Tuesday, January 10, 2012

Free Trade 20: Prohibiting 2nd-hand Imported Vehicles

Cars and other vehicles represent mobility and hence, freedom. If one has a car in good running condition, one can visit many places with ease and convenience compared to taking various public utility vehicles (tricycles, jeepneys, buses, vans) and waiting for their turn to move. Thus, car ownership is no longer a luxury but a necessity for people to move their goods, services, family, especially babies, children, old and sick family members.

Used or 2nd or 3rd-hand (or more) cars and other vehicles have market for poorer members of society. Like me, I'm still driving a 2nd hand pick up which I bought in 1999, still in good running condition but have a number of mechanical and electrical defects.

Now a leading Liberal Party (LP) official at the House of Representatives, Cong. Erin Tanada of Quezon, is proposing a House Bill banning and prohibiting the importation of used and 2nd hand cars and other vehicles. His chief of staff and my friend way back in UP since the 80s, Jeck Cantos-Reyes, posted it in her facebook wall yesterday, hoping to get more public support to their proposal.

Below are the major exchanges in Jeck's wall. I removed the family name and profile pic of two of Jeck's friends who debated with me. What is important here are the message and ideas being floated upon, not the personality per se. I'm a free marketer and free trader through and through, my blog readers won't hear or read any praise or compliment for protectionism from me, they will read it from people who debate with me. Hence, I am posting the comments by Mars and Catherine below.

yes...let's push this bill.
MANILA — Fair trade advocates, including several major labor organizations, have again strongly opposed the importa

 ·  ·  ·  · 16 hours ago · 


MANILA — Fair trade advocates, including several major labor organizations, have again strongly opposed the importation of second-hand vehicles even as they expressed full support for the passage of House Bill No. 5279, an Act Establishing the Comprehensive Motor Vehicle Development Act, authored by Quezon Rep. Lorenzo R. Tanada III.
The bill, which is now with the House Committee on Trade and Industry, lays down wide-ranging incentives for the automotive manufacturing industry, including the provision of "demand side" incentives, such as exploring the possibility of setting up affordable and accessible financing schemes to allow even low-income families to afford vehicles for business, commercial or personal use.
HB 5279 also prohibits the importation of second-hand vehicles, except for certain kinds of motor vehicles used for special purposes, such as fire trucks, ambulances, funeral coaches, crane lorries, among others....

  • Nonoy Oplas jeck, this is protectionism, not liberalism. Erin is with LP right, and LP stands for liberalism, not protectionism.
    16 hours ago · 
  • Jeck Reyes-Cantos the tanadas have always been the mavericks in the LP, nonoy. :)
    15 hours ago · 

  • Nonoy Oplas i know, but i'm talking about the policy. Restricting importation is protectionism. A poor household who pays a lot for tricycles, then jeepney, then tricycle again each day, can save if they can have a cheap 2nd or 3rd hand car, whether imported or locally bought. Why deprive poor households like them if such cheap 2nd hand cars are available from abroad?
    15 hours ago · 
  • Jeck Reyes-Cantos that logic can be applied to any other good as well - rice, shoes, etc. if it is done, ano pa ang maiiwang industry that will provide employment for our people, nonoy? what about the other local industries that are backwardly linked to this sector?
    15 hours ago · 

  • Nonoy Oplas Even rice farmers also want free trade: cheap hand tractors and parts, cheap toys, shoes and clothes for their kids, cheap tv and appliances for their houses, etc. They only want sectoral protectionism but want free trade in all other sectors. Free trade means free choice, di ba.
    15 hours ago · 
  • Jeck Reyes-Cantos oh yes...but we are for fair trade, not free trade. tulog na muna ako, noy!
    15 hours ago ·  ·  1
  • Emmanuel  

    meron bang local manufacturing of vehicles? I don't think there is. Meron tayo, jeep and jeepneys with imported parts. Sa perspective ng resource conservation, mas mabuti nang gumamit ng second hand kesa itapon lang sa mga dump sites ang lumang vehicles. think of how much mineral resources are wasted. with more new manufacturing of vehicles, there will be more demand for iron and steel: meaning more mining. more manufacture of plastics, rubber, glass, etc.

    10 hours ago · 
  • Jeck  hi manny! just to clarify. the bill is for banning the IMPORTATION of second hand vehicles, most especially yung mga right hand drives na kino-convert sa left hand (dahil me safety issues) at tsaka yung mga yun, patapon na from other countries. the bill is not against the sale of locally manufactured 2nd hand vehicles. meron tayong local manufacturing/assembly although paliit talaga nang paliit na ang volume.
    7 hours ago ·  ·  1
  • Mars  

    hi, all. i
     support erin's call in banning the importation of secondhand vehicles especially those converted from right-hand to left-hand, moreso, polluting the environment. kahit LP tingin ko is for a balanced economic & trade policies, a balanced fair & free trade regime. we nurture what we have & develop it further & we open up if we dont locally produce it, laluna kung raw materials or ginagamit directly sa production. SenMar Roxas is the father of EO 156, banning 2ndhand imported vehicles. currently what we have are assemblers (japanese/US cars), auto parts employing roughly around 77,000 workers. employment goes up if we view it in an integrated manner. we also have local 2ndhand vehicles which can easily absorb the demand. so why import if we can source it pala locally? bakit kailangang patayin ang hanapbuhay? wala pang dolyar na lumabas.

