BWorld 220, Trade imbalances, protectionism and rhetoric

* This is my article in BusinessWorld last June 7, 2018. 

In a free trade, an effectual combination cannot be established but by the unanimous consent of every single trader, and it cannot last longer than every single trader continues of the same mind.

— Adam Smith

The Wealth Of Nations (1776), Book IV Chapter VIII.

Free trade should mean that people are free to trade and do not need to secure permits to trade from governments. The expansion of governments — local, national, and multilaterals — has also resulted in the expansion of preconditions and negotiations before meaningful trade can be allowed.

This is what Adam Smith referred to in the quote above. It is the collective action of traders and not the coercive regulation of governments that free trade and real competition is established.

In recent months, “trade war” has become a common term used in international media and blame is put on the US President for stoking protectionism and implying that US trade partners that enjoy and experience huge trade surpluses for many years are not practicing protectionism.

Trade numbers will greatly help us to clarify things.

I got monthly data of merchandise trade, exports and imports, from the World Trade Organization (WTO). After getting the sum of trade balance, January to June then July to December of 2016 and 2017 and the first three months of 2018, I got the monthly average and daily average. I chose countries with relatively large value of trade surplus or deficit (in parenthesis) plus selected ASEAN countries like the Philippines. The numbers show some interesting patterns (see table).

Here are the notable facts from these numbers.

One, the US continues to experience more than $2 billion a day in trade deficit, since many years ago until today. The second half of 2017 showed a big deficit, posting an average of $2.5 billion a day. US President Trump’s threats of imposing higher tariffs on certain imports became louder in early 2018, hoping to reduce the trade deficit.

Two, China has been enjoying a trade surplus of up to $1.5 billion a day in the second half of 2016, then Trump’s higher tariff in early 2018 for some of its exports has significantly reduced the imbalance but China still enjoys a trade surplus overall.

Three, Germany has the second biggest trade surplus after China with about $0.8 billion a day. The recent higher US tariffs for steel and aluminum were mainly directed at Germany and other European exporters.

It would seem that the US is not exactly “becoming protectionist” as most media reports and opinions claim. People got used to seeing the US as having perennial big trade deficit for many years and when Trump tries to correct this, those people get angry.

Ultimately we should assert free trade and people’s freedom to trade, not governments and bureaucrats’ freedom to restrict trade. There are net gains in trade (gains are larger than pains) while there is net diswelfare in protectionism.

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

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See also:

BWorld 217, Dutertenomics, TRAIN and high inflation, June 02, 2018 

BWorld 218, Tobacco taxation, smuggling and plain packaging, June 07, 2018 

BWorld 219, The US-North Korea summit and the global economy, June 20, 2018

Free Trade 66, Trump's proposal of zero tariff in G7

This is good. Zero tariff, keep non-tariff barriers/measures to the minimum. EU, Japan, Canada, China, dare -- game?

https://www.wsj.com/articles/donald-trump-pitches-tariff-free-trade-zone-to-g-7-allies-1528556581

“We should at least consider no tariffs, no barriers — scrapping all of it,” Trump said, according to officials who were listening and taking notes.

Trump floated the idea — which was received as somewhat rhetorical — as the meeting was breaking up and was quickly challenged by Canadian Prime Minister Justin Trudeau, who asked, “What about subsidies?”

https://www.politico.eu/article/trumps-surprise-g7-pitch-we-should-at-least-consider-no-tariffs-steel-aluminum-trade/

"No tariffs, no barriers, that's the way it should be — and no subsidies," the president said at a press conference, before taking questions.

