Alliance lead convenor Wigberto E. Tañada said in a forum yesterday that trade policy drafted after consultations would “mirror the development strategy of the country.” He noted that consultations in the past had not been “institutionalized,” hence, resulting policies had been temporary.

House bill No. 5917, which seeks to form such an office, has been approved on final reading, but the Senate counterpart is pending at the committee level. — JADH

By Jennifer A. Ng
Published in the 29 May 2009 issue of Business Mirror

THE Philippine rice sector will be spared from tariff cuts prescribed under a free-trade scheme among members of the Association of Southeast Asian Nations (Asean) which is due for full implementation by January 1,  2010.

Agriculture Secretary Arthur  Yap said  the rice sector was classified as “highly sensitive” under the Asean Free Trade Area-Common Effective Preferential Treatment (Afta-CPET), which means that the rice market in Asean will not be fully liberalized at least for two years.

“Tariff cuts for the rice sector will be implemented in 2012 because rice was classified as a highly sensitive commodity,” said Yap.

Meanwhile, Yap disclosed that there are now “informal talks” among Asean ministers on the possibility of delaying full implementation of Afta-CEPT.

The sugar, livestock, and poultry and rice sectors have asked the government to seek a delay in the full implementation of the Afta-CEPT by 2010, citing the ill effects of a liberalized trading regime on domestic industries.

Fair Trade Alliance (FTA) has also joined calls for the suspension of any government plan to further reduce tariff for commodities such as swine, poultry, corn, sugar, and rice.

“These are the most sensitive agricultural products, and in the name of food and livelihood security, surely they should be given the highest trade flexibility,” FTA said in a statement.

On top of the postponement of the Afta-CEPT, FTA called on the government to undertake a comprehensive review of the country’s trade policy in the 30 years and to find out if economic liberalization had been good for the Philippines.

Under the current terms of Afta, most farm products including sugar, corn, and livestock and poultry products are supposed to go down anywhere between 0 to 5 per cent.

Afta is a trading agreement originally signed by six members of the Association of Southeast Asian Nations (Asean), namely, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, in 1992.

The free-trade arrangement seeks to increase Asean’s competitive edge as production base in the world market through the elimination of tariffs and non-tariff barriers.

The Fair Trade Alliance calls for the suspension of any government plan to further reduce tariff for the commodity sector namely swine, poultry, corn and sugar. Including rice, these are the most sensitive agricultural products, and in the name of food and livelihood security, surely they should be given the highest trade flexibility. We also support the call for an effective implementation of trade remedies against smuggling and other unfair trade practices and for the government to exert all efforts to lower the cost of doing business. All of these must be done.

However, FairTrade believes that the government can do much more other than asking for a postponement of the AFTA-CEPT.

We propose that the government use the present crisis to undertake a comprehensive review of our trade policy in the last 30 years.

Has economic liberalization been good or bad to the country?  Good or bad, what are the explanations for the continuing massive poverty, massive unemployment and massive outmigration in the Philippines?

We also propose that the review should lead to the adoption of bold but necessary adjustment measures to help shape a fair and balanced integration of the national economy with the global market.  FairTrade is prepared to hold a dialogue with the DTI, NEDA, DA, along with industry organizations on how this can be done.

It has always been the stand of FairTrade that the erosion of the country’s agro-industrial base is due to the accelerated and reckless manner by which our technocrats, in the past and in the present, have embraced and implemented a one-sided program of trade and economic liberalization.

The review of our trade policy must not only cover the country’s AFTA-CEPT commitments. Since the WTO and bilateral agreements are greatly entangled with each other, RP commitments in these agreements must also be reviewed.

May we also suggest to the good DTI Secretary for his Department to look into what other countries like the US, EU, China, India, Indonesia are doing in support of their industries and farming communities.

Continue reading ‘Fair Trade Position on the Effect of Further Reduction of AFTA-CEPT Tariffs on Local Industries and Jobs’

By Jennifer A. Ng
Published in the 16 April 2009 issue of Business Mirror

DUE to the global economic crisis, the Department of Agriculture (DA) wants to delay by five years the full implementation of a free-trade scheme among the members of the Association of Southeast Asian Nation (Asean).

Agriculture Secretary Arthur Yap said bringing down tariffs on most farm products to zero under the Asean Free Trade Area (Afta) Common Effective Preferential Tariffs (CEPT) by next year will not be a good idea in light of the current economic stability.

“So, with all of what is happening and with major markets like China now showing any signs of recovery at all, this is not the time to go ahead and destabilize the system by unbridled trade flows,” said Yap.

The DA chief said that Trade Secretary Peter Favila is set to make representations at the Asean to push for the postponement of the full implementation of Afta-CEPT. Yap, however, could not say whether Favila asked for a five-year delay in the full implementation of the scheme.

Earlier, the Fair Trade Alliance said that Favila is already seeking the support of his Asean counterparts for the delay of the implementation of the free trade scheme.

