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WTO, Bilateral and Regional Trade Agreements: What’s the Real Deal and Where are We Headed?

WTO, Bilateral and Regional Trade Agreements: What’s the Real Deal and Where are We Headed?

Jan 14, 2012

WTO, bilateral and regional trade agreements, what’s the real deal and where are we headed? By Joseph Purungganan According to the 2004 Trade Report of the World Trade Organization (WTO), “vigorous trade expansion is expected to provide enough momentum to raise global trade volume by 8.5%. The statistics show that world merchandise trade increased in nominal terms by 16% to $7.3 trillion in 2003. In real terms, merchandise trade grew by 4.5% in 2003, compared with 3% in 2002 and a decline in 2001. Trade in commercial services grew by 13% to $1.8 trillion in nominal terms.” The United Nations Development Program (UNDP) o­n the other hand reports that nearly 800 million people do not get enough food, and about 500 million people are chronically malnourished. More than a third of children are malnourished. In industrial countries more than 100 million people live below the poverty line. More than 5 million people are homeless and 37 million are jobless. 1.2 billion people live without access to safe drinking water. These are the numbers that continue to dumbfound us. Why despite the expansion of global trade volumes and values driven by rapid trade liberalization over the last 10 years do global poverty and hunger continue to weigh down o­n the lives of so many? TRP and the race to zero The Philippines is a classic case in point. The Philippines has been an ardent believer of liberalization. Even before the country’s accession to the WTO in 1995, successive administrations have been implementing the Tariff Reform Program (TRP), a review/ restructuring of the Philippine tariff system to make it responsive to the exigencies of global trade. Four tariff reform programs have been implemented since 1981. As a result, tariff rates in the country have been reduced substantially such that when the Philippines joined the WTO in 1995, the average nominal tariff rates were already at 19.72%, lower than most of the bound (or the highest possible) rates committed under the WTO. Joining the WTO and ratifying the Uruguay Round Agreements under the General Agreement o­n Tariff and Trade (GATT) meant further reduction in tariffs and opening of domestic markets to even more foreign competition. Republic Act No. 8178 was passed in March 1996 to abolish quantitative restrictions o­n agricultural products, except rice, and replace them with tariffs in accordance with WTO rules. Huge domestic pressures prompted Pres. Gloria Arroyo to suspend the implementation of TRP-IV. Issued o­n January 10, 2003, Executive Order 164 froze to the 2002 levels tariff rates o­n products whose duties were scheduled for reduction in 2003. Still, overall average nominal tariff rates in the country for 2002 were already at the low level of 6.10%. Yet such changes in the tariff structure failed to translate into benefits for many Filipinos. The recent Social Weather Stations (SWS) survey showed self-rated poverty incidence at a high 53 % and hunger incidence rising to alarming levels. Official statistics in fact show that household poverty increased from 28.1 percent in 1997 to 28.4 percent in 2000. This means that 34.0 percent of total population (headcount) was poor in 2000, a full percentage point worse than in 1997. While government technocrats and academics in the Philippines promote the free trade mantra, many more are questioning whether the road to development laid out by liberalization is indeed the way to go. The Cancun Collapse- Strike Two for the WTO The Stop the New Round! Coalition (SNR!) in the Philippines was o­ne of the groups who celebrated the collapse of the 5th Ministerial Meeting of the World Trade Organization in Cancun, Mexico in September 2003. Like our trade negotiators then, we viewed the failure of WTO members to forge a new trade deal in Cancun as a “positive development” for the country. We saw the collapse of the Cancun talks as a respite for small farmers, fishers, rural women and workers whose livelihoods and jobs have been devastated by government’s blind adherence to liberalization. Our campaign message was clear: The Philippines can ill afford a new round of trade liberalization. Any deal therefore that would further liberalize our economy would be bad for the country. The imperative for our government negotiators therefore was to slow down and put a stop to the liberalization process rather than speed up this process even more. The collapse of the Cancun talks, the second time in WTO’s short history, was significant for at least two reasons. First, it brought to fore the ever growing peoples’ opposition to the free trade agenda, mobilized and catalyzed through national campaigns across the globe. These global citizens’ actions exerted pressure at home o­n country negotiators to take positions responsive to the peoples’ demands. Second, it showed the emergence of new country alliances and groupings among developing countries like the G20, the G33, and the G90. While these new formations still reflect by and large very narrow interests rather than broad developing country unity o­n critical issues like agriculture, they nevertheless served as an important political counterweight in the negotiations to the dominance of United States and the European Union. Cancun was a peoples’ victory but we knew that it was a temporary o­ne and therefore vowed to continue our work for more coherent and just trade and development policies. Revival of talks through the July Framework Cancun collapsed but the engine that drives the new push in the WTO-- the Doha Development Agenda (DDA)-- continues to run and the proponents of free trade have made painstaking efforts to put this agenda back o­n track. After several months of intense negotiations fraught with the usual bullying tactics and intimidation by developed countries, members came out of the General Council Meeting in Geneva last 1 August 2004 with a consensus o­n a “framework” for negotiations. The framework has been praised by the proponents of trade liberalization as a crucial step towards the completion of the Doha Round. We, however, are calling the July framework flawed and unjust and the outcome in Geneva “catastrophic” for the poor. The forging of the framework agreement via the General Council Meeting is a significant development, which can very well shift the locus of decision-making in the WTO away from the highly political Ministerial Meetings, which happen o­nce every two years, to the more frequent and more politically insulated General Council Meetings in Geneva. The WTO Ministerial Meetings, the hitherto anchor of campaigns o­n the WTO, can potentially become mere stock-taking, rubber stamping exercises for deals already ironed out in negotiations in Geneva. Following a flawed framework Secretary Cesar Purisima of DTI expressed elation over the new framework from Geneva saying it “reflects the main demands of the Philippines in the negotiations.” Secretary Purisima is optimistic that negotiations for the conclusion of the so-called Doha Round will be beneficial to the Philippines. We do not share Purisima’s optimism. We do not see anything in the framework that should make us happy. The framework clearly protects the interest of the trade superpowers like the US and EU thereby further aggravating instead of addressing the imbalance in the global trading system. It provides ample leverage and flexibility for rich countries to consolidate and corner the benefits from trade at the expense of the rest of the world. In contrast, the framework merely provides developing countries empty promises o­nce again. The flawed framework in Agriculture legitimizes dumping by developed countries by giving a go-signal to the US and EU to expand rather than eliminate their domestic support. Essentially, the framework o­n agriculture would mean continued protection for the strong at the expense of the weak. With regards to Non-Agricultural Market Access or NAMA, we view the framework as a clear prescription for de-industrialization. It would commit us to bind all our non-agricultural tariffs at rates no higher than twice our applied rates for year 2001. Another peculiar aspect of the framework is the inclusion of Fisheries under NAMA alongside other non-agricultural products like jewelry and shoes. The July framework would also speed up the process of liberalization of our services sector and with an agreement to commence negotiations o­n trade facilitation, o­ne of the four Singapore issues, effectively providing a wedge for the eventual expansion of the WTO agenda. Proliferation of bilateral and regional free trade agreements New bilateral and regional agreements have also been forged and many more are being negotiated in many parts of the world alongside these new developments in the WTO. Complementing their drive to revive stalled multilateral trade talks, the United States and the European Union have been actively pushing bilateral free trade agreements. Both these trade superpowers view bilateral agreements o­n trade and investment as means to expand their interests across the globe. According to the office of the US Trade Representative, (the bilateral agreements) “deepen U.S. strategic and economic interests in Asia, the Middle East and Latin America.” The US has FTAs with Andean Countries (Bolivia Colombia, Ecuador and Peru), Australia, Bahrain, Chile, Central America, Israel, Jordan, Morocco, Panama, Singapore, Southern African Customs Union. The European Union o­n the otherhand has existing bilateral trade agreements with 35 countries and is negotiating BTAs with 15 more. In Asia, ASEAN and China are negotiating an ASEAN-China Free Trade Area (ACFTA) . An Early Harvest Program (EHP), which allows for the reduction of tariffs o­n certain products before the o­nset of the FTA has already been in motion. The programme would reduce tariffs o­n these products over 3 years: to 10% by 2004, to 5% by 2005 and zero tariffs o­n these products by 2006. In the SNR! campaign o­n the WTO last year, we raised the issue of information disclosure. We demanded that negotiations in the WTO o­n possible new agreements, which would have far reaching implications o­n livelihoods and jobs, are matters of public interest. The negotiating agenda therefore of the Philippine government should be subjected to public scrutiny and debate. Unfortunately, very few people even know about these bilateral and regional trade agreements, Very few Filipinos for instance know that the government is negotiating an economic partnership agreement with Japan, or is negotiating under ASEAN with China and India, or that studies have already been done o­n a possible US-Philippines Free Trade Agreement. These agreements remain in the realm of government technocrats and the business community. Information and documents regarding these agreements have not been made available to the public to generate the kind of informed public debate over these agreements that we think is necessary. We do not know what is expected from deals with economic superpowers like China, Japan, India, and the United States under these bilateral and regional trade agreements. At the very least, the government should make an effort to let the people know what agreements we are entering into. Global Trade Super hi-way Over a year since Cancun, we see an even more aggressive push at various levels for the agenda of economic liberalization. At the multilateral level, the WTO has bounced back and going full-speed ahead fuelled by a new framework agreement even as governments rush to begin and/or conclude bilateral and regional free trade agreements. Next Stop: Hong Kong The 6th Ministerial Meeting of the WTO will be held in December 2005 in Hong Kong. Depending o­n how the continuing negotiations in Geneva go, the Hong Kong trade talks could very well give a green light to the conclusion of the Doha Round—ushering basically a new wave of tariff reductions in agriculture and industrial goods and the opening up of the services sector. Amidst this liberalization frenzy, the crucial questions remain. Can our farmers, fishers, and workers survive the aggressive push for liberalization? How will all these complex web of trade negotiations address the long standing issues of poverty, inequality and hunger? When government enters into these negotiations, whose interests are being protected and whose are being sold-off or given away? (Published in: Focus on the Philippines No. 44, http://focusweb.org/oldphilippines/content/view/86/6/)

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