"We don't want to pay anything — why should we pay?" Trump said. "Ultimately, that's what you want. You want a tariff free, no barriers and you want no subsidies."

https://www.cnbc.com/2018/06/09/trump-says-at-g-7-summit-trade-should-be-tariff-free-barrier-free-subsidy-free.html

“No tariffs, no barriers, that’s the way it should be, and no subsidies,” Trump said during a 30-minute press conference on the sidelines of the meeting in La Malbaie, Quebec. "I did suggest it and people were -- I guess they’re going to go back to the drawing board and check it out."

https://www.bloomberg.com/news/articles/2018-06-09/trump-turns-tables-on-g-7-allies-with-free-trade-proclamation

“No tariffs, no barriers — that’s the way it should be. And no subsidies,” Mr Trump said at a brief press conference before departing from the G7 summit at the Québec resort town of La Malbaie. “We’re like the piggy bank that everybody’s robbing, it’s got to end.”

https://www.ft.com/content/ba0aa2c4-6bf6-11e8-92d3-6c13e5c92914

"Also on Friday, Trump floated the idea of ending all tariffs and trade barriers between the US and its allies - a pitch that wasn't exactly expected, according to Politico. Trump offered the proposal at the end of a "contentious" meeting on trade disputes. Most G-7 members remain furious with Trump over his decision to impose tariffs on aluminum and steel imports, and his threats to impose more trade restrictions. Merkel responded positively to Trump's suggestion, saying she would consider it."

https://www.zerohedge.com/news/2018-06-09/trump-g-7-closing-remarks-were-piggy-bank-everybodys-robbing

Other reports:

https://www.aninews.in/news/world/asia/trump-pitches-ending-trade-tariffs-at-g-7-summit-reports201806090959380003/

https://www.bbc.com/news/world-us-canada-44423072

https://edition.cnn.com/2018/06/09/politics/trump-g7-tariffs-trade/index.html

Tweets by @realDonaldTrump, June 8:

Please tell Prime Minister Trudeau and President Macron that they are charging the U.S. massive tariffs and create non-monetary barriers. The EU trade surplus with the U.S. is $151 Billion, and Canada keeps our farmers and others out. Look forward to seeing them tomorrow.

Prime Minister Trudeau is being so indignant, bringing up the relationship that the U.S. and Canada had over the many years and all sorts of other things...but he doesn’t bring up the fact that they charge us up to 300% on dairy — hurting our Farmers, killing our Agriculture!

Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you!

Tweets by @realDonaldTrump, June 10:

Just left the @G7 Summit in beautiful Canada. Great meetings and relationships with the six Country Leaders especially since they know I cannot allow them to apply large Tariffs and strong barriers to...

...U.S.A. Trade. They fully understand where I am coming from. After many decades, fair and reciprocal Trade will happen!

The United States will not allow other countries to impose massive Tariffs and Trade Barriers on its farmers, workers and companies. While sending their product into our country tax free. We have put up with Trade Abuse for many decades — and that is long enough.

Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!

PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, “US Tariffs were kind of insulting” and he “will not be pushed around.” Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!

Zero tariff is good, it is happening. EU countries have zero tariff among themselves; ASEAN countries have zero tariff among themselves too; other regional blocs in Asia, S. America, Africa, Europe (like EFTA) do it among themselves; also various bilateral FTAs. However they don't do it with countries outside their regional blocs and bilateral FTAs, they practice protectionism. Except HK which has zero tariff for all countries except for a few regulated products (guns, bombs, chemical/poisonous substances,...)

The anti-trumpistas just hate any policy he takes. If he slaps high tariffs to trade partners, they are angry. If he suggests zero tariff, they are still angry. Seems they are more confused, more double-talkers than the man they hate.

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See also:

Free Trade 63, Dealing with anti-trade lib, anti-TPP activists, February 06, 2016 

Free Trade 64, PH experience in manufacturing growth, November 04, 2016 

Free Trade 65, On the US withrawal from the TPP, February 19, 2017 

BWorld 130, Mobility of goods, capital, and people in Asia, May 13, 2017 

BWorld 137, ASEAN trade expansion and RCEP, June 20, 2017 

BWorld 167, Multilateral, bilateral, or unilateral liberalization, November 27, 2017 

BWorld 175, Trends in global and Philippine trade, January 05, 2018 

BWorld 180, Has East Asia liberalized its trade enough? January 19, 2018

BWorld 137, ASEAN trade expansion and RCEP

* This is my article in BusinessWorld last June 09, 2017.

