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The Fair Trade Alliance (FairTrade), whose affiliates are among the petitioners on the lack of government transparency in trade negotiations, denounces the cowardly decision of the Supreme Court on the Japan-Philippine Economic Partnership Agreement (JPEPA). Said decision upholds the secrecy of executive treaty-making exercise even if such treaty puts Philippine jobs and industries at risk.  As Angel Mendoza, a petitioner and a FairTrade labor convenor, puts it:

“This decision of the Supreme Court emboldens the executive department and the non-electable economic technorats to disregard transparency and public accountability on economic policies.   Instead of encouraging the executive branch to hold democratic consultations with Filipino workers and industries, this decision literally transforms them into beggars of information on matters directly affecting their lives and future.  This is a throwback to the martial-law period, when the Marcos administration concluded one loan after the other with the World Bank-IMF group and one trade agreement after another with the developed countries without informing and consulting the people.   Look at the economic mess that this Marcosian practice created for the country.”

Manuel Quiambao, another petitioner and an FTA convenor for agriculture, opines:

“Apparently, the Supreme Court has become subservient to the neo-liberal agenda of the government technocrats, who have this narrow view that wholesale trade liberalization is good for the country, totally disregarding the social and economic impact on the people of such liberalization.  Is the food crisis not the direct outcome of the agricultural deregulation and import liberalization programs, programs which wiped out the nation’s capacity to grow its own food?”

Meanwhile, the Executive Department and some members of Congress have construed this recent Supreme Court decision as a validation of the soundness of the JPEPA, and that the decision has removed all doubts about the early ratification of JPEPA in the Senate.  Of course, the SC’s decision does not mean that the JPEPA is good for the country.  What the decision tried to address is the so-called right of the executive branch to secrecy, which now amounts to a “right” to hide crucial trade information from the people.

The truth is that aside from the questionable negotiation process, JPEPA as written is a bad treaty.  It violates the Philippine Constitution on many aspects. For examples: First, it grants the Japanese land ownership.  Second, it gives the Japanese virtual fishing and maritime rights over our territorial seas. Third, it does not provide for reciprocity.

On the other hand, JPEPA allows obnoxious trade in toxic wastes and job-displacing trade in used vehicles and garments.

JPEPA is un-Constitutional, unfair and anti-Filipino. We, therefore, ask the Supreme Court justices — search your souls and reconsider your decision. Join us in asking for a renegotiation of a flawed treaty.

By Irma Isip
Published in the July 17, 2008 issue of Malaya

The Philippine footwear industry is being flattened by uncontrolled liberalization, smuggling, swarming of “ukay-ukay” (imported used clothes and shoes) and the proliferation of fakes.

Joel Gaudia, public relations officer of the Samahan ng mga Magsasapatos sa Pilipinas, said its membership has dwindled to 125 from 4,000 in 1994 before tariff walls were dismantled.

Tariffs are now at 15 percent from non-Asean countries and 7 to 10 percent from Asean from 45 percent in 1994.

Gaudia said the Philippines used to produce millions of pairs of shoes enough to shod the country, about 10 million pairs in 1994.

Today, he said the industry produces less than 5 million pairs of shoes which serves just 10 percent of the national requirement.

About 80 percent is served by imports from China, which accounts for 40 percent of total imports.

Gaudia said an indication of just how little we produce is that SM Group alone sells 21 million pairs a year.

He said the number of employes in footwear, including those employed by the 21 allied sectors - from tannery to molding to adhesive producers - has dropped drastically to 5,000 from 300,000 in the 1980s to the 1990s.

Prior to liberalization, Gaudia said, local footwear makers subcontracting for multinationals were into exports. In 1997, these companies shipped 21 million pairs worth $193 million.

“There was a huge potential for the industry,” Gaudia said.

He said today, exports have diminished, limited only to those, which invested here for export like Tretorn in Bataan catering to  the European market.

The likes of Puma, Rubberworld, which was the manufacturer for Adidas, and Kaypee, have long ceased operations, Gaudia said.

Gaudia said aside from lower tariffs, the shift in the valuation of imports has also encouraged a lot of technical smuggling with the market instantly flooded by imports from China where production is subsidized and energy costs are cheaper.

According to Gaudia, 70 percent of the regular members folded up and those, which remained, downsized their operations and retrenched workers.

A lot of them are tolling for big department stores and retailers for their in-house brands.

Gaudia said the sprouting of ukay-ukay stores in many cities also dampened demand for locally made shoes that even the players in Binan, Nueva Ecija, Bicol and Cebu are being squeezed.

“It is difficult to compete when technical smuggling is prevalent and when we have ukay ukay stores and tiangge selling fake products,” he said.

