A coalition of over a hundred farmer and fisherfolk organizations (FFOs) managed to delay the ratification of Philippine membership in the Regional Comprehensive Economic Partnership for over a year, from late 2021 to early 2023. The main argument raised by the coalition is the country’s general lack of readiness to participate in a free-trade agreement dominated by China, Japan, South Korea and Australia-New Zealand. They cited the 2021 study of Dr. Rashmi Banga, a senior economist of UNCTAD, who wrote that the trade situation of the Philippines and several Asean members (Cambodia, Malaysia, Myanmar and Thailand) is likely to deteriorate under the RCEP’s free-trade arrangement.
The fears of the FFOs have very strong material basis. The agricultural sector has shrunk continuously after several trade liberalization episodes. In fact, it is in shambles today.
The first episode happened in the early 1980s when the IMF and World Bank imposed on the debt-crippled administration of the late President Ferdinand Marcos Sr. an “agricultural deregulation” program. This program contributed to the death of the “Masagana 99,” which enabled the country to achieve rice self-sufficiency in 1976-1980. Agricultural deregulation reduced the government’s stabilization role in the rice market such as giving price support to palay (for the farmers) and rice (for the consumers), keeping interest on M 99 loans low and manageable, and maintaining the irrigation and agriculture services running.
The second trade liberalization episode occurred in 1994-1995 when the Philippines joined the World Trade Organization. The battle cry of the Senate ratifiers then: “We cannot afford to be left behind.” To fast track the ratification process, rosy projections of job gains from WTO membership were submitted by DA, DOLE, DTI and NEDA. Accordingly, 500,000 new jobs a year would be created in industry, and another 500,000 new jobs in the case of agriculture.
Scorecard after the WTO ratification? The Philippines has become a net agriculture-importing country beginning in 1995. Growth in the industrial sector has been weak or stagnant, and in the agricultural sector declining. Production-wise, the agri sector output today is equivalent to 8-9 percent of the GDP. As to the projected one million jobs a year to be generated by WTO membership, they have remained mere paper projections.
In 2019, the government enacted the Rice Tariffication Law, which downsized the role of the National Food Authority (NFA) in the palay and rice market and upsized the role of the big private rice traders in the importation and distribution of rice. As documented by the Federation of Free Farmers, the immediate effect of the RTL is the precipitous decline of palay price and income of rice farmers, on one hand, and the relatively unchanged high price of rice for the consumers compared to the pre-RTL years of 2017-2018, on the other. The winners: the big corporate importers-distributors; the losers: rice farmers and consumers.
With the RCEP ratification, the FFO coalition, now joined by major trade union federations, asserts that the future is bleak for agriculture as well as industry. And yet, the RCEP Senate sponsors, principally Senators Migs Zubiri and Loren Legarda, are adamant: more exports and more jobs for the Philippines to be ushered in by stronger performance of agriculture and MSME sector in the RCEP area. As to the fears that the country would be inundated with foreign products, their answer: “No worry” because the government is strengthening the country’s safeguard trade measures, intensifying campaign against smuggling, raising the budget for the DA’s flagship programs, and is setting up an Oversight Committee on RCEP.
But over two months after the RCEP ratification, the Senate’s Oversight Committee still has to come up with a concrete readiness program. A readiness program should be able to flesh out what is the country’s “offensive” programs (meaning the promotion of existing “exportables” as well as development of new ones through organized campaign for innovation and higher government spending on R&D and science-industry-government coordination), “defensive” programs (meaning the institutionalization of strong measures against dumping and smuggling and support to vulnerable groups such as weak MSMEs), and “coherence” programs (meaning there should be productive linkages between industry and agriculture, genuine partnership between government and the farming sector, and so on).
Unfortunately, we don’t see any program, or even a rough policy outline, of how the Senate Oversight Committee and the government as a whole shall handle the competitiveness challenges posed by a more liberalized free-trade arrangement in the huge RCEP area. It appears that the general attitude of the policy makers is simply one of allowing the free interplay of supply and demand forces to determine the country’s so-called “comparative advantages”..Free the market and let the investors come in! Free the market and let the strong grow and the weak die on the wayside or make their own survival adjustments!
Such a neo-liberal laissez-faire attitude is the same attitude that prevailed among the policy makers in relation to the various episodes of trade liberalization as summarized above. And look at the outcomes. Stagnant Philippine manufacturing compared to our Asian neighbors. Collapsing agriculture. Dependence of the country on only two economic legs—remittances of OFWs and earnings of call center/BPO sector workers.
It is against the above background that the call of the bigger FFO/trade union coalition really makes sense— Bantay RCEP and Buy Pinoy. The first means monitoring of what the Senate and the government have promised to do to make our agriculture and the economy as a whole winner in this RCEP game.
The second means success in surviving the RCEP competition and winning growth and jobs for the country with the support our government and the Filipino people can give. However, Buy Pinoy should not be seen as merely a general call for Filipinos to buy or patronize Pinoy products. It is a call to build a stronger Philippine economy, one that can stand not only on OFW remittances and call center/BPO earnings but also, and more importantly, on the two real sectors of a strong economy: strong manufacturing and strong agriculture.
Buy Pinoy means Build Pinoy, build a new economy. (More in the next issue of Laborem Exercens).
Dr. Rene E. Ofreneo is a Professor Emeritus of the University of the Philippines.
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