Globalization is war. Those who are well armed in terms of technology, government support and a clear-cut national trade strategy to conquer the global market while preserving their own domestic market win. This observation is particularly true in the case of agriculture. This is also eloquently articulated by no less than Charlene Barshefsky, the US Trade Representative who represented America in the intense negotiations in the World Trade Organization (WTO) on the implementation of the Agreement on Agriculture (AoA) in the mid-1990s. She bared the American trade position during a Congressional hearing conducted by the US House Subcommittee on Trade as follows:
“There are some who believe that simply opening markets on a global scale is the be-all and end-all, no matter how it is done or no matter who benefits. I subscribe to a different view. It is imperative that we open markets in a manner consistent with the rules of the WTO, but we must make sure Americans benefit directly from this process, and to do that Americans must drive the rules of the new global landscape and the opening of markets. There is simply no other way to protect our jobs, our vital trading interests or our global leadership on trade.” (Testimony given by US Trade Representative Charlene Barshefsky, March 18, 1997)
The above American position on the need to promote, preserve and protect American interests in global trade is similar to the position of the European Union (EU) in the AoA and other trade negotiations. Like the United States, the EU refused to phase out the huge price support it has been giving to European agricultural producers under the EU’s Common Agricultural Policy or CAP. At the same time, both the EU and the United States have been pressuring other member states to open up or liberalize markets in the name of the WTO’s AoA. In the Cancun Ministerial Conference of the WTO, the EU unabashedly came up with non-trade arguments in support of its position, stating that agriculture is part of their history, part of their culture and part of their civilization. Hence, they cannot afford to stop supporting agriculture even as they have been pushing for the opening up of agricultural markets everywhere.
The foregoing US and EU stance – insisting on market opening for all countries and yet maintaining protection for their domestic producers – explains why the WTO negotiations for a new round of trade liberalization have been bogged down for one and a half decades. The problem is that the Philippines has taken a relatively passive stance on its trade negotiations with the WTO. In fact, we undertook a program of unilateral agricultural deregulation program (under the WB’s SAP program of the 1980s) long before we joined the WTO in 1995. Likewise, we adopted a program of agricultural tariff reduction ahead of the formal tarrification of the sector as mandated by the WTO. Our actual tariff reductions in both industry and agriculture were also much lower than our bound commitments to the WTO compared to those of Thailand and other countries. This unilateral trade liberalization has been reinforced subsequently by the bundle of trade liberalization agreements under the WTO, Asean, AFTA/AEC, and the numerous bilateral and regional FTAs concluded or being concluded by the Philippines with various countries.
The agricultural deregulation/liberalization program, in place for nearly three decades, is clearly a failure as reflected in our own statistics on exports, production and so on. But with tariffs now down to 0-5 percent and the last remaining restricted item, rice, now due for tarrification, what can the Philippines do now?
The answer is still a lot. But first, our policy makers should recognize the bankruptcy of the neo-liberal idea that market opening and liberalization automatically usher in competitiveness and eventually growth. It does not happen this way. Whether the market is liberalized or not, we have to work our way up, that is, build up domestic capacity step by step, e.g., technology adaptation, skills development, market mastery, etc.
As mentioned, globalization is war, war among the most efficient and competitive. However, the most efficient and competitive industries in the world happen to be the ones enjoying government support and assistance from their own government. For examples: EU agricultural producers get support from the CAP and European phyto-sanitary standards, US farm sector receive annual subsidies from the US Farm Policy, and Thai farmers are guaranteed price support, subsidies and myriad government assistance. In the case of the Philippines, similar support programs for the farm sector – irrigation, credit, market assistance, etc. – are either missing or are getting paltry budgetary allocations, or worse, even hijacked by the con artists inside and outside the bureaucracy.
In addition to the foregoing, the Integrated Rural Development Foundation has come up with the following specific doables:
First, on the rice issue, the government should not waste so much time discussing the repercussions of the so-called end of the rice quota. Instead, the focus should be on how to strengthen the rice sector. For example, instead of privatizing the NFA, the government should strengthen its buffer stocking capacity (at least 90 days) and palay procurement program (at least 20 percent of national output). This should be complemented with the program of modernizing rice culture the organic way (such as the rice intensification method) backed up by integrated extension, input and credit assistance similar to what the Masagana 99 did in the mid-1970s. The belief that the international market will deliver for the Philippines food stability is simply false given the reality that only around seven percent of rice production in the world is traded internationally. The appropriate policy for rice in the medium and long term is to abandon the policy of perennial importation and start redirecting all efforts on rice self-sufficiency and making rice farming profitable for the rice producers, with all the support they can get from the government.
Secondly, the Philippines should take a strong stand against smuggling and unfair trade practices. Catch the smugglers, not only the smuggled agricultural products, and haul them to prison. Overhaul the inept or corrupt Bureau of Plant Industry, an institution that gives import permits, usually after the harmful products have already arrived. Adopt the Australian phyto-standard examination procedures to weed out vegetables and other products being dumped by China and other countries. Make full use of the safeguard laws as routinely practiced by other countries. If the viability of any sector in agriculture is threatened because of dumping of subsidized products and smuggling (whether outright or technical), the government should immediately impose the following as emergency measures: tariff adjustment upwards even beyond the current bound levels; re-imposition of quantitative restrictions; and application of specific duties.
Thirdly, the Philippines should convene a multi-sectoral group composed of farmers, CSOs, Church and other stakeholders in a review of the WTO and the various bilateral and regional FTAs. The idea is to show the positive and negative impact of these agreements and determine appropriate remedies to the deleterious consequences of these agreements. The bilateral and regional FTAs should be given special attention because these agreements generally go beyond the trade liberalization agenda of the WTO, for example, the strong emphasis on protection for intellectual property rights (IPRs) of the investing multinationals (MNCs) without giving importance to the protection needed by the people against bad technology such as GMO and monopoly situations created by the MNCs.
Fourthly, at the global level, the Philippines should fight for fairness in the system. It must call for the abolition of distorting subsidies provided by developed countries to their domestic producers. The irony is that while the developed countries allocate two dollars of subsidy for each cow a day, many poor people in the developing nations live on just one dollar a day. Our negotiators must advocate the principle of the special and differential treatment (SDT) as the guiding principle governing global trade. The SDT, mentioned over 100 times in the WTO agreements, recognizes the reality that not all countries are of the same level of development; hence, less developed countries should have more flexibility to make adjustments in a globalizing economic order. The food security/agricultural sovereignty amplified earlier should be the primary consideration in the formulation of SDT guidelines and in negotiating old and new trade agreements.
In summary, the aimless and mindless agricultural liberalization should be cast aside in support of a clearer program focused on enhancing the country’s food security/agricultural sovereignty and strategizing the overall position of the Philippines not only in the global market but also in the deregulated and liberalized home market. Hopefully, the Duterte Administration, in its second year, can develop a more focused program on how to rebuild agriculture while asserting Philippine agricultural interests in both the domestic and global markets.