    5 hours ago · 

  • Nonoy Oplas 

    I notice that in almost all discussions on trade policies, only the perspective of local suppliers is considered, never the consumers. I cited the case of a poor household who pay lots for multiple rides each day. The reason why Divisoria, Quiapo, Baclaran, tiangge-tiangge (market-market) are attracting budget-conscious consumers, is because these places offer near free-trade prices and commodities. When people want cheap clothes, cheap food, they don't lobby in front of DTI or Malacnang or Congress to demand subsidized food or subsidized clothing. They instead go to Divisoria, etc., zero politics involved.

    Persistent protectionism is anti-consumers, especially the poorer consumers. What if a local 2nd or 3rd hand cars are 2x more expensive than imported 2nd hand cars, why deprive the poor who want to get the cheapest car as much as possible? Will Congress or Malacanang subsidize and pay for the price differential between the two sets of 2nd hand cars? Definitely No, they only want restriction and protectionism, never mind the consumers, the poorer ones especially.

    4 hours ago · 
  • Catherine Pasali po ha. First, can we define poor? If we are talking about those who can barely put on the food table, I think owning a car is the least of their worries. HB 5279, as mentioned in the article, also wants to set up affordable and accessible car financing schemes. As previously mentioned as well, we have locally produced 2nd hand vehicles that "poor" households can avail of.
    4 hours ago · 

  • Nonoy Oplas My question was: " What if a local 2nd or 3rd hand cars are 2x more expensive than imported 2nd hand cars, why deprive the poor who want to get the cheapest car as much as possible? Will Congress or Malacanang subsidize and pay for the price differential between the two sets of 2nd hand cars?"

    Feel free to answer them, thanks.

    4 hours ago · 
  • Catherine  If we are talking strictly of the contents of the bills, then the answer is no. However, once again, the bill is all for the setting up of affordable and accessible financing that would enable those who want to own cars to be able to.
    Again, we are only talking about prohibiting the importation of secondhand vehicles. It must be noted that we have our own locally produced secondhand vehicles. For example, there are legally acquired repossessed cars available through banks.

    In addition, there are currently no banks extending loans to people who intend to buy imported secondhand vehicles. The risks are too high for the banks to take.

    However, they do have auto loan programs for those who wish to buy secondhand cars that are produced domestically.4 hours ago · 

  • Mars  hi noy. i believe that every consumer is also a producer, and vice versa.
    4 hours ago · 

  • Nonoy Oplas 

    If that bill 
    wants the poor (and its subjective or objective definition) to allow the poor to buy their own cheap cars, no need for those "accessible financing" (via tax money again?) since those folks would find their own way of financing to buy a really cheap car. Like the carindeira owners who transport their raw food via multiple rides which can be costly.
    Mars, not all consumers are producers -- babies, children, retired people, the jobless, the physically and mentally defective people, etc. My beef is really that of prohibition and restriction by government through such bills like Erin's. Each individual pursuing his/her own econ interests is making own computations which options can give him/her value for money. If such imported 2nd hand cars are much cheaper than local 2nd hand cars, why shd govt prevent them from buying it?Why restrict and prohibit?

    4 hours ago ·  ·  1

  • Nonoy Oplas I always believe that trade protectionism is one form of dictatorship. The trade bureaucrats and local interest groups want to dictate, to impose their will, on ordinary mortals and consumers -- which product they can buy and which ones they cannot. Freedom to choose is killed via trade dictatorship.
    3 hours ago · 
  • Catherine  If upon entering the Philippines, imported 2nd hand vehicles pay correct taxes and fees, locally produced 2nd hand cars will be cheaper.
    3 hours ago · 

  • Nonoy Oplas 

    then so be it. Use import taxes as a form of protectionism, not outright prohibition like the Erin Tanada bill. That bill I think will violate WTO rules on tarrification. Convert quotas and other quantitative restrictions (QRs), etc. into tariff. If you impose 500% tax, so be it. But by doing so, you will increase the incidence of smuggling and more corruption in the BOC. Remember, people want cheap goods, they don't care whether these are smuggled or not. Cheap clothes, cheap food, cheap fuel, cheap toys, cheap cars, cheap cellphoes, cheap laptops, cheap iPad,...