Gaudia cited, as example is the undervaluation of military boots coming from China. These are valued at just $5 or about P230 per pair but are sold at over a P1, 000 in the local market.

In Baclaran, fake Bally shoes are retailed at P400 a pair when the cheapest original pair is about P3, 000.

By Bernie Cahiles Magkilat
Published in the July 17, 2008 issue of Manila Bulletin

The dwindling domestic shoe manufacturing industry now accounts for a meager 10 percent of the huge demand of footwear in the country in light of the influx of cheap shoes following a global liberalization abetted by technical smuggling which has pushed the once booming industry aside.

Joel Gaudia of the Samahan ng Magsasapatos ng Pilipinas told a press conference that footwear’s most favored nation tariff is now down to 15 percent from 45 percent in 1994. Tariff for ASEAN is a lot lower at 10 to 7 percent.

Gaudia said the 10 percent local shoe supplies represent less than 5 million pairs annually only as against the estimated annual demand of 60 million pairs.

Imported shoes account for over 80 percent of the total shoe demand of which 80 percent comes from China. SM, the country’s largest chain of department stores, sells 21 million pairs annually.

On the contrary, the shoe industry was able to export 21 million pairs of shoes in 1997 worth 3 million on account of the branded shoes that used to manufacture in the country.

There used to be a total of 4,000 registered shoe manufacturers from Marikina alone but it is now down to 125. The shoe-allied industries are also down 70 percent.

The entire industry used to employ over 300,000 workers but is now reduced to 5,000.

Gaudia has recalled the industry started to dwindle when the Bureau of Customs to transaction method of valuation from home consumption value under RA 9135.

According to Gaudia, the new valuation method has paved the way for more technical smuggling because it is based on the price transacted by the parties as evidenced by the invoice.

For instance, he cited the case of the imported combat boots for the Armed Forces of the Philippines which have declared value of $ 5 each but were sold at over P1,000 a pair.

Then the government implemented a unilateral liberalization program in 1994 encouraging more traders to import shoes. From a low of 10 million pairs of shoes imported in 1994, this has ballooned to 60 million starting 2000.

Gaudia said they were surprised when the latest text of the non-agricultural market access (NAMA) negotiations of the World Trade Organization (WTO) has included footwear among the industrial products subjected to tariff cuts.

By Max V. de Leon
Published in the July 17, 2008 issue of Business Mirror

WITH the negotiations for new World Trade Organization (WTO) multilateral trade modalities expected to reach the homestretch starting next week in Geneva, the Philippines has also begun attuning its stand vis-?-vis its top trading partners, the US and Japan, even if it would mean abandoning its linkages with developing nations and giving up some trade concessions.

The nongovernment group Fair Trade Alliance (FTA), meanwhile, stepped up in parallel its opposition to the government intention, and called on it instead to strengthen its ties with other developing nations so they could much better collectively look after their common positions.

Trade Senior Undersecretary Tomas Aquino said in response, At the end of the day, the Philippines ultimate goal is still to consider its own trade profile and see how the country could protect its interest in its major markets.

Its reality check now for us. Their [US and Japan] suppliers and buyers will only want to deal with their counterparts whose governments are friendly to theirs,? said Aquino at the sidelines of the inauguration of the Philippines-Korea Internet Plaza at the Philippine Trade Training Center on Roxas Boulevard.

As the countries start to align their positions, Aquino said it would be in the interest of the Philippines not to be seen by its trading partners as a country that is blocking the negotiations.

He said the WTO leadership headed by Pascal Lamy has already noted there is convergence, and this convergence will be become the agreed modalities once captured in the meeting.

So, to protect the country’s market interests in its top trading partners, Aquino said they would start giving more weight to the stand of the US and Japan rather than those of the Nama 11 and G-33, the lobby blocs of the developing countries.

Continue reading ‘RP inclining toward trade giants on WTO talks eve’

By Ben Arnold O. de Vera
Published in the July 17, 2008 issue of the Manila Times

The Fair Trade Alliance (FTA) fears the new drafts to be presented at the upcoming World Trade Organization (WTO) mini-ministerial meeting would further increase the trade imbalances between developed and developing nations.

Rene Ofreneo, FTA executive director, said in a statement that the drafts to be presented at the mini-ministerial meeting in Geneva at the end of this week, which was convened by WTO Director General Pascal Lamy to address the deadlock in the Doha Development Round negotiations, benefit only the developed countries.
The Doha talks commenced in 2001 to introduce trade reforms that would make developing countries more competitive in global commerce. But the talks resulted in richer nations receiving more perks than the poorer nations, such as greater tariff cuts among developing nations than their more developed counterparts.

Ofreneo cited the draft on the new Agreement on Agriculture, which will maintain the huge agricultural subsidies in the United States, European Union member-states and Australia at the same time it will further slash tariff on agricultural imports in developing countries.

