Tolls of the trade
SOME 12 countries in the so-called Pacific rim are set to sign this week in New Zealand another trade agreement, the one called TPP, the humongous Trans-Pacific Partnership.
Surprise! The Philippines will not be one of those countries. Whew!
Think tanks already established in studies after studies that this country has yet to recover from the ill effects of the World Trade Organization (WTO), even some 20 years after it began in 1995.
But it seemed that our government already indicated that we would pursue the TPP like the imaginary pot of gold.
The lone voice of caution that I heard so far—the one and only warning against the hazards of our jumping into the TPP bandwagon—came from presidential candidate and former Cabinet member Mar Roxas.
Late last year, in a round table talk with this newspaper, Roxas was reported to have commented on the TPP: “No deal is better than a bad deal.”
Roxas pointed out that, if this country would join the TPP, our agricultural sector in particular would face more threats, including unfair trade practices in other countries, which we would have to accept as, well, the “toll” payment for being part of the trade club.
Personally, I could trust his position on the issue quite easily. Among the candidates for high positions in this country, Roxas knows what he is talking about when it comes to economic issues.
In their promo materials, the TPP countries shouted that the agreement would really benefit all of them, namely Canada, Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, Japan, Australia and the United States.
There would be some instant basic arguments against our joining the TPP.
For instance, the requirement for “national treatment” in the TPP (Ch. 9 Art. 9.4.1 and 9.4.2) may run against the ban in the Philippine Constitution on foreign ownership in media, education, land and natural resources.
One TPP provision also reads: “Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.”
Here is another: “Each Party shall accord to covered investments treatment no less favorable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.”
In other words, the TPP will require us to open up everything to foreigners, including the enormous conglomerates in Japan, Canada, and the US.
But look here, boss, the Philippine Constitution prohibits in no uncertain terms foreign ownership in specific sectors of the Philippine economy.
To obey the TPP, which our government wants us to pursue, we therefore will have to amend the Constitution.
And just how hard will that be, particularly if we will tinker with the Constitution because we want to join another trade agreement that will only be advantageous to developed countries?
Remember the heated political debates many decades ago on the “parity amendments” in our old Constitution. These were needed to fulfill the conditions of the Bell Trade Act in 1955, later known as the infamous Laurel-Langley agreement.
Our gallant politicos simply railroaded the amendments.
Of course, we will still have debates on whether or not we must remove the constitutional prohibitions against foreign ownership in certain sectors—a burning issue in our economic struggle.
But we can’t just simply rush to some constitutional amendment just because we want to run after the TPP.
Even in the US, by the way, the leading presidential contenders—namely Hillary Clinton, Donald Trump and Bernie Sanders—all expressed opposition to the TPP.
Their beef? The TPP will benefit only US companies with investments abroad, meaning, it will still cost jobs in the mainland. The TPP will also have to overlook currency manipulation in other countries, which may artificially cheapen their goods in the US market.
In return for our tinkering with the Constitution, what great things await us with the TPP?
Please check the website of the Office of the US Trade Representative, which described the TPP as the mechanism that would eliminate more than 18,000 forms of taxes on American goods.
It confidently added that, in those countries, the TPP would make sure that US farmers could compete—and win. Wow!
If the US, as a highly developed nation, is the clear winner in this agreement, does it mean that the others are somewhat losers?
As the leader of the TPP, the US reportedly wanted all of the 12 countries to begin working on its ratification right away, even setting a deadline of only two years.
Like it or not, even if the TPP will create the biggest ever free-trade area in the whole wide world, it will only benefit the developed economies in the group.
This was what the New York Times said: “The clearest winners of the Trans-Pacific Partnership agreement would be American agriculture, along with technology and pharmaceutical companies, insurers and many large manufacturers.”
Yet reports indicated that most third world countries—such as the Philippines—were still reeling from the bad effects of the WTO. These countries actually accounted for about 40 percent of the world economy, meaning, billions of poor human beings dwell here.
Opinion makers abroad also claimed the TPP was one of the ways of the US to counter the economic influence of China in the Asia Pacific.
In the same breath, they noted that developing countries should be apprehensive regarding the TPP’s trumpeted “benefits.”
Translating the issue into concrete terms, Roxas said the countries in the TPP, led by the US, actually enjoyed huge advantages in agriculture over countries like the Philippines. For one, those countries subsidize their farmers through price supports or even outright cash for farm inputs.
Roxas asked: “How could our farmers compete with them?”
He said in the US and Europe, farms have long been mechanized using modern technology, while our farms still use traditional and ancient methods up to this day.
The sure victims of the TPP will be our agricultural sector, much like it was the victim of the WTO, because, as Roxas puts it, cheap (subsidized) products from China and Vietnam dislodged our own products out of our own market.
The key word, I think, is “subsidy.” We will only be competitive in the world market if the government gives the same to our agriculture sector.
Either that, or we modernize our farms first.
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