Government and Taxes: Free Trade 27: Proposed EU-PH FTA and TRIPS Plus

Monday, September 24, 2012

Free Trade 27: Proposed EU-PH FTA and TRIPS Plus

Free trade and intellectual property rights (IPR), these are among my favorite topics to discuss and debate. Here are my latest papers on these subjects,

Free Trade 26: "Buy Local" and Protectionism, June 24, 2012
On IPR Abolition 17: Copyright by a Government Corporation, September 02, 2012
IPR and Medicines 24: Balancing Costly Innovation and Cheaper Drugs, March 20, 2012

The Department of Trade and Industry (DTI) called for a public consultation on “One Country One Voice” (OVOC) regarding the proposed EU-Philippines Free Trade Agreement (FTA) on September 20, 2012. I read about the invitation last September 13 and quickly confirmed my attendance.

Fearing that such proposed FTA might contradict certain provisions of the Cheaper Medicines Law of 2008 or RA 9502, a joint statement was released by MeTA Philippines, Coalition for Health Advocacy and Transparency (CHAT), Ayos na Gamot sa Abot-kayang Presyo (AGAP) and the Fair Trade Alliance (FTA). Below are screen shots of portions of the eight-pages position paper. I checked the websites/blog of AGAP, FTA and MeTA, it’s not posted there.

Below are the exchanges we have the past few days. Copy-pasting them with no alteration, so pardon our French and whatever typo errors, just showing the raw exchanges. I am adding some photos of the event that day.

A bit long, about 17 pages including images/photos, so grab your favorite snacky and enjoy the ride.

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September 20-21, 2012:

Hi Pau,

I am sorry that I did not read the attached paper on the joint position of Meta-CHAT-FTA on this issue. I saw this during the MeTA meeting yesterday as Gov Obet presented this. I spoke and commented that the conclusions seem to be an over-reaction to the IPR issue on medicines. Why?

I am not a lawyer but my understanding is that a national legislation like RA 9502 which deals with amending the IP Code on medicines has supremacy over whatever treaty that the Senate and the Executive branch may enter into any country or block of countries. In this case, should it be true that the proposed EU-PH FTA will have provisions extending patents of drugs, I don't think it will have supremacy over RA 9502 and hence, can not be implemented.

My feeling is that whatever TRIPS Plus provisions will apply to other sectors -- patents on softwares and cell phone applications, see the fight between Samsung and Apple for instance; copyrights on music and movies, see the rampant counterfeiting of DVDs, albums, etc.; or trademark infringement on the brand and logo of huge companies. I read in some newspapers how some individuals caught stealing and using the trademark of other companies so they can sell their copycats at high price. Even Kumon, the tutorial school, its logo and trademark is being stolen by some entities and they too teach "kumon education" and charge the same rate but pay zero royalties to the original brand, and their style may just be a bogus and inferior.

I still have to see the actual document, even in its draft form, of the proposed PH-EU FTA pertaining to medicines. As Daisy Cembrano of GSK said yesterday, after RA 9502, the innovator companies have practically ceded many of their IPRs in the country.

I assume that you have already circulated that statement to many people. I don't remember that a draft position was posted here. Anyway, should my points above hold true, then CHAT and MeTA may reconsider issuing an addendum position paper. An over-reaction should be remedied with a more balanced paper quoting from the actual proposed agreement and not just from other countries' FTA. For instance, I don't think Jordan and Colombia have RA 9502 type of legislation before they entered into those FTAs with the US and EU respectively. In our case, RA 9502 came before that proposed FTA and hence, the RA has precedence and has supremacy over any later agreement that may have contradiction provision.

See you later today.

-- Nonoy

Hi Pau, Gov. Obet,

I attended the DTI Consultation on the proposed PH-EU FTA. Some bad news for the statement that was released.

1. There is NO negotiation yet between the two governments.

2. There is NO draft agreement yet, not even a super-raw draft or even outline of such proposed agreement.

3. There is NO schedule of negotiation yet.

In short, the Joint MeTA-CHAT-Fait Trade Alliance statement on the issue is, as I said yesterday and posted this morning, is an over-reaction. It is a 7-pages alarm statement based on a zero page or non-existence document from a non-existent negotiation.