Despite various protectionist rhetoric by many world leaders against free trade, deep inside they know that there are “net gains” from trade and there are “net losses” under protectionism and restricted trade. Thus, while the multilateral trading agreement under the World Trade Organization (WTO) is not moving significantly, bilateral and regional free trade agreements (FTAs) are everywhere.

Trade within the Association of Southeast Asian Nations (ASEAN) is among the most dynamic in the world because of their consensus on faster unilateral trade liberalization policy and near zero tariff for all 10 member-countries since 2016. The region of some 630 million consumers would naturally attract the attention of its neighbors that want to source many of their needs and imports and want to export many of their products and services.

Thus, the ASEAN + 6 (Japan, China, South Korea, India, Australia, New Zealand) evolved and later these 16 countries moved towards creating the world’s biggest FTA covering half of the planet’s total population + the Regional Comprehensive Economic Partnership (RCEP).

Plenty of negotiations still ongoing but member-countries are hoping that RCEP will be formalized within the next two years. The main thorn in the agreement is not on tariffs but on non-tariff barriers (NTBs) or non-tariff measures (NTMs).

Last May 8, Stratbase-Albert del Rosario Institute (ADRi) organized a small group economists’ roundtable discussion on the “Global Geopolitical Situation: its Impact on Australian and Philippine Economies” at the Manila Peninsula Hotel. The main speaker was Mark Thirlwell, chief economist of Australia Trade and Investment Commission (Austrade).

It was a good forum with lots of useful data and insights. Among Mark’s points were the following: (a) Global tariffs are still low but have stopped falling, (b) Free Trade Agreement (FTA) coverage has grown but may have plateaued, (c) Non-tariff barriers are rising, including temporary barriers like anti-dumping, countervailing duties and safeguards, (d) trade liberalizing measures are surpassed or outnumbered by discriminatory/protectionist measures, and (e) ASEAN countries fit this global pattern as shown in these two very clear charts.

During the ASEAN Summit in Manila, Malaysian PM Najib Razak reemphasized the need to reduce the NTBs or non-tariff measures (NTMs) in the region, which have surged from 1,634 in 2000 to 5,975 in 2015.

Mark also said that e-commerce is also enabling trade citing the role of eBay, Amazon, and he asked if the world has already attained “peak trade” as global trade/GDP ratio has somehow plateaued at around 63% over the past few years. I argued during the open forum that like “peak food” (formulated by Thomas Malthus and later by Paul Ehrlich, others) and “peak oil” (formulated in the ’70s, reformulated in the ’90s), “peak trade” will not happen.

The average merchandise exports/GDP ratio from 2010-2015 of these Asian economies are as follows: Hong Kong 352.2%, Singapore 260.7%; Vietnam 152.7%; Malaysia 134.7%; Taiwan 114.6%; Thailand 113.6%. Yearly data I got from the ADB’s Key Indicators, November 2016 report. These are exports of goods alone. If exports of services are included, the ratio will grow much higher.

ASEAN countries should proceed with further trade liberalization and reduce the number of NTBs/NTMs at least among themselves. There is economic prosperity in trade expansion and misery in protectionism.

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See also: 

BWorld 134, PPP vs ODA, June 08, 2017 
BWorld 135, On reducing the distribution system loss, June 9, 2017 
BWorld 136, Income tax and the politics of envy, June 12, 2017

BWorld 130, Mobility of goods, capital, and people in Asia

* This is my article in BusinessWorld on May 09, 2017.

One big issue that failed to land on front pages during the ASEAN Prosperity Summit last week is the creeping protectionism, not through rising tariffs but rising non-tariff barriers (NTBs).

