Civil Society Perspectives on Trade Consultations
Initiatives for Dialogue and Empowerment
through Alternative Legal Service (IDEALS)
We at IDEALS, an NGO working on international trade, competition and antitrust, migrant rights, and land rights, welcome the opportunity to participate in the series of consultations on our nation’s international trade policy-setting process, negotiation, and implementation. We were informed that the consultations shall extend beyond the proposed PH-EU economic cooperation agreement to include also the stalled DOHA negotiations at the WTO and other trade agreements. We likewise welcome the fact that the consultations shall also cover not only trade policy formulation and trade negotiation, but also the monitoring and evaluation of our current trade agreements. Consultations are essential since international trade is a very important aspect of our national economy. It is also extremely complex. It affects us both as producers and service providers and consumers. Each one of us – including the corporations we work in – have dual roles: we are producers and we are also consumers. We are workers and also consumers; farmers and also consumers. Because of the dual nature of each person and each corporation, we have always mentioned before many forums that we it would be quite simplistic to argue that we should simply reduce or eliminate tariffs so that we the consumers would have access to cheaper goods. If we fail to nurture our industry and our agriculture, we will end up as non-producers, and non-producers cannot earn the money needed to become consumers. International trade affects the ability of the government to generate much-needed revenues. It has serious implications on another very complicated aspect of governance: taxation. Reducing tariffs obviously translates into less government revenue, even as it translates to cheaper goods for the consumers – regardless of economic status. In effect, the government transfers money from its coffers to its people, or subsidizes the consumption of its citizens. Like international trade, taxation is just as complicated. Tax cuts or increases are not zero-sum propositions. Foregone tariff revenue could very well be the price to pay so that the Filipinos will gain more or new market access in other countries, which would then translate into more revenues for our industries and agriculture, which would then lead to more jobs, which would then lead to more income taxes and more VAT revenues – all without the need for imposing additional taxes through legislation. International trade entails the offensive and defensive interests of our agriculture and industry; it could lead to job loss or job creation. It could affect our environment and the health of our people. Our decisions pertaining to commercial dealings with other countries could make international trade an engine for growth; however, if we do not do our homework, international trade could also lead to disaster. Our country’s trade with other nations should be directed at only one goal: to serve the interest of our people. This is especially compelling with respect to the marginalized sectors, which is actually the majority. To serve the interests of the people, the people must be consulted, even if the process will slow down or make the decision-making process more complicated and exhausting. While we have always advocated that consultations must be held, we are quite aware that at the end of the day it is the government which would have to make the difficult decisions. The government must decide for all of us, but ONLY after consulting with most if not all of us. Our government needs to strike a delicate balance: it is in one sense the agent of the people. But on the other hand, the people had empowered the government to decide on their behalf on matters of utmost importance – one of which is international trade. Obviously its decisions will not please everyone. However, our government must decide for us only after exhaustively considering the interests of all, coupled with thorough research and study. What is unforgivable is the refusal of the government to listen to the economic stakeholders who will be affected by its decisions. We are very hopeful that there will be a break from the past practice of having only a few people in the executive branch who decides for the rest of country. This phenomenon has engendered palpable animosity between CSO and government: CSO’s suspect that government only listens to big business. In fact, that is not even the case since even many in business complain of lack of consultation. A number of respected business people even argue that even in trade and investment agreements we had signed as a nation, it can be inferred that many in business were not consulted, as shown by the concessions that our country has granted. Unfortunately, these concessions had allegedly translated into the demise of some of our industries. Of course, the cause of the problem may be elsewhere and not in our trade policy. Many of us in civil society also suspect that in the past government’s conduct is guided by a belief that free trade is the only trade policy worth pursuing and that free trade is the panacea to all economic ills. Worse, according to Justice Feliciano, our then trade officials, because of apparent absence of dialogue with the business sector and blind faith adherence to trade liberalization, even lowered our tariffs… unilaterally… erroneously thinking that we had such an obligation under the WTO Agreements. At the moment, however, we are encouraged by the fact that all signs point to better things ahead, that more groups will be able to have their voices heard – especially the marginalized sectors and other sectors in agriculture and industry who will be adversely affected, even as the government must likewise listen to sectors in our domestic industry and agriculture with offensive interests in the markets of other nations. The “democratic deficit” in international trade should permanently be a thing of the past and so must the old perception from before that CSOs are mere nuisance in the trade discourse. Government has in fact in the past conducted what we perceive as limited consultations with CSO’s. There is still a lot of room for improvement: the process should be INSTITUTIONALIZED, and must extend to assessment of our current agreements: the WTO Agreements, ASEAN Trade in Goods Agreement, AFTA, ASEAN – South Korea, PJEPA, etc. The consultation process must also address the proper role of Congress. We have always believed that Congress has an important role, and essential role, in trade policy formulation. Any trade agreement typically has provisions on trade in goods, services, tariffs, investments, rules of origin– all of which can be categorized under two basic things: commerce and taxation. Given that the power of taxation is exercised by the state through Congress and also knowing that all acts of commerce can be regulated by the State through Congress, it is clear to us that Congress has the role, an important one, in trade policy formulation, even as trade negotiation will have to remain with the Executive Branch. Our Constitution provides that all tariff and revenue bills must emanate from the House of Representatives. Trade agreements always involve tariff; however, we cannot name a single trade agreement which benefited from the intervention of the House of Representatives. Congress comes into the picture, albeit solely through the Senate, and only if the Executive Branch decides that the agreement it had signed with another country or group of countries is a treaty which must be transmitted to the Senate for concurrence. If the Executive Branch decides that the trade agreement is a mere executive agreement, there will not be any role whatsoever for Congress. It is also clear to us that trade agreements should always be transmitted to the Senate for concurrence. In recent years (2005 to the present) we in civil society have actively participated in Congress with respect to trade issues. We look forward to continuing with this extremely important endeavor. TRADE CONSULTATION is a governance issue both for the government and civil society. The only way that the government could come up with the correct policies that would redound to the national interest is to consult with different sectors that would be affected. The different angles and the myriad of implications could be surfaced through exhaustive consultations with sectors with at times opposing and sometimes converging interests. Government must continue consulting the various stakeholders on ALL ECONOMIC MATTERS such as antitrust and competition, and not just trade. We in civil society always demand consultations, and we believe we should always continue to do so. But at the same time, we should also be prepared to also intelligently engage the government, which would entail also a lot of rigorous study and debates within our ranks. We ought to judiciously and with rigor monitor and evaluate the effects of trade and how we can influence the trade conduct of our government, and we must be prepared to defend an entire range of possible conduct – from concluding new trade agreements to totally getting out of our current agreements to totally opposing proposed trade agreements– and everything else in between. In the same manner, this trade consultation process is also an exercise that we in CSO’s must be used to given that we must engage government not only on international trade but also on other economic issues: competition and antitrust, debt payment, taxation policy, etc. We at Ideals hope that the consultation processes would lead to the creation of a TRADE CONSTITUENCY composed of producers, consumers, importers, exporters, distributors, service providers, etc. Engagement should not stop at trade policy formulation, but should extend to monitoring and evaluation. IDEALS and the other organizations we work with look forward to being a part of this constituency and looks forward to sitting down with business, government and other civil society organizations in mapping out our trade policy and monitoring and evaluating our trade agreements. We believe that consultation and continuous dialogue are essential. There is no other way of doing it. Thank you very much for your time. Tony Salvador IDEALS May 4, 2011
