Defending economic sovereignty

As the visit of US President Obama to Manila looms closer, both the Philippine and US governments are drumbeating the signing of the apparently more palatable Enhanced Defense Cooperation Agreement (EDCA) as a high point while keeping mum about Obama’s equally important and urgent agenda such as the Trans-Pacific Partnership Agreement (TPPA) and its prerequisite “Charter change” (Cha-cha).

The US pivot to Asia, which is the raison d’etre for the entire visit, is after all not just about shifting its military weight closer to China. It also involves repairing and reinforcing its economic and political alliances in the region and creating more favorable conditions for furthering the neoliberal agenda to mitigate, if not arrest its own deep crisis and overall decline.

The TPPA has been kept under tight wraps even as the US, the dominant player among 12 countries (Australia, New Zealand, Japan, Singapore, Malaysia, Brunei, Vietnam, Chile, Canada, Mexico and Peru) has pushed hard to reach a “consensus” that has eluded negotiations thus far. 

A series of leaked TPPA draft documents by Wikileaks shows why.

According to the International League of Peoples’ Struggles (ILPS), controversies are triggered by “clauses that favor US monopoly control and undermine governmental processes” of other member-countries. “The TPPA’s main provisions are expected to require member-countries to remove any remaining barriers to investments, to strictly enforce intellectual property laws that would raise pharmaceutical costs and stifle digital innovation and freedom of expression, and to allow private corporations to sue states before an international tribunal. In effect, countries joining the TPPA will have to surrender big chunks of their national sovereignty to the trade pact’s imperialist masterminds.”

The Philippines is not yet a TPPA negotiating member state and this is where Cha-cha comes in. 
While it is true that the renewed push for Cha-cha originated in the Lower House of Congress, it is a fact that the Joint Foreign Chambers of Commerce in the Philippines (JFC) led by the American Chamber of Commerce (AmCham) and US government agencies like the Office of US Trade Representative (USTR), the US Agency for International Development (USAID), and the US embassy in the Philippines have bankrolled and engineered a sustained lobby for pro-foreign big business policy reforms through Charter amendments, various legislation and executive issuances.

The AmCham manages the USAID-funded and unabashed pro-TPPA The Arangkada Philippines Project (TAPP) that “advocates” 471 neoliberal policy recommendations that promote the interests of foreign corporations in the country through greater liberalization, deregulation, privatization and denationalization while undermining the national economy, facilitating greater plunder of the national patrimony and intensifying the attack on the people’s rights and welfare.   Accordingly, all the remaining protectionist provisions of the Philippine Constitution are identified as disincentives to foreign capital that must be “bypassed, reformed, revised or removed”. 

The Partnership for Growth initiative entered into by the US and the Philippines explicitly aims to give “support for trade and investment-related policy reforms needed to improve Philippine readiness to qualify for entry into... The Trans-Pacific Partnership (TPP) agreement.”

In a Forum on PH-US relations in Washington D.C., August 2011, former US Ambassador to the Philippines Harry K. Thomas Jr. is quoted as saying, “[The Philippines has] to change laws, issue executive orders and frankly, introduce amendments to the Constitution” in order to join the TPPA.

IBON Foundation recently exposed more external pressurecoming from the Office of US Trade Representative (USTR).  In its National Trade Estimate Report on Foreign Trade Barriers (2014) the USTR “identified 30% constitutional limit on foreign ownership in advertising; 40% limit on foreign investment in the operation and management of public utilities (water and sewage treatment, electricity distribution and transmission, telecommunications, and transportation); ban on foreigners to practice law, medicine, nursing, accountancy, engineering, architecture and customs brokerage; and restrictions on foreign ownership of land as among the barriers to trade being implemented by the Philippines.”

Foreign investors calling for Cha-cha find their strongest allies in their domestic partners in the local big business community who wield formidable clout over economic policy makers, implementers and arbiters in government, e.g. the Makati Business Club (MBC), Employers’ Confederation of the Philippines (ECOP), Philippine Chamber of Commerce and Industry (PCCI), Alyansa Agrikultura, Philippine Exporters Confederation (PHILEXPORT), Management Association of the Philippines (MAP).

The unholy alliance between foreign and local big business interests (underpinned by government support) is the real juggernaut behind the House of Representatives’ Resolution of Both Houses (RBH) No. 1 aka Cha-cha.   It will have to be met and foiled by the broad unity and mass resistance by those classes and sectors in Philippine society who have most to lose in the unbridled entry and domination by  foreign capital of the Philippine economy.