Four speakers this morning talked about (1) Evaluation of EU's Bilateral FTA by Elizabeth Tan, (2) Offensive and Defensive Interests in the Manufacturing sector for a proposed EU-PH FTA by George Manzano, (3) Agri component for a prospective EU-PH FTA by Roehlano Briones, and (4) Fisheries Sector under a potential FTA by Danilo Israel.

There was no mention about IPR and medicines and public health. During the open forum, Joseph Purruganan of the FGS and Bantay FTA mentioned that they read somewhere that the negotiation may start in the last quarter of this year or 1st quarter of next year. That TRIPS Plus provision on drug patents may compromise existing laws on IPR.

DTI Usec Adrian Cristobal replied that he did not, nor the DTI did not, make any pronouncement as to any schedule of a proposed EU-PH FTA. That it may have been made up by media only. On IPR, they still have to include that in future studies to be commissioned by the DTI, but there's none yet among the on-going studies.

From the docs included in the kit, there are various schedules of public consultation by the DTI until December this year. All these are just "scooping" forum to get basic data and positions, to be submitted to the TRM (tariff and related matters?) team, to be submitted to the President, to be submitted to the EU-PH Negotiation team and position.

So ang layo pa. There is not even a PH "negotiation paper or position", wala. Lahat puro discussion papers lang.

So ano yon, kuryente itong kinalat ni Joseph? Giving you false info to make you alarmed so that you will produce an alarmed statement on a non-existent document of a non-existent negotiation with a non-existent schedule of negotiation?

Asar yon. I don't have Joseph P's email, kindly forward this to him.

I also cc here Joey Ochave (Unilab) and Mam Mita, 2 other top officers of MeTA aside from Gov Obet and Cecile.

I also stand by posting this morning -- that the law, RA 9502, will have supremacy over an FTA, which is just an Executive Agreement, ratified by the Senate if ever. Kasi kung sabihin nyo, any international agreement entered into by the Executive branch, as long as it is ratified by the Senate, can have supremacy over national laws, eh di any clever group or interest group can just go for treaty after treaty and disregard existing laws na masagasaan. Bale wala ang lower house because they are not part of the treaty-making process.

Unless you can clarify those points, I suggest that you withraw that statement. Parang "unequivocal global warming" statement yon, an alarm over a fiction story.

cheers.

-- Nonoy

Thanks, Nonoy. I'm not in the loop as regards the status of the EU-PH FTA so I don't know whether there's really no draft yet or one is already being secretly negotiated. In any case, there is no harm in letting DTI (and the government) know our position.

As an IP lawyer and being in the pharmaceutical sector, I will confirm, as I am now confirming, that any TRIPS Plus provision that will include data exclusivity, limitations on the rights of countries to determine what is patentable or not, and patent-drug registration linkage will have an adverse effect on access to essential medicines in the Philippines. I cannot see any reason why anyone could believe or argue otherwise. In fact, these TRIPS Plus provisions have been rejected by developing countries during the WTO negotiations. They even run counter to WTO's Doha Declaration on TRIPS and Public Health. This is why there are insidious attempts to insert them through FTAs, and why public health advocates should be vigilant.

On your point on treaties and statutes, they are at the same level in the hierarchy of laws. The rule of statutory construction that, in case of conflict, the latter law amends the earlier law therefore applies. Hence, if the Philippines later enters into a FTA that runs counter to the provisions of the Cheaper Medicines Law, then one may validly argue that the FTA has "effectively" amended the latter albeit one generally has to wait until an enabling national law is passed. Even assuming in argumenti gratia, that this rule does not apply, the FTA, at the very least, will be used as a justification to amend the Cheaper Medicines Law. Given that many people (including several legislators) continue to think that we always need to align ourselves with international agreements even if they run counter to our national interests, I can bet you that a law to amend the Cheaper Medicines Law to incorporate the TRIPS Plus provisions in the FTA will be passed. It's an elementary advocacy strategy -- find an international agreement or norm that supports your proposed bill and you will have a much easier time in securing its passage. After all, you can say that you are simply pushing for "compliance" with "international standards or practice". This will surely be the "talking point" of those who will push for the amendment of the Cheaper Medicines Law to insert the TRIPS Plus provisions.

Bottomline, there is nothing wrong in bringing the issue of TRIPS Plus to the fore. Whether "kuryente" or not, it is best that we start the discussion on the issue as patent policies are very technical and difficult to understand.

