This report attempts a comprehensive assessment of the impact of the Philippines’ membership in the World Trade Organization.
It finds the country deriving no benefits from membership but incurring tremendous costs. Being in this multilateral body has been an unmitigated disaster for the country. Indeed, the appropriate term for the Philippine experience in the WTOfrom 1995 to 2003 is “multilateral punishment.”
Practically all the disadvantages that opponents of WTO membership for the Philippines warned against during the ratification debate in 1994 have come about, even as those who led the country into the organization remain unaccountable for the consequences of their misguided advocacy.
One of the main byproducts of membership has been the erosion of national sovereignty, as the US government took a direct hand in overhauling the Philippine legal system to make it “WTO-consistent.” Strong US influence was exercised either through constant pressure from the US Trade Representatives’ Office and US Embassy or directly via consulting groups such as the USAID-funded AGILE program. The latter was especially the case in the areas of Trade Related Intellectual Property Rights (TRIPs) and Trade Related Investment Measures (TRIMs).
Owing to the alignment of our laws with WTO rules, which benefit mainly big northern transnationals, the broad-based diffusion of technology necessary for self-sustaining industrialization has been restricted at the same time that the country, which is rich in genetic resources, has been rendered vulnerable to corporate biopiracy. This process of legal realignment has also eliminated the use of trade policy as a mechanism of industrialization.
The impact of the WTO has been most damaging in the area of agriculture. In one key sector after another—rice, corn, poultry, vegetables—the entry of foreign commodities facilitated by the WTO has resulted in the displacement of significant local production and large numbers of producers. At the same time, membership in the WTO has not protected the Philippines from WTO-illegal restrictions on Philippine exports of products like tuna and bananas imposed by trading powers such as the United States, European Union, and Australia.
Liberalization of agricultural trade combined with a very weak financial and technical support from government has proven to be a deadly formula for Philippine agriculture. State support for agriculture has not even reached the ten per cent de minimis level of subsidization allowable under rules of the WTO’s Agreement on Agriculture (AOA). Lack of government support is the main reason why the idea–floated by pro-WTO advocates during the ratification debate–that, spurred by the AOA, Filipino farmers would move into the production of high valued added crops like cut flowers had little basis. Such a shift has high capital requirements, which can only be provided by the state.
The study contends that, contrary to the reigning neoliberal ideology in Philippine technocratic circles, aggressive state support rather than more liberalization is the solution to the worsening crisis of agriculture.
The study finds that the main source of the negative consequences of the AOA for the Philippines is its being a highly inequitable agreement that institutionalizes high levels of domestic support, subsidization, and tariffs for the United States and the European Union. Such high levels of support have encouraged overproduction and the consequent export dumping that has wreaked havoc on the agricultural sectors of developing countries like the Philippines. The AOA has institutionalized a split between the socialized, subsidized agriculture of the North and the unsubsidized free-market agriculture of the South. It is unlikely that reforms will be allowed that will transform the AOA from being an instrument for monopolistic competition between the EU and the US.
In entering the WTO, the Philippines joined a body that is not only blind to development but non-transparent and non-democratic in decision-making. Effective control is exercised by the big trading powers via a process called “consensus,” which disenfranchises most developing countries. Dissatisfaction with WTO decision-making on the part of the developing countries was one of the factors behind the collapse of the Third Ministerial in Seattle in December 1999.
The study finds that it was only through arbitrary procedures, non-transparent mechanisms such as the “Green Room,” and intimidation that the big trading powers managed to get the developing countries to agree to the declaration issued by the Fourth Ministerial in Doha, Qatar, held in November 2001. That declaration launched a limited round of new negotiations for trade liberalization that most developing countries had been opposed to before the ministerial.
The momentum from Doha failed to surmount deep-seated differences. Trade negotiations have ground to a halt less than three months before the Fifth Ministerial, which will be held in Cancun, Mexico. The big fear is that in order to push through further global trade liberalization, the negotiators of the big trading powers will again resort to non-transparent methods as in Doha.
The final section of the report underlines the disconcerting degree of non-transparency in the Philippine government’s preparations for the Cancun meeting. At this late stage, for instance, it is not clear: 1) if the government will tell the WTO that it is maintaining the rice quota; 2) what services it is planning to open up under GATS (General Agreement on Trade in Services); and 3) what its positions are on key questions on the “New Issues” of investment, competition policy, government procurement, and trade facilitation.
Clearly, a more decisive approach to the Cancun Ministerial and the WTO–one that faces up to the fact that it is one of the most damaging agreements and organizations our country has entered into–is overdue.
Executive Summary of
THE PHILIPPINES IN THE WTO, 1995-2003
By Walden Bello