In the agricultural sector, the land-hungry peasants and farm workers and the indigenous peoples robbed of their ancestral lands will lead the fight against further liberalizing foreign ownership and utilization of alienable land.  Massive land grabbing, unchecked land use conversion and forced displacement of rural folk to give way to mining, agri-business, commercial and tourism projects as well as government “development” projects are bound to worsen as a consequence of Cha-cha.  Attendant socio-economic problems - malnutrition, poverty, disease and criminality - will surely be aggravated not just in the countryside but in urban areas where the displaced rural population spill over seeking jobs and other livelihood opportunities. 

Chronic unemployment and underemployment and inhuman work conditions for the rest of the population also looms with Cha-cha.  The neoliberal policies to be enshrined in the Constitution translate into a domestic economy continuously kept backward by feudal land tenure relations, the lack of an industrial base and the unbridled exploitation of its natural resources.  It cannot generate the jobs, productive enterprises and social wealth that can sustain a bourgeoning population nearing the hundred million mark.  The class divide between the miniscule elite and the masses including the sinking middle class is bound to grow and generate more social disorder, discontent and conflicts, while the state increasingly resorts to force to suppress resistance and dissent 

The workers and urban poor in alliance with the middle forces of fixed income employees, small and medium entrepreneurs and patriotic business persons must awaken to the dangers of Cha-cha to their lives and livelihood and join the rural folk in their fervid opposition.

Nationalists and patriots among the intelligentsia - students and teachers, mass media practitioners, professionals, and artists - must join hands to prevent foreign big business interests from capturing, controlling and dominating educational, mass media and other cultural outlets through the expediency of Cha-cha.

The people’s broad and determined opposition both to the RP-US Enhanced Defense Cooperation Agreement and the Cha-cha/TPPA cannot be underestimated.  #

Published in Business World
25 April 2014

Upending economic sovereignty thru Cha-cha

In the run-up to the Manila visit of US President Barack Obama, mass media attention has been riveted towards the cat-and-mouse game of Philippine and Chinese naval forces near the Ayungin Shoal and the high-profile declarations of support by the US for its defense treaty allies Japan and the Philippines in light of their territorial and maritime disputes with China. 

In the meantime, a far more imminent and dangerous threat to national sovereignty and territorial integrity called the RP-US Increased Defense Cooperation Agreement  (purportedly the lynchpin to beefing up the country’s external defense capabilities) as well as serious moves to further undermine national economic sovereignty at the expense of national development goals, social equity and the people’s overarching welfare through the latest Charter Change (Cha-cha) offensive in Congress -- have not merited as much sustained media and ergo public attention as they should.

In order to draw attention to these impending affronts on our people’s immediate and long-term interests and general well-being (not to mention aspirations for national development, social progress and a just peace) we wish to train a probing light onto the latest Cha-cha bid being railroaded in Congress.  The House Committee on Constitutional Amendments has in fact peremptorily approved Resolution of Both Houses (RBH) No. 1 to amend what remains of nationalist economic provisions in the 1987 Philippine Constitution and has set this for plenary debates on May 5, barely a month from today.

One would think that the dire effects of the neoliberal policy environment of the past three decades under the “Freedom Constitution” of 1987 should be enough to give pause to the “free marketeers” and “globalists” among our policymakers in the executive and legislative departments representing foreign and domestic big business interests. 

Apparently the simplistic and unsubstantiated line -- the Philippine economy is backward because of the lack of capital; foreign investments can fill in that lack but restrictive Constitutional provisions act as a disincentive; and removing these Constitutional barriers will automatically up the volume of foreign investments thereby assuring vibrant economic activity, job creation and invariably, sustained growth and development  – continues to stranglehold official policy discourse and decision-making.

This is without a doubt attributable to the various “incentives”, material and otherwise, that powerful lobby groups (including interventions emanating from the Foreign Chambers of Commerce, international financial institutions such as the International Monetary Fund, and the embassies of the advanced capitalist countries in deep economic crisis) have utilized.  This latest incarnation of Cha-cha in Congress that claims to be limited to economic amendments cannot be an exception.

Thus it was refreshing to have been able to participate in a recent round-table-discussion among economic policy experts, academics, small-to-medium business groups, social activists, farmers’ organizations, legislators and media practitioners that highlighted and expounded on very straightforward and quite compelling arguments against RBH No. 1.

Bayan Muna representative Neri Colmenares underscored the highly suspicious speed and gross lack of democratic consultations that attended the passage of the Cha-cha bill at the committee level in the Lower House.  Mr. Colmenares raised two major questions that remain unsatisfactorily addressed to date:  1) whether Congress can introduce wide-ranging changes in the Charter “just like passing a normal law” and 2) whether Congress can be allowed a free hand in overturning the protectionist, pro-Filipino provisions of the Charter by the mere exigency of tacking on the phrase “unless otherwise provided by law” to pertinent sections on natural resources, land ownership, strategic enterprises, public utilities, education, mass media and advertising.

