Filipino First: The road not taken

rene-e-ofreneoIf Donald Trump has “America First”, why can’t  President Digong Duterte formally adopt a “Filipino First” policy?

To reiterate, Trump’s America First policy is not new.  It is essentially an expression of economic nationalism as reflected in slogans such as “Buy America”, “Manufacture in America” and “Protect America”.  America First policy goes back to the campaign of George Washington and Alexander Hamilton in the 1770s to build industrial America to become truly independent of  Great Britain. What has rattled Europe, Asia and other regions is that the United States, in the name of America First, is now unilaterally changing the rules of the global free trade system, a system which the United States helped establish in the first place as part of Pax Americana in the 20th century.  Trump has made the policy even more controversial with his racism, misogyny and hatred against Latino and Muslim immigrants.

However, Trump represents part of the American economic and political elite which sees that the global free trade system no longer serves American interests. Trump is tweaking the system to reposition American global leadership through measures such as taxing Chinese exports, asking trade partners to share the cost of American defense spending, and shifting trade talks to bilateral mode.  Trump has also given up on the Trans-Pacific Partnership, partly because the project will further encourage the outsourcing of American jobs to cheaper production platforms in the Asia-Pacific region.  The overall framework is classic mercantilist: produce more at home and export as much with a little help from a depreciated dollar and higher tariffs against imports.

Now back to the Filipino First policy. This is not a new idea. Filipino cause-oriented organizations, past and present, have been advocating economic nationalism to free the country from foreign economic stranglehold and wipe out mass poverty through an integrated program of industrialization. This demand incidentally is included in the ongoing government-Communist Party of the Philippines peace talks related to a proposed “comprehensive agreement on socioeconomic reforms”.

But had there been no efforts on the part of our government to adopt a Filipino First policy? The answer is there were sporadic efforts. In fact, there were at least three historical moments where the Filipino First was formally enthroned, at least on paper, as the guiding governance framework.

The first happened during the Commonwealth period, when colonial Philippines was given some elbow room by America for self-government. The impoverished situation of the country under the free-trade agreement with the United States, especially in the wake of the 1929-1933 Great Depression, prompted some emerging Filipino businessmen to call for self-reliant industrialization to end poverty and underdevelopment. A National Economic Protectionism Association (Nepa), led by a shoe entrepreneur, Toribio Teodoro of Ang  Tibay, was formed in 1934. Nepa succeeded in mobilizing budding businessmen, such as Salvador Araneta, Gonzalo Puyat and Joaquin Elizalde, behind the Nepa mission of informing the Filipino people of “the progress of our industrialization and of the Filipino participation in business”. Nepa was warmly received by the government. Then-Finance Secretary Manuel Roxas wrote:

“The only workable economy possible under present conditions is a nationalistic economy on a producer-consumer basis. Every nation has adopted it to a greater or lesser degree…we must endeavor to supply as much of our requirements as practicable with our own production.” And  yet, nothing happened. President Manuel L. Quezon and Secretary Manuel Roxas were not in a position to steer the country toward industrialization given the free-trade regime with the US, a trade arrangement that promoted Philippine reliance on a few agricultural exports (sugar, abaca, etc.) and industrial imports from America. This situation was further compounded by the limited power of the “transition” Commonwealth government, the financial and economic crisis bred by the Great Depression, and the massive social unrest the crisis engendered.

The second historic moment happened in 1958, when the National Economic Council, under the administration of President Carlos P. Garcia, came up with Resolution 202, promulgating a “Filipino First” policy. The resolution provided guidelines on how to give preferential treatment to Filipinos, particularly in the allocation of dollars and in their entry in any field of business. Dollar allocation was a thorny issue then. Because of the foreign-exchange controls, domestic industries, mostly import-substituting in character, had to queue for dollars to be able to import needed industrial raw materials, machines and other inputs. The resolution was short-lived, because the Garcia administration retreated in the face of Chinese and American business opposition. The latter called the resolution a “fascist slogan”. Under the “parity” agreement of 1946, American businessmen could own land and operate freely in any area of the Philippine economy. However, they were angry they could not remit freely their dollar earnings because of the foreign-exchange controls, and angrier that they had to play second fiddle to Filipino importers in the proposed allocation of dollars.

The third historic episode took place in 1969. Then-Speaker Jose B. Laurel succeeded in shepherding through both chambers of Congress a joint resolution, entitled Joint Resolution 2, otherwise known as the “Magna Carta of Social Justice and Economic Freedom”. Drafted by a group of nationalist economists, headed by Emmanuel Yap of the Congressional Economic Planning Office, and signed into law by President Ferdinand E. Marcos, the resolution calls for an overhaul of economic governance. It provides, among others, for the following policy guidelines: “The government shall vigorously push through a program of industrial and agricultural pioneering and development”; “the disposition of the nation’s foreign exchange shall be subjected to a rigorous system of priorities”; and “basic and integrated industries essential to change the structure of the economy” shall be established. In his sponsorship speech, Laurel thundered: “Only by industrializing the economy, through the establishment of basic industries, particularly those that will utilize indigenous raw materials, can we hope to resolve the perennial problem of mass unemployment and marginal income that hound the lives of our people”.

Unfortunately, Resolution 2 was never given the full backing by Marcos, who dilly-dallied in its implementation, because of his back-door negotiations with the International Monetary Fund for a Philippine loan and the criticisms raised against the resolution by the liberal economic technocrats hired under the Presidential Economic Staff. When martial law was declared in 1972, Resolution 2 became one of the first casualties.

In brief, Filipino First has never been truly enshrined as a national policy. The tragedy is that, seven decades after independence, the Philippines is still debating on how to build/rebuild its industrial base.