FTA also claimed the draft remains vague on measures wherein developing countries can designate special products that are exempted from tariff formulas, and on limits to a small percentage the import volumes with which developing countries can utilize special safeguard mechanisms.

Continue reading ‘New drafts in WTO talks feared to benefit only the rich’

By Ayen Infante
Published in the July 17, 2008 issue of the Daily Tribune

Multisectoral advocacy group Fair Trade Alliance (FTA) wants the country’s trade negotiators to further review the impact of a draft of the new Doha-round world trade agreement that may possibly carry fresh formulas favoring developed countries.

FTA executive director Rene Ofreneo told reporters in a press briefing yesterday that the new Doha drafts, which will be presented by World Trade Organization (WTO) director general Pascal Lamy to trade negotiators in the next round of “mini-ministerial” to be held in Geneva, Switzerland this July 21, will give both the flexibilities and the increased market access to the developed countries while placing the developing countries at the losing end.

“It will only worsen global trade inequalities. They will also deepen the global food and fuel crisis both of which happen to be partly the consequence of the massive erosion of the capacity of developing countries to grow their own food under unrestrained global agricultural deregulation,” Ofreneo said.

The supposed “breakthrough” drafts to finally close the gaps between and among developing and developed countries on contentious issues under the Agreement on Agriculture (AoA), the Non-Agricultural Market Access (Nama) and the General Agreement on Trade and Services, was supposed to provide a compromise for developing countries seeking wider “flexibilities” on trade opening and developed countries which are demanding wider “market access” in agriculture, industry and services.

The agreement has been at a stalemate since the launch of the Doha talks in 2001.

Ofreneo insisted that after a closer examination, it showed that the formulas being applied under the new drafts may work against developing countries.

Continue reading ‘Doha draft for WTO deal remains biased for rich’

By Ma. Elisa P. Osorio
Published in the July 17, 2008 issue of the Philippine Star

The Fair Trade Alliance (FTA) has asked government negotiators for the World Trade Organization (WTO) to be careful in accepting economic concessions especially with the looming fuel and food crisis.

“The Philippines is facing rising food and fuel prices right now. In the light of these unfortunate events, accepting new and further economic liberalization without the necessary preparedness and trade flexibilities for the vulnerable sectors is tantamount to economic and political suicide,” the FTA said in a statement.

According to the FTA, the country must maintain its alliance with other developing nations and continue pushing for Special Products (SPs) and Special Safeguard Mechanisms (SSMs).

The multisectoral group explained that there should be flexibility clauses that will allow developing countries to have as many sensitive products be declared as SPs and to have the facility to avail of protection through the SSMs.

“The food and rice crises show the correctness of the logic behind SP and SSM. We should therefore push for these in the WTO in the context of the overarching goal of the Special and Differential Treatment (S&DT) principle,” the FTA said.

In addition to this, the FTA advised that the country should now focus its efforts in boosting our own domestic agricultural production than become perennially dependent on imports.

Meanwhile, the FTA said that simulations prepared by both the Tariff Commission and the Board of Investments (BOI) show that for the tariff cuts, targeting a coefficient of 50 will maximize the current policy space of NAMA tariff lines whose average bound rates is pegged at 23 percent.

NAMA refers to all products not covered by the Agreement on Agriculture. In other words, in practice, it includes manufacturing products, fuels and mining products, fish and fish products, and forestry products. They are sometimes referred to as industrial products or manufactured goods.

Likewise, the FTA said that a mark up of 50 or a minimum of 35 should be adopted in order to provide flexibilities for the treatment of unbound tariff lines, considered to be sensitive and instrumental to economic development.

For services, the FTA said  the issues still are how to insure that the principle of universal service, how to provide effective competition against big foreign and domestic monopoly service providers and how to preserve public control over strategic sectors of the economy such as the land market, environmental services, water and energy distribution, operation of public utilities.

Global trade negotiators are trooping to Geneva this week.  The Director-General of the World Trade Organization (WTO), Pascal Lamy, is convening this July a “Mini-Ministerial” to break the impasse in the deadlocked global trade talks for a so-called Doha Development Round.

Accordingly, Lamy’s negotiating committees have new “breakthrough” drafts closing the gaps between and among the developing and developed countries on contentious issues under the Agreement on Agriculture (AoA), the Non-Agricultural Market Access (NAMA) and the General Agreement on Trade in Services (GATS).   Specifically, it is alleged that the drafts provide a win-win solution — the developing countries getting the wider “flexibilities” they have been demanding, and the developed countries the increased “market access” in agriculture, industry and services that they have been seeking since the launch of the Doha talks in 2001.