Let me just reiterate - the WTO itself in the Declaration on TRIPS and Public Health has acknowledged that developing countries need to approach the issue of patents differently so as to enable them to address their public health problems. The World Health Organization is of the same opinion. Whoever continues to argue otherwise simply does not know his TRIPS. The campaign for access to essential medicines in our country has gone a long way. True, the journey towards universal health insurance is still an arduous one, but,itaga mo sa bato 'pre, in our lifetime the Filipino's constitutional right to health will be realized. We will all make sure it happens. In the meantime, we need to protect our gains. And the first step is to make sure everyone understands what TRIPS Plus is so that we can quickly mobilize if it becomes necessary. I am willing to sit down again with any group that wants to know more about TRIPS Plus and its implications to public health. Just let me know when.

On global warming, I will let the others react to your statement. However, it seems that the weight of evidence is now already on the other side.

Thanks and best regards.

-- Joey

Hi Nonoy!

Let me first say that I respect your personal opinion but we differ on where we are coming from, quite a distance I would say.

I was also at the DTI OCOV meeting. If you go thruLinda Medalla's last slide presentation, there is aPH-EU FTA research study on cross-cutting and special concerns i.e. analysis of specific legal andtrade-related issues in a possible PH-EU Economic Partnership: PH Constitution, Competition Policy, Government Procurement, INTELLECTUAL PROPERTY RIGHTS, Dispute Settlement and Trade Remedies. Researcher named was Atty. Lyn Barcenas.

Why was it not presented today? I don't have the correct answer, well, probably Lyn is still outside the country or in another important meeting or still weighing what and how to present it. What is clear is that DTI and PIDs commissioned someone-in-the-know to dig on the abovestated issues and how EU may position, pose difficulties in actual negotiations on matters of significant value, i repeat, of significant value to them like the IPR and TRIPS +.

Whether actual negotiations for an EU-RP FTA starts tomorrow or next year, public discourse should have commenced, as in yesterday. For FairTrade and its affiliates, we've already got lessons from JPEPA, Early Harvest with China, AFTA-CEPT and ATIGA, and the other noodle bowl of ASEAN agreements entered into by the past administrations sans genuine consultations with multistakeholders and the public, as a whole.

As to the supremacy of internal laws vis-a-vis a treaty, well, Joey O. addressed

it in his email to you. Let me add the similarity with what Justice F. Feliciano stated in his memo to the Senate during the JPEPA hearing on the matter of legal consequences of present Philippine Schedule to Part 1 of Annex 7...'The denial of the application of that Japanese investor would be valid and constitutionally legitimate act of our Government as a matter of Philippine law since the constitutional provisions would prevail over the JPEPA provision in the internal legal order of the ROP. But such denial would nonetheless be abreach of our treaty obligations under JPEPA and on the plane of international law, which would generate state responsibility under international law on the part of the Philippines and probably liability for damages before an international judicial or arbitral forum.' Nonoy, eto ang bangungot na nais nating iwasan kung sakaling pumasok na naman ang Pilipinas sa isang kasunduan with EU or with any other trading party.

Was the position statement signed by the 4 national organizations a product of the imagination? It was based on a benchmark research done by Pau for Meta and Oxfam. It was validated in a series of consultations with WHO and other government officials, w/ industry stakeholders, w/ academe, and other constituencies.

Was it wrong to release the position statement prior to seeing the actual negotiation text? If you base it on what was actually stated in the position statement, then my reply to you is definitely not.

Will it stop AGAP, META, CHAT or other organizations from coming out with additional position statements as the EU-RP FTA negotiations goes on track? Most likely these organizations will intensify the discourse and will go line by line, and with the help of experts all over, may yet come up with a comprehensive study not only on implications of IPR or TRIPS + to medicines or public health but on other related issues such as mentioned in the presentation of Elizabeth Tan i.e. EU's bilateral FTAs: WTO + Policy Areas and EU's bilateral FTAs: WTO X Policy Areas.

Did the OCOV meeting this morning respond to what we want to know? How do we gauge it for being transparent? Well, kudos to Che for its a good start relative to the previous DTI tight-lipped officials.

Lastly, the EU-RP Partnership Cooperation Agreement was signed July 11. All programmes, projects, and activities under this PCA are either finished or midway into its implementation timeline as we communicate. Sa ganang akin, bumabaha ang pera ng EU sa iba't ibang line agencies, smoothly paving the way for the transition into an FTA.

Yung sinasabi mong 'layo' ay relative eh. Posibleng sa iyo ay malayo pa para pag-aralan ang mga bagay-bagay at gawan ng karampatang aksyon. Posibleng sa iba naman na nais abutin ang higit na nakararaming maaapektuhan, likewise the policymakers and negotiators, baka ang tingin nila ay kulang na kulang na ang oras para ipaliwanag ang samu't saring teknikalidad ng isang FTA lalu't higit kung nais mong pag-aralan at ipakita ang posibleng implications nito sa grassroots level.

Sya, uwi na ako. Take care!

-- Mars Mendoza (FTA)

Joey, Mars, sincere thanks for your comments. I wish to be frank and brutal to myself when it comes to personal education, so I try to open up my ideas as publicly as possible, to make them publicly available and elicit counter-arguments.

Now it is clear to me that a national law and an international treaty are of equal force and rank. But still there is a need for an enabling law to align a local law with an international treaty.

I now take back my earlier proposal that you (Pau and Gov. Obet) withraw the Joint CHAT-MeTA-FTA statement. Let it stay as it is.

Before the start of the consultation, I talked to George Manzano and Linda Medalla, 2 of the speakers this morning. After learning that there is no such thing as even a "draft nego paper", I asked why there are groups now circulating position papers based on a non-existent document. George opined that perhaps just to help influence the DTI and other future government negotiators of what issues they can and cannot bring up in the trade negotiation.

Anyway, during the open forum, I also wanted to give my comments but I withrew just when the moderator called my name, for the simple reason that it was about 12:50pm and I thought that other participants might resent that I postpone their lunch just to ask a few questions which may have to be answered by the speakers and hence, further prolong the discussion.

My point is that a real free trade would not require any prolonged negotiations, or no negotiations at all. Free trade is freedom to trade by the people, not permission from government to trade. So since many supposedly free trade agreements are hijacked by government trade negotiators and bureaucracies, the appropriate term for that would have been a government trade agreement (GTA) and not an FTA. Hong Kong, Dubai, UAE, even Chile, are slowly moving towards unilateral trade liberalization, or no negotiations, just unilateral opening up of borders to foreign trade. I like that model actually and not those prolonged, highly bureaucratic, highly politicized, trade negotiations, whether at the multilateral or bilateral levels.

Secondly, the purpose of free trade is to expand the choices and options for consumers, for us all. People by nature are free traders. If the poor find the food and clothes in malls and groceries rather high, they do not go to the DTI or DA or Malacanang to demand food subsidy or food price control. Not a bit. They instead go to Divisoria or Baclaran or Quiapo or tiangge-tiangge or talipapa, and find cheap food, cheap clothes. They want more choices, more options, and free market and free trade gives them such wider options.

So trade protectionism and trade politicization, like those prolonged FTA negotiations, is one lousy way to restrict consumer choices and options.

And thirdly, an easy, simple free trade policy, will greatly augment domestic tourism. Even if the EU will retain their high tariff rates and multiple non-tariff barriers (NTBs) like consideration of human rights, animal rights, dolphin rights, turtle rights, etc. in the trade of fisheries and agri products, let them be. EU bureaucracy is among the most rigid, most scheming, around the world. The bureaucracies there tend to exist mainly for themselves, so it might be day dreaming to hope that the EU bureaucracy will let go of their various protectionist policies and practices easily.

So we can have a situation where American or Japanese or Canadian or Korean tourists are enjoying European food in Philippine beach resorts, and the net gainers will be the Filipino people -- capitalists and workers, entrepreneurs and contractors, formal and informal sectors.

That is how an unabashed free trader and free marketer like me would tend to think and analyze these issues.

cheers.

-- Nonoy

Thanks, Nonoy. Your opinions are always most welcome. Frank discussions are the best way to sharpen one's position, whether one is for or against something. This helps prevent either one from degenerating into sloganeering.

I agree with you that FTAs should benefit the people, and not be a feather in the cap of trade negotiators. Unfortunately, when a government agency measures its performance by the number of international agreements it has concluded, there is a real risk that the negotiations will be, as you say, "hijacked" by government bureaucrats. National interests are sometimes ignored in their desire to show "performance". It's human nature - what is rewarded is what gets done. Alas, it is more difficult to measure "positive impact" on the people vis-a-vis a simple counting of the number of international agreements signed. Hence, it's the latter that is measured and ultimately gets rewarded. Never mind if the agreement actually benefits the people.

However, there are still many in government who genuinely desire to contribute to our people's welfare. Marami sila. The only problem is with the many issues confronting an agency, it is difficult for many of them to "go deep" on an issue. There are also many competing equities that need to be balanced. There lies the difference between government and NGO - the latter can afford to be a single-issue advocate, the former simply cannot and should not if it is to function well.

If we acknowledge and understand the above limitations of government, then we know how to engage its agencies properly. After all, the inescapable fact is it is government that ultimately makes the policy decisions. Not us. Our role then is to make sure we all educate ourselves and understand the issues so we can meaningfully engage government. Hindi pwede ang slogans lang. My personal experience is government officials (the good ones at least) listen if they know that you know the issues better than they do. While doing ED work to make sure everyone of us understands the issue, the organizing should continue. In truth, while solid arguments are useful, it is ultimately organizing that will determine if we are able to make government accept our position (whatever it is). Ganoon talaga, given the competing equities that government has to deal with, we should be able to show that our position is the most compelling and we show this through a broad alliance of forces ready to mobilize.

Bottomline, the FTA campaign is an opportunity to sharpen our thinking, organize and consolidate our forces, and, yes, strengthen our relationship with allies in government who share our aspirations. An important element is a "frank discussion" among ourselves. And this is why I value your opening salvo.

Ingat lagi.

-- Joey

hello, noy, no problem. makatulong lang linawin ang mga isyus. salamat din sa email mo.

glimpse lang muna sa usaping ito:

bilang consumer, paano mo mabibili sa palengke natin ang mansanas, peras o ubas sa halagang piso na galing sa tsina o europa , o kaya'y kung ikaw ay may panlasa para sa imported clothing galing france or US, kung ikaw bilang isang empleyado o manggagawang pinoy ay wala ng trabaho o hanapbuhay dahil nagsara ang iyong pagawaan o opisina, o ang nasimulan mong negosyo dahil ito'y nilamon na rin ng isang dayuhan, monopolyo't higanteng kumpanya?

asan ang consumer choice mo?

consumerist line has been used by free traders who blindly adhere to a debunked paradigm that has brought havoc and death to local producers worldwide.

all of us are consumers and producers alike.

-- Mars

HI Sir Noy,

Been quite very busy that I wasn't able to attend the meeting. Anyway, I don't see it as a bad news. There's nothing wrong with releasing the statement this early because while no EU-PH FTA may have been signed, negotiated and drafted, the EU-RP PCA is already in place and this PCA marks the beginning and usually is the framework of any bilateral. Sabi nga diba? Mas maige na ang MA-AGAP sa Makupad. hehehe!

While document may be non-existent at the moment, giving the government warning that civil society is indeed ready and on guard is good so that they will have to look carefully into their next steps. We have had a bad experience with JPEPA and other agreements because we, the CSOs, and the rest of the population, sees the agreement when its signed. There is usually no transparent negotiations on the matter.

Also, we have to note that our neighboring countries have signed and/or negotiating FTA with EU. This may have been the result of the collapse of the then proposed EU-ASEAN because not only us, but other countries, were vigorously opposing it. Moreover, we have to consider too that if EU is already negotiating with other neighboring countries, it is not far that they will also start negotiating with us. Eh history dictates, gaya-gaya pa naman tayo usually. hehehe!

The impact is too overwhelming to neglect if indeed we sign the FTA. Ngayon pa lang, may mga gusto ng mag amend sa CHeaper Meds so how much more if there's International pressure through this agreements? I could only imagine.

Besides, the position paper is not only applicable to a possible EU-RP FTA but to other FTAs and even BITs and other treaties where the superior party (NOT us of course) inserts provisions on TRIPS PLUS. This brings me back to the time we presented before government agencies what the provisions on IPR in our EPAs and other treaty mean, they were saying... "Oh, yun pala ibig sabihin nun". This only shows that they really do not understand the issue/problem and yet, they continue to adhere to the external pressures, tinataya ang health nating lahat. May mga usapin pang TPPA na nakapalibot.

Sorry Sir Noy, but I will have to say that there was and is NO Over reaction on the issue. And that there is no need for any supplemental paper on the matter. In fact, as AGAP, we plan to further publicize the statement. In some ways, the statement alone will be a learning tool for those who will be involved in negotiations of FTAs sometime soon. Again, mabuti na ang MA-AGAP sa makupad. :)

See you soon,

-- Pau

September 22, 2012

Hi Joey,

You’re right in your observations above. We ordinary mortals and citizens cannot stop the government, both the Executive and Legislative branches especially, from bureaucratizing an otherwise simple transaction as trade between and among private individuals and enterprises.

