RP gained little under WTO — business execs

Getting the Philippines under the umbrella of the World Trade Organization (WTO) was not bad for the nation’s economic health, but it could have achieved more had it been accompanied with deeper reforms on the domestic front.

This emerged as a common assessment of business leaders and representatives of the academe when their views were sought by government negotiators led by Trade assistant secretary Jose Antonio Buencamino before the weekend.

Consultations with the private sector have been initiated by the Department of Trade and Industry (DTI) as ongoing negotiations over global trade in farm products and services reach the critical stage of working out specific rules.

The negotiations coincide with the WTO’s own soul-searching as a result of protest saying that the new trade order may have favored the rich nations at the expense of the poorer ones.

University of the Philippines professor Froilan Alburo made the most telling observation that increased trade has also increased the incomes of the richest segment of the population, but it widened the gap between the rich and the poor.

He backed his analysis with average family income data before and after the Philippines joined the world trade regulatory body.

"It is not correct to assume that sustained trade leads to income redistribution," Alburo pointed out. He suggested that the government adopt progressive public policy on social issues and invest more on education to bridge the income gap.

He also advised government negotiators to go slow in giving more concessions to the developed world. "Developing countries are made to pay now for gains that the developed countries promised to repay in the year 2005," Alburo said.

Speaking for exporters, the supposed chief beneficiary of trade liberalization and the lowering of import tariffs, Philippine Exporters Confederation president Sergio R. Ortiz-Luis, Jr. blasted off that myth.

"Export growth has always been pictured as the successful impact of trade liberalization," Ortiz-Luis told the negotiators. "Only this year has it seeped into the public mind that our export growth had only been in electronics. There was little growth in non-electronics exports."

He traced the problem of other export goods to declining productivity and the higher cost of doing business in the Philippines compared to neighboring countries.

"The impact of liberalization on exports could have been greater had it been accompanied with the reduction of business cost — among them, simple business regulations and procedures, better road networks, modern ports and irrigation systems, better government extension services, and all the nitty-gritty that goes into lowering transactions costs in the Philippines," the export leader concluded.

Roberto Francia, executive director of the Federation of Philippine Industries, expressed more reservations, arguing that the present trade order may simply lead to a few giant multinationals lording over the world market.

Francia specifically pointed out needed reforms that he called "not taking place." Among them are: the persistence of outright and technical smuggling which is killing domestic industries, and government policy that keeps the cost of inputs and raw materials very expensive.

More specifically, Ortiz-Luis suggested that tariffs on imported raw and packing materials be reduced to zero and sweeping reforms in agriculture be made before the local food processing industry gets wiped out. — Abe P. Belena, Philexport News & Features