We, at the Fair Trade Alliance (FairTrade), would like to express our collective concern on the great uncertainties facing the nation, now that it is clear that the global recession-depression will be a prolonged and painful one for virtually all countries of the world. The country’s major trading partners – United States, Japan, Western Europe, South Korea, Singapore, Taiwan and China – are all reeling from the recession and are cutting down on imports, which explains the social and labor dislocations being felt today in Regions IV, III and VI, the base of the Philippine electronics, garments and other export industries. On the other hand, declining OFW remittances and deployment are slowing down our remittance-dependent consumption-led economy.
This is why, we are somewhat relieved that our government technocrats, after a long period of denial in 2008, now openly admit the adverse impact of the crisis on the economy and employment. DOLE has been organizing job summits and layoff prevention and mitigation conferences left and right. NEDA, after flippantly ignoring the call for economic bailouts, is suggesting an unemployment insurance scheme for all affected, something that has not been tried in the country. As it is, the country has three (3) million unemployed, six (6) million underemployed, one (1) million annual labor entrants and a large number of workers being displaced at home and in the overseas labor market.
However, we are dismayed that the Philippine stimulus package is a badly packaged one. Not only has it been delayed by the usual budgetary wrangling in Congress, 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 means, or in the words of France’s Sarkozy, “saving our national champions”.
And yet, the Philippine Economic Resiliency Plan (PERP) says nothing on how local industry and local agriculture can be revived and strengthened to perform the task of creating national wealth and jobs. In contrast, the $787-billion 1,000-page stimulus package of Barack Obama requires public-funded infrastructure projects to source their steel, iron and other needed supplies from American producers, precisely because the package is directed at reviving and strengthening American industry and employment.
In Asia, it is widely recognized that there are three countries that are well positioned to withstand the global recession, namely: China, Indonesia and India. These three populous countries happen to have a uniform program of sustaining growth by relying on the continued growth of their home markets and home industries. China’s $586-billion bailout package, announced November of last year, is directed at stimulating domestic demand for the output of their own domestic industries. Even as it is openly denouncing the so-called “American protectionism” in Obama’s “Buy America” bailout package, China is requiring its huge state-owned enterprises (SOEs) to buy Chinese. China’s State Council has also crafted stimulus package for ten (10) industrial sectors – machinery, textile, shipbuilding, auto, steel, electronics, ICT, light industry, petrochemical, non-ferrous metals and logistics. This is guided capitalism in the guise of economic stimulus!
In the case of Indonesia, a great part of its $6.15 billion stimulus package is really aimed at supporting Indonesian industry and agriculture. Its Minister of Industry, Mari Elka Pangestu, has refused the calls of free-traders to withdraw the government policy requiring public servants to wear Indonesia-made uniforms and footwear. In the run-up to the ASEAN Leaders’ Summit in Thailand last February, a number of Indonesian cabinet members also opposed the early signing of the ASEAN free-trade agreement with Australia-New Zealand (AANZFTA) on the ground that Indonesia is not fully prepared to handle the likely surge of Australian industrial and agricultural products such as automotive, electronics, sugar, milk, meat and so on.
As to India, it has one of the highest industrial and agricultural tariff structures in the world.
Subsequently, India’s strong home industry and agriculture have enabled it to provide jobs for its teeming millions as India’s famous ICT sector is able to create only four million jobs out of a labor market of 400 million. Thus, while it also denounces Obama’s so-called protectionism, India has been reticent in its refusal to give up its tariff space as reflected in its continuing opposition to the WTO’s liberalization proposals for NAMA (industry) and AoA (agriculture). In the recent ASEAN meeting, India also pushed for another postponement (the third time!) of the proposed ASEAN-Indian Free Trade Agreement (AIFTA). In 2005, the AIFTA signing bogged down on the Indian insistence to exclude 1,414 tariff lines.
In the case of the Philippines, we are shocked to see how the DTI and other government agencies are going with their usual business oblivious or unmindful of the earth-shaking adjustments the big countries, both developed and developing, are adopting to preserve and strengthen their domestic industry and agriculture through various bailout and assistance schemes. Most in fact have openly abandoned the policy of untrammeled free-trade neo-liberalism in favor of outright support to critical industries, which is what the United States, Europe, China and other countries are now doing.
And yet, we see the Philippines endorsing wholeheartedly in the February ASEAN meeting the AANZFTA and the ATIGA (consolidated free trade agreement in goods) despite the objections raised by the Fair Trade Alliance (FairTrade) and concerned industry groups last year (during the Tariff Commission hearings). To date, the government has not given the local stakeholders any copies of their studies on how the Philippines will come out as winners under these new agreements. And if there are any losers, the track record of the Philippine government in assisting failed enterprises, both employers and employees, has not exactly been sterling.
Returning to the PERP, we hardly see anything in the said program that will stimulate, much less preserve local industry and agriculture. In fact, we do not see and do not feel the crucial leadership role that the DTI and the agriculture cabinet cluster (DA, DAR and DENR) should play in charting the nation’s survival and growth path under a prolonged global recession.
Instead, we are treated to a sad spectacle where DTI technocrats are naively projecting higher export performance for this year and next when it is abundantly clear that global export demand is falling and that the next best option is to look inward. Note, for example, how a 50 per cent devaluation of the Korean won has failed to stimulate a sagging Korean economy.
Clearly, we need a Cabinet shakeup, especially in the economic cluster. We need a bold re-focusing of the PERP. We need a long-overdue overhaul of an imbalanced economic program dependent on only the OFW and export sectors. We need a balanced economy based on a strong agro-industrial base. And in times of crisis, we need to take advantage of our own strength – a large market of 90 million Filipinos.
It is accepted wisdom that a crisis also presents an opportunity. Let us take this opportunity to build up our agro-industrial base and set the foundation for faster growth that will lift the majority of our people out of poverty.