The Philippine Constitution expressly mandates the State to “promote a just and dynamic social order that will enable the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, rising standard of living, and an improved quality of life” (Section 9, Article II).
Further, the Constitution fleshes out the goals of the national economy: “More equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity” (Section 1, Article XII). And to achieve the foregoing, the charter declares that it is the duty of the State to “promote full industrialization and full employment based on sound agricultural development and agrarian reform,” and to “protect Filipino enterprises against unfair foreign competition and trade practices.”
Sadly, the above Constitutional vision of a prosperous and independent economy standing on two strong legs—full industrialization and sound agricultural development —is not happening. Since the 1980s, both the industrial and agricultural sectors are either stagnant or have been crumbling, no thanks to the policy of “unilateral disarmament” that the country’s creditors and their neo-liberal economic allies in the government have managed to push in the policy corridors. As the ADB’s Norio Usui wrote in 2012, both the industrial and agricultural sectors of the Philippines had been collapsing and the economy was able to survive only because of OFW remittances and call center/BPO earnings.
“Unilateral disarmament” was the term coined by former Senator Wigberto Tanada when he questioned in 1994 the Senate’s rush to ratify Philippine membership under the World Trade Organization. He bewailed that the country then had no readiness program in place, meaning the government did not have a clear “offensive” program (more and value-adding exports), “defensive” program (remedies against trade dumping) and a “coherent and integrated” program to build up both the industrial and agricultural sectors amid the harsh realities of economic globalization. What the government did under the WTO was simplistic: just open up wholesale the industrial and agricultural sectors (through a general tariff reduction lower than those of Thailand and other Asian neighbors) in the naïve belief of the neo-liberal economic planners that full integration in the global market under untrammeled free-trade conditions would make the economy competitive and robust.
A coalition of nearly 150 farmer, fisher folk and trade union organizations formed in 2022 also dubbed the Senate’s rush to ratify Philippine membership in the Regional Comprehensive Economic Partnership, the China-led free-trade agreement in Asia, as “unilateral disarmament.” Why ratify when no readiness program is in place? Why ratify amid a full-blown agricultural crisis, a crisis that is likely to take a turn for the worse under RCEP?
Now that the Senate managed to ratify RCEP despite their collective opposition, the coalition of farmer, fishery and trade union organizations has shifted its focus: monitoring how the policy makers in the executive and legislative branches would deliver on their “compromise” promises of providing Philippine agriculture, MSMEs and industry the needed protection against foreign trade onslaughts (e.g., dumping, smuggling, etc.) as well as the vital capacity-building programs to rejuvenate these stagnating sectors of the economy. Thus, the coalition’s new call: “Bantay RCEP, Buy Pinoy.”
However, it is abundantly clear that the coalition is envisioning the “Bantay RCEP, Buy Pinoy” campaign to be much more or a broader one, that is, a campaign that goes beyond the simple call on the people to patronize or buy local harvests and locally-made products. It is a campaign to revive the Filipino spirit of economic solidarity, of helping one another (“damayan” in bad times and “bayanihan” and “tangkilikan” in good times). It is a campaign to unite the Filipino producers and consumers in supporting a program to build up the capacity of the nation to produce more and better products as well as to create more and better jobs for as many Filipinos. After all, no consumer in his/her right mind will buy an expensive and shoddy product simply because it is a Filipino product. If there are no improvements in the price, quality and availability of Filipino products, the market shall easily be flooded by imported “ukay-ukay” products, no thanks to WTO-RCEP-facilitated trade liberalization regime.
But how do we transform an economy with weak and broken industrial and agricultural sectors given the country’s new liberalization commitments to RCEP? How do we prevent the UNCTAD’s prognosis that the Philippines’ trade situation (mounting deficits) is bound to deteriorate further under the RCEP arrangement from happening?
The answer is that there is no substitute in finding new and bolder alternative economic policies, that is, alternatives to the existing policy regime of just letting the so-called market forces (global/national supply and demand) work out to reveal the country’s so-called “comparative advantages.” This means going back to the demand of the coalition—instituting a comprehensive readiness program to shield the economy from unfair trade dumping and building up the capacity of Filipino farmers, Filipino MSMEs, Filipino manufacturers and Filipino workers to develop a stronger and self-reliant economy. This means going back to what the Constitution has mandated the State, which is to “promote full industrialization and full employment based on sound agricultural development and agrarian reform” and to “protect Filipino enterprises against unfair foreign competition and trade practices.”
Immediately, such a proposition will invite criticism from the neo-liberal economists who will brand such a program of re-building the economy “protectionist” and violative of the national commitments to the WTO and RCEP. But look what’s happening in the world today. Developed countries that have been preaching “free trade” are the ones leading the movement to subvert the global free-trade rules of the WTO.
Take the case of the United States. Donald Trump’s “America First” has been replaced by Joe Biden’s “Buy America.” The American government has enacted an Inflation Reduction Act, which provides $370 billion worth of subsidies and tax breaks to American companies. The Biden administration has also asked US multinationals, especially the chip manufacturers, to bring back or re-shore to the American mainland the production facilities that these firms have outsourced to Asia and other countries under their global production systems or GVCs. And yes, the Biden administration has rendered the WTO rules on free trade meaningless by imposing “trade sanctions” on China, Russia, Iran and other countries in the name of “national security.”
Not to be outdone, the European Union has adopted the French proposal for a “Made in Europe” program, which essentially means further strengthening of Fortress Europe and maintaining its major industries such as the Airbus-led aviation industry. It also means maintaining the subsidy-filled Common Agricultural Policy in support of European farmers.
Further, there is a national security concern for the Philippines. The global economic order is witnessing today trade conflicts and disruptions that have serious implications on the country. For example, what happens to the country’s capacity to import critical or essential food items when the sources of these imports refuse to export these products in the name of their own food security program? This scenario has been discussed extensively by our own agricultural scientists such as Dr. Ted Mendoza, who warned that climate change is threatening the capacity of India, Vietnam and Thailand to produce enough rice for export.
The conflicts and disruptions that are dividing and fragmenting the global economic order are widely reported in the newspapers and social media. They include the following: Russia v. Ukraine/Nato/US war, China-US trade war, Opec keeping world oil price high, de-dollarization efforts of countries that are trying to get out of American economic embrace, developed countries reconfiguring existing GVCs in order to re-shore productive investments at home, China’s aggressive program to build a Belt-and-Road trading system that now reaches all the way to Africa and Latin America, advances in AI technology that are making some of the old trading and manufacturing practices superfluous, etc.
Amidst all these trade conflicts and disruptions, shall our economic planners remain wedded to their trade liberalization commitments? Is it not high time to look more closely at what we can do as a people to strengthen our industrial and agricultural muscles in order to insure the country’s survival in a dividing and fragmenting global economic order?
Is it not time to go back to what the Constitution says: build a prosperous and independent economy based on strong industrial and agricultural sectors that are capable of producing quality products and quality jobs for all Filipinos—at home?
Dr. Rene E. Ofreneo is a Professor Emeritus of the University of the Philippines.
For comments, please write to reneofreneo@gmail.com.