As I posted earlier, Hong Kong does not hire too many trade negotiators, consultants and bureaucrats in dealing with other countries. It simply has a unilateral trade liberalization policy, almost anyone can bring their goods to HK at zero tariff except a few regulated goods like guns, bombs, poisonous chemicals, fake medicines, contaminated food and drinks, etc. People from other countries see that some or many goods that are not available in their country due to various protectionist policies, are available in HK, and that is how the tourism industry – airlines, hotels, restaurants, malls, theme parks, souvenir shops, taxis, buses, boats, etc. -- benefit and compliment the free trade policy.

I also agree with you that the more organized or the more politically active and noisy groups (big labor groups, NGOs, political parties, etc.) would tend to get the ear of policy makers. This is a big challenge for free marketers in the country. We are a small group here, and divided among the libertarian anarchists, minarchists (I belong here), the Objectivists/Ayn Rand group, other groups and individuals who simply call themselves as free marketers too even if they so love having a big government.

Hi Mars,

Consumer choice means a person has a choice whether to buy a P10 or P40 imported apple or pears, or a P5 indian mango or duhat or other local fruits. If your company has closed due to business competition or political harassment or simple business mismanagement and wastes, there are other companies hiring or there are opportunities for self-employment. Being one of millions of ambulant vendors is among the most common path to self preservation.

“all of us are consumers and producers alike.” This is not true. Babies, toddlers, children, students, adults but have serious physical and mental disability, the sickly and aged, they are out of the labor force, they are non-producers. Out of the estimated 96 million Filipinos this year, all of them/us are consumers, but only 37.6 million (latest July 2012 labor force data) are employed, fully or partially and hence, producers of various goods and services.

Free trade will allow even poor parents who have several (non-producer) young children but have some income, to choose whether to buy more tilapia or hito, or more kangkong or cabbage, or more apples or bananas. People adjust their consumption based on their preferences and priorities. Whereas protectionism ensures that local producers, cronies or otherwise, are assured of captive market as consumers have been prevented from having more choices, more options from more producers and sellers.

Hi Pau,

I see your point, thanks. Overall, I believe there is a role for having more innovator and more generic manufacturers in the country. Right now, there is no vaccine against dengue. If five or more innovator companies can produce a vaccine each and they will be competing with each other in terms of price and efficacy, patients and the public will benefit even if the initial prices are high. Not only that the patent of those useful vaccines and medicines will soon expire and generic versions will soon appear, but the higher cost of prolonged hospitalization if not deaths due to dengue, will make an initially expensive patented vaccine appear “cheap” after all.

Cheers.

-- Nonoy

Thanks, Noy. I'm sorry, but being in industry, I will have to tell you that free market has its own limitations and inefficiencies. The government definitely has a role to play. This fascination for unfettered free market is the product of academics who see the market from afar. In truth, the government, if it acts well through sensible regulations crafted through a transparent and inclusive process, has a role to play in bringing about a prosperous and compassionate (not mendicant, mind you) society, which I am sure all of us want to have.

The flipside of unfettered free market - Big Government allocating where resources should be devoted - has, of course, likewise been shown to be inefficient.

The challenge lies in the proper interplay between market and government, and where civil society should be in this interplay. This is why it's fun to be in the Philippines -- here, we can make a difference.

Best.

-- Joey

hi, nonoy.

the philippines went through a unilateral and one-sided trade liberalization policy (TRP) imposed by IMF-WB, we did four TRP schedules under cory, ramos, and erap. gma even inked a midnight EO to the effect. even way, way before the multilateral agreement was signed. even before any trading partner asked us in any negotiating table. we were one of the few countries to do it. in other words, our country, a developing country that is, has been too wide open for the past two or three decades while neighboring countries like korea, malaysia, indonesia were cautious and competently studied how to open up their markets. korea did not succumb to imf-wb imposition, didn't get any loan packages but look where they are now.

blindly adhering to free trade, haphazardly opening up the country's market has been the government's policy since the 60s. tell me honestly, did it work for us? do you think we scored poorly in liberalizing our economy? did we attain nichood as promised? did it lessen poverty? did it diminish the gap between the poor and the rich? did the TRPs bring in the promised jobs, livelihood, income, and well-being of every Filipino?