  

Malaysian Prime Minister Najib Razak pointed out during the Summit that NTBs and non-tariff measures (NTMs) from 2000 to 2015 have surged by nearly four times to 5,975 from 1,634. This despite the zero tariff regime for intra-regional trade and the creation of the ASEAN Economic Community (AEC) or the regional single market.

While ASEAN was created initially for defense cooperation against regional communist revolutions in the ’60s and ’70s, it has evolved into a platform for freer movement of goods, people and services, and capital or investment. It was a good development and it should be pursued.

This coming November, the Philippines will host the ASEAN partners’ meeting composed of ASEAN + 6 (China, Japan, South Korea, India, Australia, and New Zealand) + Russia and US. Mr. Putin, Mr. Xi, and Mr. Trump and other leaders will be coming to Manila.

The US exit from the Trans Pacific Partnership Agreement (TPPA) and China-Japan leadership in the Regional Comprehensive Economic Partnership (RCEP) are important developments.

By how much have Asian economies improved based on freer mobility of goods, services, investments, and tourism? Here are some basic data (see table).

Those that have expanded by more than seven times in just 15 years are the following:

1. Vietnam: 11.2x in exports, 10.6x in imports, 9.1x in investments, and 10.6x in tourism receipts.

2. Myanmar: 7.2x in imports, 12.1x in investments, 12.9x in tourist arrivals; also high expansion in tourism receipts.

3. Cambodia: 14.2x in investments, 10.3x in tourist arrivals, and 24x in tourism receipts.

4. Laos: 9.3x in imports, 10.4x in tourist arrivals and 36x in tourism receipts.

5. China: 9x in exports, 7.5x in imports, almost 6x in investments, and 7 to 7.5x in tourist arrivals and receipts.

6. Japan: 7.4x expansion in international tourist arrivals.

7. India: 7.5x in exports, 12.3% in imports, and 7.8x in exports.

The Philippines also experienced modest growth in all the above indicators but not fast enough to create more jobs and businesses to its 104 million people. We should take hard lessons from our two small neighbors with huge economic achievements, Singapore and Hong Kong.

Singapore with only 5+ million people and just 3 1/2 hours by plane south of Manila, has 6x more exports, 11x more FDIs, attracts more than 3x foreign tourists and more than 4x in tourism receipts than the Philippines.

Hong Kong with only 7+ million people and less than 2 hours by plane north of Manila, has 8x more exports, 32x more FDIs, attracts nearly 7x foreign tourists, and nearly 8x in tourism revenues.

What small economies Singapore and Hong Kong have that the Philippines lacks are two important policies: free trade (zero tariff, minimal NTBs) and stricter rule of law (the law applies equally to both rulers and ruled, applies equally to unequal people).

So while we have improved our GDP size and material wealth via freer trade, freer movement of people and capital, we need to free up more.

We should allow more islands and provinces to have their own industrial zones to attract more investments and foreign trade. To have their own international airports and seaports to attract more investments and more tourism.

More modern infrastructure, simpler rules, and freer trade will help the Philippines attain what our developed neighbors have already achieved. Drastic reduction in NTBs and the removal of rice quantitative restriction (QR) and protectionism for instance. And less politics, taxes and bureaucracies, more respect for the law by politicians and bureaucrats.

Bienvenido Oplas, Jr. heads Minimal Government Thinkers and a Fellow of SEANET. Both institutes are members of the Economic Freedom Network (EFN) Asia.

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See also: 

BWorld 121, The PH tax reform bill and tax policies in East Asia, April 10, 2017

BWorld 127, Economic freedom in Asia means faster growth, lower prices, May 07, 2017 

BWorld 128, The quest for more stable and cheaper electricity in the ASEAN, May 08, 2017 

BWorld 129, Open pit mines and the DENR Secretary, May 12, 2017

BWorld 127, Economic freedom in Asia means faster growth, lower prices

* This is my article in BusinessWorld on April 26, 2017.