Speaker Sonny Belmonte and his pro-Cha-cha cohorts are apparently taking advantage of the ambiguity in the 1987 Constitution about the method of Charter amendments via two-thirds vote of the two houses of Congress but without the necessity of convening a Constituent Assembly for the express purpose.  More insidiously, Cha-cha proponents seek to avoid the necessity of rigorous crafting of Charter amendments on the aforementioned sensitive aspects of the national economy and the attendant vigorous debate such will entail by assigning omnibus power to the “honorable members” of Congress to henceforth make the changes as only as they deem necessary or desirable.

Private think tank, Ibon Foundation, through its Executive Director Sonny Africa, has sought to demolish some major assumptions of the Cha-cha proponents.  For one, the conventional wisdom that foreign investments per se always redound to the benefit of the local economy, much more, the majority of the people is belied by the Philippine experience of increasing foreign direct investment (FDI) since the 80s but with little to show in terms of overall economic development.  According to IBON, annual FDI inflows are currently fifteen times larger than in the early 80s from USD 243 million (1981) to USD3.6 billion (2013).  However, “(r)ising FDI has been accompanied by  increasing unemployment, increasing labor export, falling real wages, shrinking domestic manufacturing and more volatile and exclusionary growth.”  IBON provides the data to corroborate their analysis.

Part of the Cha-cha offensive is the conscious effort to denigrate the necessity and overall benefits of economic protectionism and state regulation of foreign capital.  IBON takes pains to show how this baseless claim flies in the face of the clear historical precedents in a diverse range of countries whether these be the United States of America, the United Kingdom, France, Germany and Japan in the late 19th century; South Korea and Taiwan in the 60s and 70s; and China, Russia and Cuba during their respective periods of revolutionary overhaul.  All these countries resorted, at certain stages in their development, to state protection of the domestic economy from unbridled penetration by foreign capital.

While there is a place in underdeveloped or backward economies such as that of the Philippines for foreign capital’s contribution to national development, this only comes about with deliberate, responsible and democratic government intervention.  Otherwise, foreign capital, especially in the hands of transnational corporations will, by nature, put a premium on profit-making regardless of or even in contradiction to a country’s development goals.  For example, while governments in the Third World have sought to impose certain requirements for investments in manufacturing like technology transfer and some percentage of locally-sourced raw materials in the end commodities produced, or some form of equitable sharing in revenue generation for the exploitation of natural resources such as in mining or oil and gas exploration,  advanced capitalist countries have consistently opposed these whether in bilateral or multilateral forums.

Moreover, since the global financial and economic crisis in 2008, even the more advanced economies and developed countries have resorted to protection and regulation. IBON cites the United Nations Conference on Trade and Development (UNCTAD) tracking of national regulatory changes worldwide since 2000 showing an increasing trend towards regulations and restrictions especially in the extractive, agribusiness and financial sectors.  IBON also cites the Centre for Economic Policy Research (CEPR) with its similar observation of rising protectionism amid the worsening global crisis.  In fact, the US, European Union (EU), Germany, Russia, China and India are leading the pack.

Concrete analysis of historical experience, whether global or Philippine, clearly trumps the uncritical and even unthinking acceptance of foreign capital as the be-all and end-all of domestic growth and development.  Most especially so if we speak of growth for the majority of the people, not just for the elite few and their foreign business patrons and partners; and of genuine development for the entire country, not just for a few economic enclaves in highly urbanized areas that are merely a cog in the global supply, production and marketing chain controlled by transnational corporations, in turn based in the advanced centers of capitalism.#

(Next week, Cha-cha on foreign land ownership, exploitation of natural resources, ownership of public utilities, educational institutions and mass media and advertising and concomitant political implications.)

Published in Business World
11-12 April 2014

Dealing with China

When we criticize and oppose a new de facto basing agreement dubbed the “Framework Agreement on Enhanced Defense Cooperation” between the Philippines and the United States of America, we are often met by strong, emotional reactions in connection with the territorial and maritime disputes of the Philippines with China in the West Philippine Sea (South China Sea). We are accused of either burying our head in the sand, refusing to recognize China’s aggressive acts and intent to bully us into submission, or we are actually aiding and abetting China.

Invariably our patriotism is questioned for not wanting the Philippine government to seek US help in defending Philippine claims militarily.  A more sober reaction has been to challenge us to come up with alternative approaches and concrete steps that government should take if we are against involving the US in our quarrels with our neighbors.  (Note that aside from China, the Philippines has overlapping claims with Malaysia and Vietnam.)

There certainly are other ways that are valid, viable and have better chances of finding short to medium, if not long-term, solutions to the disputes with China.  These approaches avoid counterproductive and even violent confrontation between an obviously weaker state (the Philippines) and an emerging behemoth (China), economically and militarily, that would not entail the former becoming dependent on a third party (the US) with its own primordial interests to promote and protect.