However, a closer examination shows that these “breakthrough” drafts give both the flexibilities and the increased market access to the developed countries.   As such, they will only exacerbate global trade inequalities.  They will also deepen the global food and fuel crises, both of which happen to be partly the consequence of the massive erosion of the capacity of developing countries to grow their own food under unbridled global agricultural deregulation.

Imbalances are written all over the new AoA,  NAMA and GATS drafts.

In the AoA, the new draft leans on the side of the US, EU and Australia. These countries  want to maintain their huge agricultural subsidies while insisting on new tariff-slashing formulas that will hurt the developing countries the most. For example, under the draft, the US shall be given a farm subsidy cap of US$ 13  to US$16.4 billion a year.

On the other hand, the draft is vague on the actionable measures which the  developing countries can use in designating the special products (SP) that are exempted from the new tariff formulas.  Likewise,  the draft limits to a tiny percentage the import volumes that can “trigger” the use by the developing countries of the special safeguard mechanisms (SSM).  The SPs and the SSMs are at the center of the global battle for policy space – for the right of developing countries to have flexibility in pursuing policies to preserve food security, rural development and livelihoods.

Continue reading ‘New Doha drafts will deepen global inequalities and the global food and fuel crises!’

Claims further lib is economic suicide

Published in the June 6, 2008 issue of Malaya

Saying that any further liberalization is economic suicide, multisector group Fair Trade Alliance (FairTrade) yesterday said the government should reject the new text drafts issued by trade negotiating committees of the World Trade Organization (WTO) because it remains biased to developed countries.

FairTrade convenor Dave Diwa said while other developing countries have voiced out their criticisms, the Philippines has not made any public statement about new trade developments arising from the new draft texts issued by trade negotiating committees of the WTO in agriculture, industry, fisheries, and services.

The new drafts hope to address the issues and close the gaps between and among the trade interests of the developing and the developed countries.

FairTrade said government should break its silence and put the country’s interest ahead in responding to the drafts, adding that it should first address the food and fuel crises before accepting any economic liberalization that will only exacerbate poverty and economic weakening.

He said at this time of rising food and fuel prices “accepting new and further economic liberalization without the necessary preparedness and trade flexibilities for the vulnerable sectors is tantamount to economic and political suicide.”

“Upon closer examination of the drafts, it still remains highly skewed and imbalanced in favor of the developed countries,” Diwa said.

He said that while pressuring developing countries to open up their agriculture by imposing tariff-slashing formulas, the United States, European Union, Japan and Australia still maintain huge agricultural subsidies The US for example maintains a farm subsidy cap $13 billion,.

Diwa also noted that talks on special and differential treatment such as the special products (SP) and special safeguard mechanism (SSM) that developing countries are hoping to get out of the negotiations to sustain the livelihood of millions of small-scale farmers and fisherfolk in the rural communities are not moving forward.

Diwa said developing countries such as Brazil , India , Indonesia and some African countries are highly critical of the new texts.

He said that these countries lament the fact that there remains no progress in agriculture such as on the core development issues especially on special and differential treatment for developing countries, trade-distorting domestic subsidies and the African issue of cotton export subsidies.

In a fresh bid of WTO Director General Pascal Lamy to conclude the Doha Round, the Fair Trade Alliance (FairTrade) urges the Philippine trade negotiators to first address fully the twin-problem of food and energy insecurities in the country before accepting any new economic liberalization that will further exacerbate poverty and economic weakening.

The WTO negotiating committees had recently come up with new “breakthrough” drafts in AoA, NAMA, GATS, etc. hoping to address the issues and close the gaps between and among the trade interests of the developing and the developed countries.

“However, upon closer examination of the drafts, they remain highly skewed and unbalanced in favor of the developed countries. Developed countries like the US, EU, Japan, and Australia are pressuring developing countries to open up their agriculture by imposing tariff-slashing formulas,  but they themselves do not want to slash their huge agricultural subsidies. For example, the US is maintaining a farm subsidy cap of US$ 13 billion. On the other hand, the talks on special and differential treatment such as the special products (SP) and special safeguard mechanism (SSM) that developing countries are hoping to get out of the negotiations to sustain the livelihood of millions of small-scale farmers and fisherfolk in the rural communities are not moving forward.” Fair Trade said.

Developing countries such as Brazil, India, Indonesia and some African countries are highly critical of the new texts. They said that in agriculture there was still no progress achieved on the core development issues especially on special and differential treatment for developing countries, trade-distorting domestic subsidies and the African issue of cotton export subsidies. In industrial and fishery goods, the formula for tariff reduction is highly disproportional and inequitable because it will slash tariffs more on developing countries than on developed ones. The Philippines, on the other hand, has not made any public statement about these new trade developments.

Continue reading ‘New WTO talks must consider impact of rising food and energy insecurities-FairTrade’