Thanks to its rapid economic growth, the Association of Southeast Asian Nations (ASEAN) is being looked up to by other economic blocs as it celebrates its 50th anniversary this month in Manila.

The pace of trade liberalization until this decade is perhaps the world’s fastest both among ASEAN member-states, and even among those outside the group.

Free trade creates good will among people and governments across the globe. It gives foreign trade partners greater access to the home market and, in the process, these trade partners tend to open up to more ASEAN countries’ exports and investments.

Here are two tables that show the economic wonders of free trade policy -- not exactly zero-tariff and minimal non-tariff barriers (NTBs) but approaching there -- for the emerging economies of Asia. We will use the purchasing power parity (PPP) values of gross domestic product (GDP) to somehow equalize valuation of goods and services across the world.

Overall, the GDP size of the world at PPP values was $40.3 trillion in 1996 and it rose to $120 trillion in 2016 or an expansion of more than three times in just two decades.

ASEAN-5 refers to Indonesia, Malaysia, Philippines, Thailand, and Vietnam. G7 countries are the US, Canada, Japan, UK, Germany, France and Italy.

Table 1 numbers show the following:

1. Emerging and developing Asia (including China and India) is now the world’s biggest economic bloc with GDP size of $38 trillion in 2016, overtaking the G7. The expansion of GDP size in just two decades was six times, an astonishing feat. The per-capita GDP also expanded almost five times, the fastest in the world.

2. ASEAN-5 GDP size of $6.5 trillion in 2016 was larger than the combined economies of the CIS or developing Europe or Sub-Saharan Africa. Per capita GDP expanded more than two and a half times over two decades which is larger than that attained by many other economic blocs. 

Table 2 numbers further show that:

3. While emerging and developing Asia is only the 3rd largest bloc in the exports of goods and services in the world, selling $3.9 trillion in 2016, the size of exports has expanded 7.2 times after only two decades, the fastest in the world. In terms of price inflation, the region also showed consistent price decline and stability at only 2.9% in 2016, the lowest among developing blocs in the world.

4. Sub-Saharan Africa and MENA remain burdened with high prices and slow expansion in exports.

Giving local consumers and manufacturers more economic freedom where they can buy and sell the various goods and services that they need and produce means empowering the whole economy. Price declines and price stability are proof that freer trade is working and are instrumental in stabilizing the supply of various traded goods and services.

There are winners and losers in free trade, the same way that there are winners and losers in protectionism. But overall, “net gains” from trade trump “net losses” from protectionism because locals are deprived by policies that limit choices and options.

It is important therefore, that emerging Asian economies like the Philippines should never lose sight of the potentials of free trade and resist protectionist aspirations that penalize the consumers while protecting local vested business interests.

Bienvenido S. Oplas, Jr. is the President of Minimal Government Thinkers and a Fellow of SEANET; both are members of Economic Freedom Network (EFN) Asia.

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See also: 

BWorld 124, On Grab, Uber, traffic and LTFRB, May 05, 2017 

BWorld 125, On the retail competition and open access (RCOA) and EPIRA, May 05, 2017 

BWorld 126, Why mining is appropriate for certain areas and provinces, May 06, 2017

BWorld 71, Free trade and higher income

* This is my article in BusinessWorld last Friday.

Among the benefits of free trade, besides having tariffs as low as possible, if not zero, is higher income for the people. There are several ways by which this takes place.

First, free trade expands the choices and options of the local consumers and producers in the economy, both in prices and product quality. Thus, a rice farmer will have more choices where to get his new farm tractor, harvester, and fertilizer and this greatly expands his productivity while reducing crop wastes and losses. Competing suppliers from different countries will offer as low prices and/or better quality as possible to secure more buyers.