But Trade Undersecretary Thomas Aquino, one of the country’s leading trade negotiators, appears to be cool to the idea of delaying the full elimination of tariffs under Afta-CEPT.

Aquino said in an interview with BusinessMirror that postponing the full implementation of the Afta-CEPT is not just a step backward, but will also draw negative responses from the rest of the world. Under the current terms of Afta, most farm products including sugar, corn, and livestock and poultry products are supposed to go down anywhere between 0 to 5 percent.

Sugar producers, corn farmers, hog raisers and poultry growers were among the stakeholders in the local farm sector who called for the postponement in the full implementation of Afta-CEPT.

Afta is a trading agreement originally signed in 1992 by six Asean members— namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand.

The free trade arrangement seeks to increase Asean’s competitive edge as production base in the world market through the elimination of tariffs and nontariff barriers.

By Ben Arnold O. De Vera
Published in the March 31, 2009 issue of Manila Times

FAIR Trade Alliance called on the Department of Trade and Industry (DTI) to review the country’s current external trade policies in light of the global slowdown.

In a statement, FairTrade said Manila’s appeal to fellow-members of the Association of Southeast Asian Nations (Asean) to postpone full implementation of the Asean Free Trade Agreement-Common Effective Preferential Tariffs (AFTA-CEPT) should be pursued given the “threat posed by rising imports on a very open Philippine economy.”

Under the AFTA-CEPT, tariffs on goods traded among Asean members should be slashed to between 0 percent and 5 percent by next year.

“Although it comes rather late, this move of the DTI Secretary is still a welcome move as it departs from the usual stance taken by key DTI officials that the wholesale and unqualified economic liberalization is good for the country and that all liberalization commitments should be complied with no matter how debilitating for the local industries,” the non-government organization said.

It said the government can do much more to aid local industries and boost the domestic economy by undertaking a comprehensive review of Philippine trade policies in the last 30 years.

FairTrade said this crisis period is high time to reassess whether liberalization has benefited or worsened the country’s economic condition. “What are the explanations for the continuing massive poverty, massive unemployment and massive out migration in the Philippines?”

“The review should lead to the adoption of bold but necessary adjustment measures to help shape a fair and balanced integration of the national economy with the global market,” FairTrade said.

“The review of our trade policy must not only cover the country’s AFTA-CEPT commitments. Since the WTO [World Trade Organization] and bilateral agreements are greatly entangled with each other,[Philippine] commitments in these agreements must also be reviewed,” the NGO said.

FairTrade also said the government’s stimulus package should be intended to bolster local industries and agriculture, as is being done in other countries now.

“The Philippine Economy Resiliency Plan (PERP) being floated by the government is vague until now on how it will stimulate our economy. But it can have some sense if the DTI will include in the PERP some trade adjustment measures that will help our industries and agriculture out of the crisis,” FairTrade said.

FairTrade also advised the government to take advantage of the domestic market, which is composed of 90 million consumers, to develop local industries, by coming up with industrial development plans and programs.

Finally, the Secretary of the Department of Trade and Industry (DTI), tasked to oversee the development of industries, is talking some economic sense.

Earlier, DTI Secretary Peter Favila was reported to have sought the support of his ASEAN counterparts for a postponement of the full implementation of the member commitments to the ASEAN Free Trade Agreement-Common Effective Preferential Tariffs (AFTA-CEPT) in the light of the global economic recession. Under the AFTA-CEPT, the tariffs of goods traded among ASEAN countries will be brought down to zero to five percent by the beginning of 2010.

Although it comes rather late, this move of the DTI Secretary is still  a welcome move as it departs from the usual stance taken by key DTI officials that the wholesale and unqualified economic liberalization is good for the country and that all liberalization commitments should be complied with no matter how debilitating for the local industries. Moreover, since the start of the crisis last year, the DTI has been relatively silent on how the country can survive the crisis. By seeking a postponement of the full implementation of the AFTA-CEPT, the DTI in a way is seeing the gravity of the threat posed by rising imports on a very open Philippine economy.

However, FairTrade believes that if the government is serious in helping our industries survive and nurturing our economy, the government can do much more other than asking for a postponement of the AFTA-CEPT.

We propose that the government use the present crisis to undertake a comprehensive review of our trade policy in the last 30 years.  Has economic liberalization been good or bad to the country?  Good or bad, what are the explanations for the continuing massive poverty, massive unemployment and massive outmigration in the Philippines?

We also propose that the review should lead to the adoption of bold but necessary adjustment measures to help shape a fair and balanced integration of the national economy with the global market.  FairTrade is prepared to hold a dialogue with the DTI, NEDA, DA and other agencies of the government on how this can be done.

It has always been the stand of FairTrade that the erosion of the country’s agro-industrial base is due to the reckless and mindless manner by which our technocrats, in the past and in the present, have embraced and implemented a one-sided program of trade and economic liberalization.

