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| ON THE OTHER HAND |
| Mar Roxas on Free Trade By Antonio C. Abaya April 3, 2002 It is both refreshing and reassuring to know that there is at least one senior Cabinet member in the Arroyo Government who is not a na�ve sucker for the slogans and half-truths being peddled by the snake-oil salesmen of Free Trade. Reacting to the refusal of some European countries to lower or remove the 24% tariff on Philippine tuna, Trade Secretary Mar Roxas indignantly protested that �they preach one thing, but they practice another.� That, sir, is the beginning of wisdom. To realize that the very high priests of the postmodern religion of Free Trade do not really practice what they preach is like finding out that there really is no Santa Claus. It may have come late in the day for some Filipinos, who have acquired the reputation of being suckers and pushovers in the global marketplace, but, as they say, better late than never. As I wrote in a previous piece titled �Protectionism Wins Over Free Trade,� the sensible and pragmatic position for the Philippines should be: mouth the slogans of Free Trade, but protect our industries and our jobs against foreign competition. ***** Barely two weeks after asking for a 30% tariff on imported steel, in order to save hundreds of thousands of American jobs in the steel and ancillary industries, President Bush imposed a 35% tariff on Canadian lumber, in order to save tens of thousands of American jobs in the timber and lumber industries. This is the way that it should be. To repeat, mouth the slogans of Free Trade, but protect your industries and your jobs with tariffs against foreign competition. The Americans and the Europeans and the East Asians do it all the time. It is only the Filipinos who are such na�ve simpletons that they actually believe the slogans peddled by such worthies as Jess Estanislao and Bernie Villegas, the ideological gurus of President Fidel V. Ramos during his watch., when he (FVR) embraced Free Trade for us. For Third World countries like the Philippines, struggling to pull themselves by their boot straps, the guiding light should not be Alan Greenspan or George W. Bush (when he is peddling Free Trade), but Malaysian Prime Minister Mahathir Mohamad who is wise enough to realize that �under Free Trade, there are losers and there are winners. Most of the losers are the poor, underdeveloped countries; and most of the winners are the rich developed ones.� The Philippines is definitely one of the loser countries. Since 1997, a succession of multinational corporations have totally or partially closed their manufacturing facilities in this country because of Free Trade. The list includes Sony, Philips, Johnson and Johnson, Colgate-Palmolive, Warner Lambert, Abbott Laboratories and Uniden. Because of the advent of the Asean Free Trade Area or AFTA, these corporations have calculated that it is not necessary for them to maintain manufacturing facilities in all Asean countries. They will need only one or two plants in the region and will just import their products into the other countries since tariffs will soon be down to 5% and thence zero. Almost invariably, the Philippines is the first manufacturing country to be scratched out because of one or several reasons: a) the high cost of electricity, the second highest in East Asia, next to Japan�s; b) poor or inadequate infrastructure, and the resultant horrendous traffic jams and thick pollution in Metro Manila; c) labor militancy by communist-led trade unions, which are not a problem in Malaysia, Singapore, Thailand, Taiwan, South Korea, Communist Hong Kong, Communist Vietnam or Communist China; d) poor security and rampant lawlessness. Whereas in the past foreign corporations had to endure these in order to sell in our market, now under Free Trade, they no longer have to. In addition to being the low man on the East Asian totem pole, as far as multinational corporations are concerned (despite our highly touted English-speaking work force), the Philippines has also seen its domestic industries ravaged by floods of smuggled and legally imported competing products. In recent years, we have seen the collapse or marginalization of our steel industry, our cement industry, our footwear industry, our poultry industry, our hog industry, our furniture industry, our automotive industry, and almost every other significant industry in our market except prostitution and the export of labor. ***** Proponents of Free Trade tell us that if we were to concentrate on industries where we have a competitive advantage, we would find our niche in the globalized economy. Tell that to the hundreds of thousands of Filipinos who have lost their jobs as a direct and indirect result of Free Trade. What IS our competitive advantage, anyway? Our English-speaking work force? That hasn�t stopped multinational corporations from closing their factories here and moving them to countries where English is neither spoken nor understood to the extent that it is here. Our low wages? In the 1960s, when our wages were relatively high because of the minimum wage law, most American manufacturers chose to locate their factories in Hong Kong and Taiwan, where wages were, believe it or not, lower than Philippine wages and, more important, were not mandated by a minimum wage law. Now that our wages have sunk relatively low (largely because of poor management of the economy and wrong choices in economic strategy), fewer investors want to locate their factories here for reasons listed above. So what IS our competitive advantage and what is our niche in the globalized economy under Free Trade? The Arroyo Government has chosen, in its medium-term development plan, agriculture, information technology and tourism, as the sectors in which it will concentrate in order to create the much needed jobs. It has an ideological aversion to manufacturing because that would be contrary to its commitment to Free Trade, under which our domestic market is opened to the manufactures of other countries, while we search high and low for our competitive advantage and our niche in the globalized economy. In the meantime, hundreds of thousands of Filipinos have lost their jobs as a direct and indirect result of Free Trade, and the million new entrants into the labor market every year have fewer and fewer options other than to seek employment abroad. Is this then our niche in the globalized economy: to do the menial work for the middle-class families of the world? For how else can we pay for the flood of imported goodies that we are committed under Free Trade to allow into our market, even to the detriment of our own industries? Neither our exports earnings nor our tourism revenues are enough to pay for our imports. In the first case, because 65% of our exports are made up of electronic parts for which the value-added is minimal, only about 10 to 15%; in the second case, because our tourist arrivals (less than two million in 2001) are pathetically low compared to our neighbors�. Only the remittances of our overseas workers are keeping this economy afloat. It is refreshing to hear the dissenting voice of Mar Roxas. At last, someone high up in government is not a patsy for the slogans of Estanislao and Villegas. His position on our tuna exports as well as subsequent positions on cement and second-hand cars, the unbridled importation of which are wreaking havoc on our domestic industries, give us a glimmer of hope that this nation has higher ambitions than to be the Atsay of the World. ***** This article appeared in the April 22, 2002 issue of the Philippine Weekly Graphic magazine. |