Second, free trade creates high levels of goodwill among other countries. Allowing them to export as much as they can at zero or very low tariff rates makes many of them to open up and liberalize their imports from that country or economy. Only goods that can affect public health and safety will be barred or subjected to heavy regulations. Thus, zero or low tariff for shoes, bags and computers but not for guns, bombs, canned food, or medicines with questionable or tainted quality.

Third, free trade invites more foreign visitors and tourists because some products that are heavily taxed and are expensive in their home countries can be found cheaply or abundantly in their destinations. As a result, airlines, hotels, restaurants, malls in the economy expands significantly. Thus, in the case of Hong Kong and Singapore, they import in thousands of containers and “export” in millions or billions of shopping bags when the tourists fly back home to their country.

Here is a sample of economies which have zero or low tariff at most favored nation (MFN) treatment. We will omit discussion about non-tariff barriers (NTBs) at the moment. Three small but dynamic Asian economies lead the pack and two non-EU members, Switzerland and Norway, have lower tariff than the EU average. The Philippines’s tariff rate would approximate the rate of co-members in the ASEAN except Singapore and Brunei. While ASEAN and EU countries have zero tariffs on their co-members in their economic bloc, they impose certain tariffs for other countries outside the bloc (see Table 1).

Japan and the US have also reduced their overall tariff over the past two decades. The Philippines has joined its neighbors in the ASEAN in unilateral trade liberalization but not towards zero rate. It is a mystery why overall tariff has increased after 2006 (4.49% in 2007, 6.48% in 2008, 5.8% in 2009 and 5.62% in 2010). No data is shown in the WB database after 2010.

We now check the income of the countries listed above and added other ASEAN countries. Economies with zero or near zero tariff also have very high per capita income (See Table 2).

There are many other factors of course that explain for the high per capita income of those countries above, like having a rule of law and smaller population. Small population has forced them to open up to global trade via tariff liberalization, otherwise their small volume of consumers and producers will greatly restrict their capacity to expand their income and economic freedom.

The above are lessons for the Philippines and other countries show why pursuing free trade and unilateral liberalization towards zero tariff make a lot of sense. Expanding the economic freedom of their people to have more choices, more options where to buy and sell their various products and services is actually an end in itself.

Protectionism and nationalism are old philosophies that have served their purpose in the last century but will no longer work in the current century and beyond. Governments should learn to take a step back and ease regulation and taxation of trade.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET, both institutes are members of the Economic Freedom Network (EFN) Asia.

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See also:

BWorld 44, Why the Philippines should join the TPP, February 19, 2016 

BWorld 48, On unilateral trade liberalization, March 17, 2016 

BWorld 59, Free trade and Norwegian salmon, May 28, 2016

BWorld 64, The WTO and trade agreements, June 17, 2016 
BWorld 65, PH exports growth from 1960-2014, June 22, 2016

BWorld 68, Criminal justice and Duterte, July 07, 2016 

BWorld 69, Foreign direct investments and Pres. Duterte, July 08, 2016 
BWorld 70, Wind power firms corner billions of FIT money, July 09, 2016

BWorld 7, Free Trade vs.Protectionism via Non-Tariff Measures

* This is my article in BusinessWorld Weekender. Posted online yesterday, hard copy is published today.
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Trade, human welfare, and their barriers

TRADE is perhaps the single most important invention made by humanity to improve their condition and welfare. It is so vital as to be essentially inherent to human nature, as shown by the earliest, the most primitive societies.

This is because no man, no matter how bright and resourceful, is capable of producing everything that he needs for himself and his family, especially in modern societies. Modernization is possible only through specialization of labor and skills, making efficient production of certain goods and services, generating big surplus and using the surplus to procure other goods and services that are more efficiently produced by other people somewhere else.