    3 hours ago · 
  • Catherine  ‎"Protectionism" has helped economies grow and they are still being used by developed countries. Why kick away the same ladder they used to reach the top?
    3 hours ago · 

  • Nonoy Oplas Really, you dont go to divisoria, baclaran, tiangge-tiangge, midnight sales, where prices are dropped low to approach free trade prices? Protectionism expanded BOC and govt corruption. People want things to be cheap while protectionism want things to be as expensive as possible.
    3 hours ago · 
  • Catherine  Blind and direction-less protectionism can prove your theory correct. However, policies and programs that would ensure industries are ready to compete before opening the floodgates are must-haves.
    3 hours ago · 

  • Nonoy Oplas Answer the questions: (1) you dont go to divisoria, baclaran, tiangge-tiangge, midnight sales, where prices are dropped low to approach free trade prices? (2) People want things to be as cheap as possible while you advocate protectionism ("direction-less" or otherwise) which will make things as expensive as possible?
    2 hours ago · 
  • Catherine  Bakit biglang naging about me?  
    Pero kung ikakasaya nyo po ay sasagutin ko. I rarely go to Divisoria. I went there to accompany my mom or my aunt. I personally want affordable products but it does not stop there. I also look for reasonably priced QUALITY products. For whywould I buy "cheap" products if I have to replace them every now and then. Same with cars, in the long run I might end up spending more on maintenance and repair when I buy 2nd hand imported cars because I am not sure if all declared info (age, mileage, emission) are accurate.

  • Nonoy Oplas That's the point. You go (or don't go) to Divisoria, Baclaran, Quiapo, tiangge-tiangge (literally market-market), SM midnight sales, etc. because you want free choice, based on your (or any other consumer's) needs and priorities (lower price for its own sake, low price with good quality, good quality despite high price, etc.). The bottom line is more choice, more options, more freedom. Protectionism ("direction-less" or otherwise) simply kills choice, simply kills more options. The government -- like the proposed Erin Tanada bill -- say you ordinary mortals, getting a 2nd hard car from abroad is killed, forget about it, you have no option but buy only local 2nd or 3rd hand cars. See the point, cheers.
    6 minutes ago · 
  • Jeck Reyes-Cantos hi noy, irene and everyone! nalingat lang ako ay haba na ng thread dito. was offline the entire day today as i had meetings. hey, i enjoyed reading the exchanges. noy, you're the forever free choice, no government is best set up. :) and there are those of us who still entertain the thought that there is room for industrial policy, creating employment and domestic industries and the two shall not meet. your points noy and the counterpoinrts of catherine, mars, would be very useful when we prep ourselves for the debates. salamat ng marami!
    Tuesday at 9:08pm ·  ·  2

  • Nonoy Oplas slight correction Jeck. I advocate free trade, free market, minimal govt, not zero govt. Govt has a role in free trade -- restrict and regulate trading of bombs, guns, poisonous substances, etc, fake/counterfeit medicines, etc.

    Meanwhile, I just talked to an American friend last night, he observed that 2nd hand cars here are generally expensive compared to the US, Japan, etc. Japan has a law that imposes higher taxes for older vehicles so that car owners dispose their 6 yrs old or more cars even if they are in good running condition (there are almost no potholes in Japan's roads) simply bec the tax is high, cheaper to get a new car. So Japan, US, etc. have big problem of dumping those big volume of cars in recycling plants even if they are in good condition. If these are made available to poorer Filipinos, they will be riding cars instead of tricycles or kuliglig or jeeps, all of which are worse pollutants than cars.

    Some will say that we should limit the no. of cars here to "save the planet", but why target restriction of cheaper 2nd hand cars to the poor? Why not restrict cars also to the rich and middle class? And such restriction mentality is a good breeding ground for future totalitarianism. More restrictions, more prohibitions.

I hope that Cong. Erin Tanada and other LP members in the House will reconsider their proposal. Liberalism is advocating for more freedom, more choice, more options, not more restrictions.

See also:
Free Trade 1: Estonia's Free Market, Globalization, May 09, 2006
Free Trade 2: Unilateral Trade Liberalization, May 17, 2006
Free Trade 3: Protectionism Perpetuate Poverty, September 05, 2006
Free Trade 4: FTA in APEC, July 09, 2007
Free Trade 5: Business , Rock Music and Cycling Globalization, July 17, 2007
Free Trade 6: Counterfeit Drugs Worldwide, December 21, 2007
Free Trade 7: Class War, Eco-protectionism and Climate, April 02, 2008
Free Trade 8: Global RIce Price, May 13, 2008
Free trade 9: Parallel Importation of Medicines, May 22, 2008
Free Trade 10: More on Unilateral Trade Liberalization, July 15, 2008
Free Trade 11: Global Petition, Keynes, March 19, 2009
Free Trade 12: Trade and World Peace, April 28, 2009
Free Trade 13: Benefits of Dumpiing, June 16, 2009

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