Hence while in principle it is our patriotic duty to assert our national sovereignty and territorial integrity over the issue of the Spratlys (Kalayaan) and other islands, reefs and shoals which are well within the 200-nautical mile exclusive economic zone (EEZ) as defined by the UN Convention on the Law of the Sea (UNCLOS), we must not forget that it is also in our sovereign interest to avoid involving ourselves in unnecessary displays of military force or provocations, much less a shooting war with China, no matter how we delude ourselves into thinking the US will automatically come to our aid should push come to shove in the disputed waters of the West Philippine Sea.

In light of China’s increasingly aggressive actions, for whatever reason (China claims it is the one being provoked by Philippine moves to establish physical structures on uninhabited reefs and shoals and to interdict Chinese fishermen in waters that are part of their territory), the Philippines’ counter action of bringing its case to the Arbitral Tribunal of UNCLOS last January appears reasonable despite China’s refusal to take part in the proceedings.  It is a diplomatic and political move that has its pros and cons that must be weighed carefully.

It should be pointed out however that international arbitration, even if the Philippines wins its case, does not necessarily lead to the resolution of the disputes with China. As opined by former Philippine Permanent Ambassador to the UN, Mr. Lauro Baja, apart from the UN Security Council where China has veto power, other international bodies such as the Arbitral Tribunal do not have any means of enforcing its decisions.  Everything will still redound to the realpolitik of which state has the over-all capacity to assert its claims in actuality.

China has reacted quite strongly to the filing of the Memorial seeking to nullify China’s 9-dash line map on which it bases its claim on almost the entirety of the South China Sea and has declared that such Philippine action “seriously damaged bilateral relations with China”.  Invoking the Declaration on the Conduct of Parties in the South China Sea signed by China and all ASEAN countries, the Philippines included, China continues to call on the Philippines “to resolve disputes over territory and maritime rights and interests through negotiations by the sovereign states directly concerned”.

The Center for People’s Governance (CENPEG), a Filipino policy studies group, in a statement submitted to the Committee on Foreign Affairs of the House of Representatives last March 4 advanced the view that bilateral talks with China is worth pursuing contrary to conventional wisdom that such bilateral negotiations places the Philippines at a disadvantage from the outset.  CENPEG underscores that the Philippines had in fact been negotiating bilaterally with China and had inked various agreements since diplomatic ties were reinstated in the 70s.

“One advantage of bilateral talks is that it opens up for discussion and negotiation many nuances of a disputed issue that cannot be addressed in a strictly rules-based form of arbitration… Moreover, many sensitive political issues that cannot be openly discussed in a legal arbitration format can be better addressed and threshed out in more informal bilateral talks, ” the CENPEG elaborated.

The Philippines can take a leaf from the examples of Vietnam and Malaysia that have avoided further escalation and provocation in its territorial and maritime conflicts with China compared to our official tack.

At the same time, it doesn’t help that no less than the Philippine head of state, President B.S. Aquino, continues to engage in antagonistic, even belligerent, rhetoric in almost every international forum available while seeking international support for his government’s position against China’s aggressiveness a.k.a. “bullying”.

More important, is the recognition that involving the US, the sole Superpower now embroiled in its own  deep socio-economic crisis and geopolitical quagmires, in our disputes with our neighbors is not only unhelpful, it is asking for trouble. 

In the first place the US has already stated in no uncertain terms that it is not going to involve itself in such territorial and maritime disputes.  In the real world, the working relationship of the US and China is too important for both countries, grounded as it is on huge investment, trade, foreign policy and other strategic concerns, for either side to risk being drawn militarily into the other’s conflicts with its neighbors unless it has a vital interest at stake. Run-ins and even saber rattling over the islands, islets, reefs and shoals in the Spratlys and other small archipelagos in the West Philippine Sea is insufficient casus belli for either country.    Moreover, the Mutual Defense Treaty does not have an automatic retaliation clause despite all the deceptive reassurances and barefaced gullibility of our political leaders.

Should the Philippines and the US come to an agreement to increase “rotational” troop presence and the “prepositioning” of its warships and other war munitions inside Philippine territory together with more frequent holding of joint war “exercises” including in disputed waters, it is to be expected that China will consider this a provocation, part and parcel of the US containment strategy against China, with the Philippines a very willing junior partner.  Objectively, such a development will lead to the heightened militarization of the West Philippine Sea thus increasing the dangers of miscalculations and armed skirmishes that neither the Philippines nor China really wants.

Certainly it would be very useful all around for people-to-people exchanges and relations to be encouraged and developed in order to counter the undercurrent of big-country-chauvinism and ultranationalism in China and the matching flag-waving pseudo-nationalism and anti-Chinese racism in the Philippines that lend themselves to jingoism and other types of populist calls for retaliatory moves on both sides. #

Published in Business World
4-5 April 2014