While trade is vital to human welfare and progress, it is also the object of envy and contention among certain sectors of society in different countries. While it is human nature to have free trade among people, politics and governments come in to cater to special interests in society and deprive many consumers of the freedom of choice, by erecting various tariff and non-tariff barriers (NTBs) to trade. And this creates trade disputes among participating governments.

The World Trade Organization (WTO) was established in 1995 mainly to pave the way for a rules-based global trading regime. The rules are transparent and apply to all member-countries.

In a forum at the Asian Development Bank on May 21, WTO director-general Roberto Azevedo said the organization supports global trade and development via five schemes.

1. Providing a rules-based trading system that now covers around 98% of global commerce.

2. Serving as a forum where countries can sit down and monitor each other’s practices and regulations to ensure that agreements are observed and respected.

3. Offering a settlement mechanism for trade disputes between and among countries. Almost 500 trade disputes have been heard by the WTO, helping members to resolve their differences in a fair, open and transparent manner.

4. Fighting protectionism. During the 1929-1933 Depression, retaliatory trade restrictions wiped out two-thirds of world trade. Such practice was not repeated when the world experienced heavy fiscal and financial turmoil in 2008, and response by governments was mostly calm and restrained. Under the WTO, member-states knew that they were bound by rules and obligations, so they had the confidence to resist domestic protectionist pressure.

5. Providing a place where developing and least-developed countries have a seat at the table and an equal voice in global trade issues. These countries are also afforded special and differential treatment, and technical assistance to help improve their trading capacity.

While tariffs have generally gone down across many countries, there are various non-tariff measures (NTMs) and barriers that restrict free trade. The most prominent is restriction via various bureaucracies or trade bureaucratism, a serious problem for many exporters and importers.

In December 2013, a historic WTO ministerial conference in Bali produced an important output, the Trade Facilitation Agreement (TFA). Its goal is to make faster, easier, and cheaper the movement of goods across countries and borders. The WTO estimates that the TFA can reduce trade costs at the border by up to 15% for developing countries, and inject up to $1 trillion per year into the global economy, creating some 21 million new jobs worldwide.

The next challenge for the WTO is the TFA’s ratification by at least two-thirds of the member-states.

There are many other barriers to free trade. Here are the eight non-tariff measures (NTMs) imposed by different governments that limit or restrict the movement of goods and services across borders: Sanitary and phytosanitary (SPS), technical barriers to trade (TBT), anti-dumping, countervailing duties, safeguards, special safeguards, quantitative restrictions (QRs), and state trading enterprises (STEs).

STEs are also known as state-owned/operated enterprises (SOEs) and, in the Philippines, they are called government-owned and -controlled corporations (GOCCs).

In East and South Asia, the NTMs are plentiful. See these charts. In the first row are charts for the Philippines, Thailand, Indonesia, Malaysia; second row has India, China, Japan, USA.

In the Philippines and Indonesia, the most common NTM is SPS. In Thailand and India, safeguards and anti-dumping are the common NTMs. China loves imposing QRs and anti-dumping while Japan’s favorites are safeguards and special safeguards.

The US, falsely labeled by many people as the “chief ideologue” of the “jobs-killing free trade” philosophy, is actually a practitioner of multiple NTMs and other forms of trade restrictions.

In contrast, many other economies have very few NTMs, among them, Singapore, Hong Kong, United Arab Emirates, Qatar, United Kingdom, Germany, Spain, and Sweden.

Hong Kong and Singapore are the known practitioners of unilateral trade liberalization in goods in this part of the planet. Their NTMs are few compared to their neighbors in East Asia. UAE and Qatar used to be very small economies that became super rich largely through trade opening.

UK, Germany, and other EU member-countries have strict observation of the free mobility of goods and people across the Union. Thus, their NTMs are very few, except for SPS measures. Freeing trade is among the most important policies that any nation can undertake to unleash the entrepreneurial skills and potentials of its people.