what addiitonal big challenges are needed for free traders in this country? free trade has been THE policy. free trade has been institutionalize in this country. they are everywhere --> in the government bureaucracy, the economy managers and technocrats, legislative and even judiciary branches, in research institutions, in media. it is THE only economic thought being taught in economic schools. as a side story, we have the opportunity to meet regularly with these students who are intelligent, smart, magnas and sumas of several economic departments from various campuses and universities. they will be our future economic managers, some may go to NEDA or DOF or be connected with other government agencies. some will become professors or researchers in think tank institutions. noy, they do not even know what heteredox economy is for it is not being taught in their classes.

noy, we need a balancing act here. we need to carefully study our economy, we need to know our potentials, our defensive and offensive strategies, and development track. we need to know what marbles and candies to offer in any negotiating table baring in mind that we have our own farmers, workers, families, children to look after. we should not have taken the road to free trade without the much needed thorough study per industry and integrated, review, pilot, consultations and preparations.

the most protectionist economies now are those who parroted free trade like US, EU and Japan. and look where they are now? compare our economies in the 60's when we were second only to Japan (although yes, it has its weaknesses then) and today.

do not mistake comparing hongkong and singapore economies with ours. their economic base is very much different from ours.

well, i still believe that we are still producers and consumers altogether.

btw, i am sending you some materials on IPRs.

-- Mars

September 24, 2012

Thanks Joey.

Our advocacy for free market and less government is not absolute. Unlike the libertarian anarchists, we believe there is a BIG role for government, and that is to promulgate the rule of law, and protect the citizens' three important freedom: freedom in private property ownership (physical and intellectual property), freedom from aggression, and freedom in self expression.

Most if not all other government functions, like telling the people to whom they can sell and buy or not, at what price levels and distortion, are unnecessary or secondary.

Rule of law means no exception and no one can grant exemption; the law applies equally to unequal people. Thus, killing is killing, stealing is stealing, rape is rape, not even Presidents or Prime Ministers or Mayors or whoever can escape from the penalties of the law. Even the poorest man on earth cannot justify stealing. Once we have real rule of law as promulgated and implemented by the government, we shall have peace and order, people can be as hard working and as lazy as they want. they can be as efficient and wasteful and dependent-minded as they want.

Hi Mars,

I am also critical of the WB-IMF, in fact I want them to be abolished, along with the ADB and many UN agencies. Can you also say the same? If not, why?

There was NEVER any unilateral trade liberalization policy by the PH government. One clear indicator of such policy is the abolition, if not drastic shrinkage, of the Bureau of Customs (BOC). But no, not a bit, the BOC is among the most influential and most corrupt agencies in the government. Bureaucrats there can decide whether to release an imported shipment or not for whatever reason/s -- that the importer did not declare the correct value, they did not pay the correct taxes, they did not comply with various health/environmental requirements, etc. I discussed it here,

Free Trade 21: Abolish or Shrink the Bureau of Customs, February 03, 2012

So there was no such thing as "blindly adhering to free trade", not a bit. If we have free trade, smuggling would have been eradicated many many years ago. Smuggling is a function of tariff rates and other taxes, rule of law promulgation. Briefly,

Smuggling = f {taxes (+), RoL (-)}

That is, the higher the tariff and related taxes, the bigger the temptation to do smuggling (positive correlation). And the more strict the promulgation the rule of law, the lesser temptation to do smuggling (negative correlation).

It can be argued that more trade protectionism results in more smuggling and more government corruption.

Free trade as in freedom to trade by the people means zero or very small bureaucracies, angels or evils alike, to interfere in the people's decision. So even supposedly protectionist rice farmer actually want free trade -- they want more options, more choices to get good quality but cheap shoes and clothes for their kids, good quality but cheap TV or ref for their house, good quality but cheap tractors and spare parts for their farms. Protectionism is restricting such freedom of choice.

And that is why protectionism is trade dictatorship, anti-freedom and anti-poor.

Btway, I notice that the Fair Trade Alliance website/blog is bereft of any new discussion material. I suggest that you copy-paste our exchanges and debate, and post them in your blog. That will update your blog with new contents somehow, cheers.

-- Nonoy

Government and Taxes

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Monday, September 24, 2012

Free Trade 27: Proposed EU-PH FTA and TRIPS Plus

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