Saturday, May 28, 2016

BWorld 59, Free trade and Norwegian salmon

* This is my article in BusinessWorld last May 19, 2016.

Among the noticeable things when I buy in public markets is the presence of Norwegian salmon. Usually the salmon heads or salmon belly are available, and their retail price is not that far from bangus or tilapia. So while it is common to see Norwegian salmon in big groceries and supermarkets, it is good to see the presence of this Norwegian product in public markets at affordable prices, implying that trade of this commodity is increasing fast.

And that proves further that free trade is good. The taste of salmon is a lot different than many tropical fish products that we have. Free trade allows the poor and lower middle class to enjoy this produce from time to time.

Last May 14, 2016, I had the opportunity to meet and break bread with some Norwegian businessmen and Filipino managers running Norwegian companies in the country. It was at the celebration of Norway’s Constitution Day.

I checked the data from the UN Conference on Trade and Development, “Bilateral FDI Statistics 2014.” Instock investments from Norway is still small, only $7 million as of 2012. The biggest investments are from UK ($1,418M), France ($310M), Switzerland ($239M), and Denmark ($197M). Nonetheless, the flow of trade and investments between Norway and the Philippines is rising.

The important institutions of Norwegian commerce in the Philippines are the following:

First, the Norwegian embassy, promoting diplomatic, cultural and economic partnerships with the Philippines. I met the Norwegian Ambassador to the Philippines, His Excellency, Erik Forner and I asked him what are the key business sectors where relations between Norway and the Philippines are most active, and he quickly mentioned the maritime industry. Many Norwegian businesses operating in the Philippines are shipping-related. Norwegian shipping companies are among the biggest employers of Filipino seafarers, about 25,000 of them, aboard their ships or in shipyards abroad. They also have the Norwegian Training Center in Manila that provides relevant and specific training for Filipino seafarers working on Norwegian ships. Then the Norwegian Maritime Authority is working with the Philippines’ Maritime Industry Authority in ensuring that maritime/seafarer education is in compliance with international standards.

Second, the Philippine Norway Business Council, a young organization that promotes bilateral business opportunities between the two countries. Established on 5 January 2011, the Council is a direct result of a common initiative from the Norwegian business community in the Philippines. The objective was to create a forum or a platform of interaction for Norwegian companies represented in the Philippines, Philippine companies with links to Norwegian businesses, and individuals involved in Norwegian companies.

Third would be the Norwegian companies themselves that have come into the country to partake of opportunities presented by the Philippines business environment. One of these companies is Norconsult -- one of the oldest Norwegian companies in the country specializing in project management services for engineering projects in the transport, energy, and urban & regional development sectors.

Norconsult’s first Filipino Managing Director for its Philippine subsidiary, Rodolfo “Ozone” T. Azanza, Jr. said that their manpower complement has expanded almost three times in less than two years, signifying the expanding business opportunities for his firm, that in turn also create more jobs for Filipinos. He also said that the best export of Norway to the Philippines is their strong practice of business integrity. By practicing it locally, it gives a good business case, attracting clients and employees who live by the same principles.

Here is a snapshot of the social and economic conditions of the Philippines and Norway, rather incomparable in many aspects but are welded by trade and investments (see table).

On April 28, 2016, the four European Free Trade Area (EFTA) states composed of Iceland, Liechtenstein, Norway, and Switzerland, signed a free trade agreement with the Philippines in Bern, Switzerland. The EFTA-PH Free Trade Agreement (FTA) is a broad-based agreement covering trade in goods and services, investment, competition policy, intellectual property rights protection, government procurement, and sustainable development. Specifically, EFTA abolishes all customs duties on industrial products from the Philippines upon implementation, while the Philippines will gradually lower or abolish its duties on the vast majority of such products coming from EFTA.

That trade agreement may bode well for a similar future agreement with the continent’s bigger economies like Germany, France, and UK. A possible Philippine membership in the US-led Trans Pacific Partnership Agreement will also be a good thing, before a FTA with huge EU economies.

In trade, the best route is unilateral liberalization, just open the borders and regulate only those products and services that can cause harm to public health and safety. Like guns and bombs, poisonous substances, substandard medicines, etc.

However, only a few economies have succeeded in having such policy, like Hong Kong, Singapore, UAE, and Chile. So the second-best policy is via regional and bilateral FTA. Empowering the local consumers and producers with more choices where and from whom to buy and sell is empowering the people, expanding their economic freedom and individual liberty.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers, a Fellow of SEANET and member of EFN-Asia that promotes free trade.

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