“If the economy is growing fast, there is a call for distributing income from the rich to the poor to put in place social safety nets.” – Manmohan Singh
Thirty years after the Philippines the General Agreement of Tariffs and Trade that later evolved into the World Trade Organization, I believe it is high time to revisit its impact. In December of 1994 the Philippine Senate ratified this accord, committing the country towards trade liberalization. However, then Senators Ernesto Maceda, Wigberto Tanada, and Tito Sotto expressed their stern disagreement over the said accord, expressing diversity of ideas on this very important global and national concern. In fact, the Philippines is one of the states that committed at the earliest stage of GATT.
But what is GATT? The General Agreement on Tariffs and Trade (GATT) is a multilateral trade treaty among countries to regulate international trade and tariffs in accordance with specific rules, norms, or code of conduct. This later evolved into a global economic structure as the World Trade Organization (WTO). The GATT was originally constituted by 23 founding states in 1947 called the Uruguay Round during the post World War 2 almost simultaneous to the creation of the International Monetary Fund (IMF).
‘GATT GOT US’
After the accord was formalized there were subsequent agreements on top of the bilateral ones the Philippines entered into. The most evident impacts of the agreement are manifested largely in the agriculture sector. Examining the lens of its effect in the Philippine economy let us attempt to identify major these impacts.
Tariffs were restructured in order to accommodate in-flows of other products. This restructuring was done on a graduated process, especially on agriculture products which were identified by the Philippine representatives to the roundtable that essentially have to be protected, but tariffs for these products were reduced until ultimately taken out. The safety nets of protection, trade advantages, and gains including employment, according to various studies were not realized.
Market expansion as an opportunity for the Philippines. We were labeled as a “developing country” but Philippine promoters of GATT asserted safety nets are in place for sectors that will be significantly affected. They added that we should take advantage of the expanding market brought by liberalization. The volume, quality and the competitiveness of Philippine agriculture is now put to challenge. By many indications, if not all, we have fallen short of the global standards and protection measures as safety nets were sacrificed as evidenced by major products such rice and sugar, and subsidies are limited.
The adjustment of the prices of export products are reduced and must be aligned to the prevailing global prices, but not sacrificing quality, but then again we fail to sustain efforts towards this end.
Overall, the ratification came in where there were no ready systems and mechanisms for the full implementation of the safety nets, including the welfare of the farmers.
MORE AGONY
Very recently on February 21 this year once again the Philippine Senate concurred with the participation of the Philippine government to the Regional Comprehensive Economic Partnership or RCEP which includes the 10 ASEAN countries plus 5 larger economies of New Zealand, Australia, Japan, China and Korea. Only two days of deliberation the RCEP membership was approved as this was a priority program of President Marcos Jr.
The RCEP is one of the subsequent off-spring of the GATT-WTO. However, prior to the membership of the Philippines we can glean the major impacts of trade liberalization even after a decade after the government ratified the accord simply because fundamental safety nets as protections remained a big debate on whether implemented or not. I say most of them were not implemented.
Moreover, periodic budget deficits and debt servicing are prioritized instead of ensuring subsidies and other forms of safety nets and welfare of the small farmers. More specifically, the agriculture sector suffers from less production which is not even enough to meet domestic needs because of the lack of modern machinery, equipment, and technology. Productive lands are being encroached and converted for other purposes, putting the food security and subsistence in peril, and the proper and efficient use of water as irrigation crucial for sustainable production is overlooked.
Finally, the export oriented and import dependent mindset has not been overcome as almost 80 percent agricultural products, according to estimates, are imported, including livestock. Safety nets are nowhere to be found.*
