AMID
DEEPER economic integration and further trade liberalization that
cause varying degrees of labor displacement and economic deterioration,
the Philippine government remains a staunch supporter of international
trade under the auspices of the World Trade Organization (WTO).
The illusion that Southern countries like ours will benefit from
WTO has been a recurring joke since December 1995, when the Philippine
Senate ratified the General Agreement on Tariffs and Trade and was
admitted to the WTO.
This week, the country hears the same joke with hopes that it will
finally yield some grain of truth. The Philippines will face 145 other
economies when the WTO Ministerial Meeting convenes on 10-14 September
in Cancun, Mexico. The Cancun Ministerial will conclude the negotiations
proposed under the Doha Ministerial Round held in November 2001.
The Cancun negotiations will revolve around further reduction of
trade barriers in agriculture, settlement of intellectual property
rights in medicine and drugs, and further liberalization of services.
A complication, however, presents itself in the Cancun Ministerial:
Northern countries like the United States and the European Union propose
new rounds of negotiations in areas where the WTO - a trade regulatory
forum - essentially lacks jurisdiction, like multilateral investments,
government procurement, and trade and competition policy.
As negotiations progress, perhaps this is the proper time for the
government to step backward and assess if the Philippines benefits
in its continued support to the WTO. Further, the government should
seriously consider whether or not the country should remain under
the WTO mandate.
The Concept of Trade Is Equal Opportunity
The idea behind trade, whether domestic or international, is the concept
of mutual benefit and equal gains. Adam Smith simplifies the idea
behind international trade: for two nations to trade with each other
voluntarily, both nations must gain. If one nation gained nothing
or lost, it would simply refuse to trade.
Modern-day economists Paul Krugman and Maurice Obstfeld echo Smith's
simple truth of mutual benefit.
Robert J. Samuelson forwards another opinion: "The justification
for free trade is that everyone ultimately benefits… If too many
countries hoard, the logic of free trade collapses."
Mutual benefit in trade exists because there is an assumption of
comparative advantage among sovereign states. Between two countries
that produce the same kind of goods, comparative advantage simply
means a country that produces a certain good at a cheaper and more
efficient method should stick to that product and import other products
that are cheaper and efficiently produced elsewhere.
If mutual benefit is the assumption in international trade, why then
does the WTO receive so much flak from poor countries and civil society
groups?
First Among Equals
A single most important flaw in the WTO system is the false assumption
of equality. In reality, there exists inequality among nations; there
can be no mutual benefit in international trade because only a handful
of countries are better off at the expense of the majority.
The North (United States, Canada, European Union, Japan) wields more
advance technology and sophisticated capitalist tools, compared with
the South's predominantly agricultural and pre-industrial economies.
Therefore, the assumption of fair trade among equals is a fallacy
at the very beginning.
The disparity is further exacerbated by a set of rules that is biased
in favor of rich countries. WTO promotes "fair" competition
and removal of any form of subsidies. Comparative advantage of the
North makes it easier for them to dump their surplus to the South.
To further complicate the matter, the WTO is exposed to veiled threats
by the sole political, military, and economic superpower. The United
States have been reneging its duties under the WTO system, especially
in removing agricultural subsidies and obeying results of the dispute
settlement council. The WTO, however, is powerless to compel obedience.
Fundamental Flaws in Southern Economies
Aside from the inherent inequality among nations and a set of trading
rules more favorable to the rich, intrinsic flaws in the structure
of Southern economies makes the matter worse.
At the micro-level, structural infirmities abound the economies of
South countries: most are agricultural with some level of industrialization
and based on cheap labor, import-dependent, and debt-ridden.
This situation makes Southern economies more vulnerable to interference
of Northern countries. The International Monetary Fund and World Bank
have used debt as leverage to further privatization, deregulation,
and liberalization in South economies.
These three -tion that summarize the new world economic order: state
enterprises are delegated to the private sector (privatization), government
systematically withdraws from the economic sphere (deregulation),
and foreign economic intervention through trade and investment is
promoted (liberalization).
What should the Philippines do?
Amid the seemingly hopeless situation, what is the Philippine government's
best recourse? Is withdrawal from the WTO an option for us?
Asserting that the Philippines should withdraw from the WTO is a
simplistic answer to a complex question. What is the cost of withdrawing
from a system where 146 countries participate?
Unfortunately, I cannot offer any black-and-white answer nor will
I attempt to do so. What I can offer are mere suggestions that can
be construed either way, whether or not the country remains in the
WTO:
1. In the micro-level, the government should take heed of the demands
of the progressive people's movement to reverse of privatization,
deregulation, and liberalization. Further, structural flaws within
the economy should be addressed to promote genuine industrialization
and self-reliance.
2. In the global level, the Philippines should be instrumental in
further strengthening of South-South solidarity and promote the interests
of Southern economies. As the world majority, the South countries
should assert their interests against corporate-driven globalization
and instead, focus on cooperation.