Whether high tariffs or low tariffs but multiple NTMs, such policies deprive the people of the freedom to choose and buy those goods and services that maximize their individual and household welfare. When households make big and regular savings via purchase of cheaper, freely-traded commodities, they can use those savings and surplus to procure other goods and services that otherwise they could not buy. This expands the range of commodities among consumers and, in turn, this expands business and employment opportunities for many other people.

Free trade simply expands human welfare, whether people realize it or not.

Bienvenido S. Oplas, Jr. is president of Minimal Government Thinkers, a Manila-based think tank advocating free-market economics, and a fellow of South East Asia Network (SEANET), a Kuala Lumpur-based regional think tank advocating free trade in the ASEAN. 

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See also: 

BWorld 2, Benefits of Trade Liberalization for the Philippines, May 16, 2015

BWorld 4, Public Transport, Colorum Vans and MAPSA, May 29, 2015 

BWorld 5, Transportation Bureaucracy and Uber, June 16, 2015 

BWorld 6, Biotechnology, Innovation and the Philippines, June 19, 2015

Free Trade 45: Protectionism in Services, Peering at the ASEAN, March 12, 2015 

Free Trade 46: Debate on TPPA and Liberalization in Malaysia, March 31, 2015 

Free Trade 47: TPP, RCEP and IPR, May 11, 2015

Free Trade 48, WTO DG Azevedo in Manila, May 22, 2015

UHC 22: Shortage of Doctors in the Philippines

A friend, Dr. Tony Leachon of UP College of Medicine, also practicing at Manila Doctors Hospital, posted this article in his fb wall last week, and it attracted lots of healthy and useful comments from his fellow physicians. I believe more people should be able to read this useful exchange. This is long, 4,600+ 7,300+ words, 10 16 pages, enjoy.
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Tony Leachon
PMA warns of worsening shortage of doctors. http://www.abs-cbnnews.com/nation/01/30/14/pma-warns-worsening-shortage-doctors

Emmanuel 3D- Dispersal, Diffusion, Dedication

Daniel Most patients in the provinces can't afford doctors. The government thought universal healthcare through the PHIC will solve it. It just solved half the problem.

PHIC doesn't even pay for OPD consults. What, wait for these patients to be sick enough to be admitted for insurance to start paying for it? By then the healthcare cost could already skyrocket.

Ted The ratio should be 1 physician per 1000 persons. If we are 95million and we have 130,000 licensed isnt 1.3 doctors per 9,500 population? We definitely need more doctors! I believe PPP will be a major solution as many of the doctors are in the private sectir.

Iris Hopefully UPCM Return Service will help and that these new MDs will be encouraged to stay.

Minerva  This issue definitely needs a comprehensive analysis that considers demographics, changing practice patterns and healthcare access. Most existing estimates of the shortage of physicians are based on simple ratios. These estimates do not consider the impact of such ratios on patients’ ability to get timely access to care and do not quantify the impact of changing patient demographics on the demand side and alternative methods of delivering care on the supply side. We are at the threshold of collaborative practice which could be expanded to include the use of healthcare teams of physicians, nurses, midwives. Telehealth is another option to address timely access to care in remote areas. Improving allocations for physicians in government, both national and local as well as improvement in facilities through local government emphasis on health agenda is a must while we review the Local Government Code.

As an educator engaged in organized medicine, I believe we should also shift some of our focus in teaching medicine and include health informatics, leadership and management of change, medical socio-anthropology and immersion in public health issues in research, in elective rotations and as part of case scenarios in medical subjects so that medical students will have a grasp of the real world that they will face after medical school.

Ted  If each private doctor accepted or was assigned few poor families in consult and treatment under their care and Philhealth paid for their servicrs, would that lessen the problem?

Daniel  PHIC calls it capitation but its only paid to the RHU doctors, which in most cases, the poor patients won't even find in their clinics.

Adrian It might be time to consider Dr Domingo's proposal for a national matching system. That will ensure a career for doctors, while addressing distribution issues.