The review of our trade policy must not only cover the country’s AFTA-CEPT commitments. Since the WTO and bilateral agreements are greatly entangled with each other, RP commitments in these agreements must also be reviewed.

May we also suggest to the good DTI Secretary for his Department to look into what other countries like the US, EU, China, India, Indonesia are doing in support of their industries and farming communities.  It is abundantly clear that all the bailout and stimulus packages being implemented in various countries today are all directed in the strengthening of their respective domestic industries and agriculture.   What, therefore, is the DTI’s own plan for the Philippine industry?  Relatedly, what is the DA’s plan for Philippine agriculture?

The Philippine Economy Resiliency Plan (PERP) being floated by the government is vague until now on how it will stimulate our economy. But it can have some sense if the DTI will include in the PERP some trade adjustment measures that will help our industries and agriculture out of the crisis.

And why are we not taking advantage of our large domestic market — 90 million consumers – to develop our own industries?  Where are our industrial development plans and programs?

In the face of the trade challenges that our industries and agriculture are facing today, FairTrade is asking Secretary Favila to give the country real and long-lasting solutions.

From Mr. Dan Mariano of Manila Times:

The P1.4-trillion General Appropriations Act for 2009 purportedly contains an economic stimulus package worth P330 billion, the equivalent of about $6.8 billion. However, only P30 billion, or about $613 million, are actually “new” allocations, according to Dr. Rene Ofreneo, executive director of the Fair Trade Alliance (FairTrade).

The bulk of the so-called Philippine Economic Resiliency Plan (PERP) consists of routine allotments to government programs and projects already in existence even before the worst economic crisis since the Great Depression of 1929 hit the world last year.

“The PERP is not only badly packaged and delayed by the usual budgetary wrangling in Congress,” Ofreneo said at the Kapihan sa Sulo media forum last Saturday. “It also misses the central role of what a stimulus package is supposed to do—that is, to stimulate or stir a slumbering national economy in order to spur growth and preserve and create jobs at home. This means saving and strengthening critical industries at home. This is what ‘industry bailouts’ really mean.”

Full column of Mr. Dan Mariano after the jump.

Continue reading ‘Cabinet shakeup needed to rescue RP economy’

By Cai U. Ordinario
Published in the March 17, 2009 issue of the Business Mirror

CONTRARY to expectations, the country posted only a slight uptick in its unemployment rate to 7.7 percent, which translates to 2.86 million Filipinos without jobs in January 2009, based on the latest Labor Force Survey (LFS) released by the National Statistics Office (NSO).

The LFS data showed the unemployment rate in January 2009 was higher compared with 7.4 percent posted in January 2008. Among the regions, the highest unemployment rate was recorded in the National Capital Region (NCR) at 14 percent.

However, experts believe this is not a reason to celebrate. Dr. Rene Ofreneo, head of the University of the Philippines School of Labor and Industrial Relations Center for Labor Justice, said the numbers are not an indication the country is doing well or the government’s programs are already taking effect.

“This is not an indication that we are doing well. Usually, November-December, or the end of the year, are high employment months due to the Christmas season, [that’s why there was only a slight reduction in the] unemployment figures,” Ofreneo said in Filipino.

Ofreneo noted that apart from the seasonality in the unemployment figures, the country should expect some lag in the effect of the global financial crisis on the economy and the country’s labor force.

In the 1997 Asian financial crisis (AFC), layoffs were not immediate and there was a lag of around six months before the Philippines experienced mass layoffs, he recalled. Assuming the effect of the AFC on the labor force will be similar to the global financial crisis, the unemployment figures to watch will be the April and July LFS.

“In January [it was in] electronics [where layoffs occurred], but you don’t know how far it will spread. The figures to watch are in April and July. In April there will be a lot of new entrants to the labor force, and the July data will show us the effect, whether there has been an improvement in the global economy,” Ofreneo explained.

Besides more job losses in the coming months, the country can also expect the numbers of informal workers and the underemployed to increase, as those being laid off from their jobs will seek refuge in the informal economy and/or choose to be part of the underemployed who work less hours and get less benefits.

Meanwhile, Director Dennis Arroyo of the National Economic and Development Authority’s National Planning and Policy Staff (NPPS) said unemployment and employment figures would start improving in the second quarter, when the government’s P1.4 trillion-worth budget takes effect.

Arroyo said that since the General Appropriations Act was recently signed, the government’s Comprehensive Livelihood and Emergency Employment Program (CLEEP) would only be implemented in the second quarter.

And, even with the global economic recession affecting the country’s manufacturing sector, particularly export-oriented industries like electronics, some associations like the Semiconductor and Electronics Industries in the Philippines Inc. had said there could be some rebound in electronics in the second half of 2009, he noted.

Arroyo said this would be assisted by the stimulus packages of the Philippines’s main export markets, such as the United States and Japan, which have started to implement their own stimulus packages.

Continue reading ‘Experts: Jobs data will get worse’