Not too fast on TPP

President Aquino was reported to have lobbied President Obama for US support to our bid for inclusion in the Trans Pacific Partnership or TPP and got a polite response. Secretaries Purisima of Finance and Domingo of Trade and Industry both emphasized that our export sector will be disadvantaged if we are left out of the group.

The TPP is an initiative of the US to form a trade group that affects not only tariffs but also services, investment rules, patents (including over pharmaceuticals), agriculture, the environment, and government procurement.

Our Great Leader should really get a complete briefing on TPP not just from his cabinet secretaries but from a wider sector of informed citizens. There are those who think being a member of TPP effectively surrenders some of our sovereignty. The wide scope of the deal includes the right of corporations to sue governments for lost profits due to its regulations. 

It has also been pointed out the Philippines already has existing free trade relationships that we have not fully utilized. TPP also imposes high governance practices that are beyond our ability to comply with in the near future.

For example, Heritage Foundation’s Economic Freedom Index pointed out that our “Domestic companies are favored in government procurement bids. Rice producers are subsidized and protected from competition. Foreign investment in several sectors is restricted.” We can’t reform all that soon enough to qualify for TPP membership.

For regulatory efficiency, Heritage noted that “incorporating a business takes 16 procedures and 34 days. Completing licensing requirements remains time-consuming, taking about three months on average. The labor market remains structurally rigid, with varying degrees of flexibility across economic sectors and regions of the country.”

It is the same results for the 2014-2015 Global Competitiveness Report: regulatory inefficiency and red tape and lackluster rule of law. Mapapahiya lang tayo if we apply for membership now.

Lawyer Jemy Gatdula, who writes on trade law and is a fellow of the Foundation for Economic Freedom (FEF), observed that “First, we really don’t have an issue as to us being plugged into the international trading system, what with our membership already into the World Trade Organization (WTO), in addition to several free trade agreements.

“Finally, the problem is our internal structures that only prevent us from benefiting substantially from international trade. Of what use is Philippine membership in more trade agreements for ordinary Filipinos if they’re bogged down by red tape and high taxes, amidst world-beating-in-being-horrible airports, the world’s worst traffic, slow online speeds, flooding amidst water shortages, and the incredibly bizarre inability to produce simple drivers licenses and passports?”

In other words, Atty Gatdula thinks we ought to do our homework first. He debunks the argument that membership in more trade agreements such as the TPP will provide external pressure for the Philippines to shape up as some people assert. I agree with him. That is sheer wishful thinking.

Atty Gatdula explains: “One, we’ve long been members in other trade agreements and look at us now. So much for external pressure… Finally, as a sovereign country, I don’t see the point in wanting the Philippines rendered vulnerable to international litigation simply because our country can’t do things unilaterally because our government officials can’t muster the political will to do what is right.”

Atty Gatdula is correct to point out that “it is not whether the Philippines should indeed join (we should, clearly) but the conditions in which the Philippines does so.”

A recent article in the Wall Street Journal explains the possible danger that the TPP might pose to our national sovereignty, something Secretaries Purisima and Domingo ignored and P-Noy may be totally oblivious to.

Wall Street Journal: “’Behind the border’ barriers are politically more sensitive than tariffs because they affect domestic policies, from human rights to how much public health systems pay for drugs.

“Classical arguments for free trade are also less relevant: a country that grants foreign drug companies longer patent protection is raising prices for its own consumers, and more restrictive labor laws erode its competitive advantage of cheap labor.

“Yet these sorts of rules are the conditions the US and other advanced countries insist on if developing countries are to have access to their markets. This is why TPP’s significance lies not in its economic impact – modest for most signatories – but how it restricts its members’ domestic sovereignty.”

The same Wall Street Journal article reports that “thousands have taken to the streets in New Zealand to protest potentially higher drug prices and the threat of lawsuits by multinational companies claiming discrimination. Australians have similar concerns.”

Teddy Locsin Jr, in his Teditorial on ANC, reported that “Ralph Nader told Pulitzer Prize journalist Chris Hedges that the TPP is the most brazen corporate power grab in America, and it will go worse for countries like ours…

“TPP allows corporations to bypass the 3 branches of a democratic government, impose enforceable sanctions by secret tribunals, said Nader. These tribunals can declare a country’s minimum wage and labor safety laws, as well as consumer and environmental protections to be non-tariff barriers and therefore illegal.

“Countries will be fined for noncompliance because TPP can compel democratic governments to pay multinationals most of their taxes for protecting their citizens.

“TPP will lift all price controls on essential commodities like food and medicine, while punishing any attempted self-sufficiency as violations of free trade as multinationals will define it—and as violations of global patents on manufactured and natural goods.”

Robert Reich, a former US Labor Secretary confirms that there is a “provision that allows global corporations to sue countries whose health, safety, labor, or environmental regulations crimp their corporate profits. It establishes a tribunal outside any nation’s legal system that can force a nation to reimburse global corporations for any such ‘losses.’

“Big tobacco is already using an identical provision to sue developing nations that are trying to get their populations off nicotine. The tobacco companies are demanding these nations compensate them for lost cigarette sales.”

Why was President Aquino so quick to commit the country to an international trade agreement that is scarcely understood by almost everyone including himself? Purisima and Domingo are worried that some of our exporters, principally our garments industry, will be at a disadvantage in the US market if we are out of TPP.

The thing is… our nearly dead garments industry has bigger problems than tariff. Industry leaders told the FEF it is our wage structure that rendered us noncompetitive in garments manufacture. TPP membership isn’t going to fix their problem.

I am dismayed that Mar Roxas blindly parroted P-Noy again and expressed support for TPP even if it potentially renders our Cheap Medicines law useless. The American drug companies can sue our government for claimed losses because our law, which Roxas claims to have championed in Congress, allowed the generic versions of their products to be sold in violation of their extended or modified patent rights.

An analysis by Public Citizen notes “all TPP countries—regardless of level of development, poverty or wealth—will be required to adopt the TPP’s pharmaceutical IP rules.” Peter Maybarduk, director of Public Citizen’s Global Access to Medicines program said that in sum, “TPP would cost lives.”

The US wants to give drug companies patent term extensions and patent linkage as they apply a product for marketing approval in a TPP country. This would grant an extension of 10 years in addition to the current 20-year patents of existing drugs being modified or renewed for new uses.

Médecins Sans Frontières (Doctors Without Borders), claims that such regulations will grant big pharmaceutical companies “a wide-ranging set of legal mechanisms designed to prolong monopoly protection for medicines and delay availability of more affordable generic versions.”

A letter issued by over 130 members of the US House of Representatives also raised the same concerns on the affordability of medicines in developing countries under the US-proposed provision.

Joining the TPP is not like joining the Rotary Club for mere prestige or for a sense of belonging. It is about trade and it is about sovereignty. P-Noy’s enthusiasm on TPP, even if he has not totally comprehended it, is due to an APEC euphoria.

Now that our hosting of APEC is over, it is time to do real work on everything that will improve our competitiveness in the global market. The work we need to do are more about the boring stuff like improving the way government regulates business by cutting red tape and improving overall governance.

In the end it is all about improving the lives of our people by doing things that enable them to share from the benefits of economic growth. That’s more difficult than just signing off on TPP. That’s what we elected P-Noy President for, in case he forgot.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco