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Social clause in trade liberalization : an agenda for the Philippines in APEC Amba-Cuenca, Maria Dulce Cecilia B. 1998

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Social Clause in Trade Liberalization: An Agenda for the Philippines in A PEC by M A R I A D U L C E CECILIA B. A M B A - C U E N C A J.D., The Ateneo de M a n i l a University School o f Law, 1995 B . A . , The University o f the Philippines, 1990 A THESIS S U B M I T T E D I N P A R T I A L F U L F I L M E N T O F THE REQUIREMENTS FOR T H E D E G R E E OF M A S T E R OF L A W S in THE F A C U L T Y OF G R A D U A T E STUDIES (Faculty o f Law) We accept this thesis as conforming To the required standard  T H E U N I V E R S I T Y OF BRITISH C O L U M B I A  September 1998  © M a r i a Dulce Cecilia B l Arrr^a-Cuenca, 1998  In  presenting this  thesis  degree at the University  in  partial  fulfilment  of British Columbia,  of  the  requirements  I agree that the  freely available for reference and study. I further agree that  for  permission for extensive  granted by the  department  understood  by  his  or  her  representatives.  It  is  that  publication of this thesis for financial gain shall not be allowed without permission.  Department of The University of British Columbia Vancouver, Canada  DE-6 (2/88)  advanced  Library shall make it  copying of this thesis for scholarly purposes may be or  an  head of my copying  or  my written  Abstract The institutionalization o f a social clause in an agreement which is binding among the signatories is difficult to support as it always entails having to touch issues like protectionism, and political, economic and cultural hegemony. The barrier o f distrust between the "pro" and the "anti" social clause groups has become too deeply entrenched in the Asia Pacific to elicit a consensus that can be embodied in a ratified agreement. It is i n this light that the A s i a Pacific Economic Cooperation ( A P E C ) forum seems to be a more practicable approach. This, thesis begins on the recognition that A P E C exists and the Philippines is actively participating in it — the critical issue now is to make it an institution that w i l l safeguard labor rights, not contribute further to their violation. Vital to the understanding o f A P E C is that it is more o f a process rather than a solid institution. The A P E C process is consensus-based and therefore functions well as a vessel for the harmonious and beneficial navigation by member economies o f the treacherous waters o f global trade. Because o f the apparent voluntary character of member countries' commitments, some cause-oriented groups consider this process as an opportunity for interjecting social issues in A P E C trade discussions by influencing c i v i l society and thereby ultimately putting pressure on their respective governments to include these issues in the countries' individual commitments. This thesis is divided into four main chapters. The first chapter gives a historical analysis o f the Philippines'journey toward trade liberalization in an increasingly globalizing world economy. The early stages o f the country's trade liberalization program were plagued by a fundamental problem: the policies at the macro-economic level conflicted with the goal o f liberalization, for they were hinged on an unsustainable level o f foreign borrowing and on domestic politics o f corruption and exploitation o f human resource. The second chapter analyses the A P E C objectives o f free trade and the Philippines' trade liberalization commitments within that forum. It is argued that the country's bold and unilateral initiatives toward the fulfillment o f the Bogor Declaration are unsustainable because o f the government's misplaced fundamentals o f competitiveness and lack o f social support measures. The third chapter is a theoretical review of the linkage between the social clause and the liberal trading order with references to the North-South divide. It is argued that given a basically similar rationale — rejection o f protectionism and o f exploitation o f labor — there could be an alternative path between the two opposing camps through which labor rights can be discussed and considered i n a regional trade forum. The concluding chapter explores the different ways with which the labor movement can tap the human development and sustainable development aspects o f the A P E C forum. There is a need to develop and utilize a counter-consciousness in policy making which w i l l inject a critical approach to the Philippines' ardent drive to attain global competitiveness. It is concluded that there is a possibility o f creating a political space for non-government organizations (NGOs), private organizations (POs) and social movements to meaningfully participate in the A P E C process and help i n safeguarding social concerns, particularly labor rights.  Table of Contents Abstract Acknowledgements  ii iv  Introduction A. Objective of the study B. Scope and limitation of the study C. Background of the study  1 - 15  Chapter I: Trade liberalization in the Philippines A. The setting B. The complex road to trade liberalization 1. Import substitution and industrialization 2. The introduction of export - oriented industrialization 3. Exogenous shocks and structural adjustments 4. The political economy of reformism C. "Blazing the trail" toward the free market system D. Conclusion  16 - 49  Chapter II: APEC and the Philippines... A. Introduction > B. The APEC process C. "APEC: Four adjectives in search of a noun " D. The Philippines' commitment to APEC and its emergent effects E. Conclusion  50-78  1  2  Chapter III: The social clause in the globalized economy: The South - North debate 79 - 102 A. Introduction B. The North - South divide in the social clause and world trade issue C. Conceptual disagreement 1. The North perspective 2. The South perspective D. The shifting rationale of the linkage between labor standards and trade... E. Conclusion Chapter IV: The advocacy of a social clause within the APEC regime A. Introduction B. The NGOs' "thirdpath " C. Creating political space within APEC D. Conclusion  103 - 117  Term borrowed from Chapter Four of Robert Dohner and Stephen Haggard's book, cited at note 46. Term borrowed from Walden Bello's book bearing the same title, cited at note 146. The term was coined by former Australian Foreign Minister Gareth Evans. 1  2  iii  ACKNOWLEDGEMENTS  For V i n o and Jae M o m , Dad, Tita, Tez, V i r g i l and Jana too.  Special thanks to Prof. Ruth Buchanan, Prof. Joel Bakan, Prof. Ivan Head, Prof. Bob Paterson, Dr. Terry M c G e e , Prof. Prod Laquian, L L . M . '97, L i l l i a n Ong, Karen, Marietta, Eleanor and Thalie.  IV  Introduction  The issue of the inclusion of a social clause in international trade agreements is not new. Within the General Agreement on Tariff and Trade ( G A T T ) , the topic has been discussed at length by the opposing poles, with minimal success. The institutionalization o f a social clause i n an agreement which is binding among the signatories is difficult to support as it always entails having to touch issues like protectionism, and political, economic and cultural hegemony. The barrier of distrust between the "pro" and the "anti" social clause groups has become too deeply entrenched to elicit a consensus to be embodied in a ratified agreement. It is in this light that the A s i a Pacific Economic Cooperation ( A P E C ) forum seems to be more practicable. The underlying rationale for this thesis is that A P E C exists and the Philippines is actively participating in it — the critical issue now is to make it an institution that will safeguard labor rights, not contribute further to their violation.  Vital to the understanding of A P E C is that it is more o f a process rather than a solid institution. The A P E C process is consensus-based and cooperation is based o n mutual benefit. There is a unity o f purpose, hot approach. A s such, some advocates o f a social clause deem it more workable to champion their cause within this set up. There are no ratified laws or contractual obligations in A P E C . There are no prospects o f trade sanctions for deviant or errant member nations. A P E C members submit their individual commitments toward the realization o f A P E C ' s common vision o f a free trade region. Members at different stages o f economic development  1  are each given specific time frames within which they can liberalize trade i n their own economies. Because o f this apparent voluntary character o f member countries' commitments, some cause-oriented groups consider this process as an opportunity for interjecting social issues in A P E C trade discussions by influencing civil society and thereby ultimately putting pressure on  their respective governments  to include these issues in the countries' individual  commitments.  A. Objective of the study  The aim of this thesis is to present through a case study approach o f the Philippines, how social support measures, particularly those affecting labor, can be interjected in a regional trade alliance such as A P E C which operates on a flexible consensus. Does the A P E C process matter at all in the Philippines' advancement of labor rights as embodied in a social clause in a regional trade arrangement?  The answer to this, the thesis w i l l argue, lies i n how the labor movement  will position itself and the cause they are advocating in the trade forum. This thesis explores the social repercussions arising from trade and liberalization o f the global market on a developing country like the Philippines. The country presents an interesting study o f how a nation struggles to embrace the global economic system while maintaining a firm grip on its own values and identity. This thesis also aims to draw some policy shifts the Philippines can undertake in its quest to participate in international trade.  2  I will argue that the advocacy o f a social clause and the interjection o f social support measures should be pursued in A P E C trade discussions, and more importantly i n the Philippines' individual and voluntary declaration o f commitments towards the realization o f A P E C ' s goal o f a trade barrier-free A s i a Pacific. These steps are essential for the Philippines in ensuring a meaningful participation in the A P E C process and in vigilantly carving for itself a role within this regional economic forum.  Furthermore, 1 w i l l discuss the role of Philippine non-government organizations (NGOs), private organizations (POs) and peaceful and unarmed social movements i n promoting a social clause within the A P E C arena. The Philippine government has unequivocally presented itself as profree trade. The country has identified itself with the pro-free trade Northern bloc o f A P E C which includes the U . S . , Canada, N e w Zealand and Australia. But as far as social clause and human rights issues are concerned, it is in harmony with its A S E A N neighbors like Indonesia, Malaysia, and Thailand, categorized as the less developed Southern bloc, which are opposed to including such issues in trade forums. It is because o f this diametrically opposed loyalty that there is a need to tap whatever persuasive strength can be derived from Philippine N G O s , POs and social movements. These groups have played a significant role i n Philippine society for they have shown considerable ability to influence government policies and effect political changes at various stages o f the country's history. Another important goal o f this study is to encourage a meaningful and beneficial participation o f the Philippine labor sector in the process o f trade liberalization and trade discussions within A P E C .  3  B. Scope and limitation of the study  The topics o f globalization, trade liberalization, A P E C and the social clause are very complex and distinct. However, for purposes of this thesis I w i l l not discuss the validity o f globalization, whether it is inevitable or preventable, or whether or not nations should participate in it. This thesis works on the premise that globalization is happening: as a consequence o f which, nations engage i n trade liberalization. I w i l l also work on the premise that A P E C exists and is fast gaining momentum. I will not justify its existence nor reject it entirely. N o w that the Philippines finds itself in this APEC/trade liberalization nexus, the focus should be on what the country can do to make the most out o f its participation in this regional alliance — with the best possible benefit to Filipinos and without sacrificing the interest o f its labor sector.  The discussion is limited to the Philippine experience in liberalizing trade. There w i l l be a historical analysis o f the Philippine trade liberalization measures from the 1950s until the present. Focus w i l l be on the country's declared commitments to the A P E C process, excluding other regional trade alliances the Philippines is engaged in, such as the W o r l d Trade Organization ( W T O ) , the Association o f Southeast Asian Nations ( A S E A N ) , and the A S E A N Free Trade Agreement (AFTA). However, .there will be some historical references to these other regional alliances in the discussion on the linkage between trade and labor rights.  4  This thesis is divided into four main chapters. The first chapter gives a historical analysis o f the Philippines'journey toward trade liberalization i n an increasingly globalizing world economy. It will be learned that the early stages of the country's trade liberalization program were plagued by a fundamental problem: the policies at the macro-economic level conflicted with the goal o f liberalization, for they were hinged on an unsustainable level o f foreign borrowing and on domestic politics of corruption and exploitation o f human resource. The chapter also examines the obstacles to the increased participation o f the Philippines in the international trading system and what measures and steps the country has undertaken in the process o f opening up its market for international trade. The effects o f these initial efforts and steps on the Philippine economy and labor w i l l also be analyzed.  The second chapter reviews and analyses the A P E C vision and objectives o f free trade and the Philippines' trade liberalization commitments within that forum. This chapter explores and analyzes the following issues: the Philippines' commitment to the A P E C goal o f a free trade area by the year  2020;  the legislative actions directed towards the achievement of this goal; A P E C ' s  commitment to the social clause; labor's role in A P E C ; and the emergent effects on Philippine society, particularly on the labor sector, o f these trade liberalization measures committed to the A P E C process. It is concluded that the country's bold and unilateral initiatives toward the fulfillment o f the Bogor Declaration are unsustainable because o f the government's misplaced fundamentals o f competitiveness and lack o f social support measures.  5  The third chapter is a theoretical review of the linkage between the social clause and the liberal trading order with references to the North-South divide. It is argued that given a basically similar rationale — rejection of protectionism and of exploitation of labor — there could be an alternative path between the two opposing camps through which labor rights can be discussed and considered in a regional trade forum. This chapter starts with an examination of the North South divide in the context of world trade particularly regarding the social clause. This backdrop is used as a convenient terminology as the Philippines is unmistakably representative of the South. It then discusses the debate on the relationship between trade liberalization on one hand, and international standards and the social clause on the other. The linking of trade with human rights and labor standards will also be historically outlined while analyzing the rationale behind the introduction and failure of the initial effort at the linkage.  The fourth and concluding chapter is aimed at how the issue of labor rights or the social clause can be advanced in the APEC arena. This chapter explores the different possible ways with which the labor movement can tap the human development and sustainable development aspects of the A P E C forum. It will be stressed that there is a need to develop and utilize a counterconsciousness in policy making which will create a critical approach to the Philippines' ardent drive to attain global competitiveness. There will be a discussion of the alternative forms of bringing about free trade through policy-making rooted in local tradition, democratic decentralization and accountability and maximum participation from the people's movements.  6  It w i l l be concluded that there is a possibility o f creating a political space for N G O s , POs and social movements to meaningfully participate in the A P E C process and help in safeguarding social concerns, particularly labor rights.  C. Background of the study  The phrase "social clause in trade liberalization" has been touted as an oxymoron. For some, the mere mention o f the global economy invokes a specter o f multinational corporate monsters devouring the poor o f developing countries. Globalization's three elements — trade and investment liberalization, deregulation and privatization — are widely seen by its critics as the nefarious tools o f structural adjustment which are forced on developing countries by the developed countries as "modern-day imperialists". This thesis, however, does not seek to validate these claims nor to defend the whole concept o f a free market economy. These negative impressions o f a new global marketplace stem from the fact that economists and strategists have alienated the process o f globalization from the workforce. Thus, pro-market reform is seen as an indiscriminate and radical "corporate agenda" in blatant disregard o f the working class' rights and welfare. It is also viewed as a concerted effort of a sinister club composed o f approximately 40,000 transnational corporations operating the world over, the top 200 o f which control over  7  a quarter of the world's economic activity. These corporations which operate internationally are 1  reported to have a revenue o f $7.1 trillion which is bigger than the combined economies o f 182 countries. Indeed, this massive wealth, which is almost twice the combined income o f the 2  bottom four-fifths o f humanity, suggests a system where corporate greed rules. A s such, 3  whatever changes that may occur and programs which are initiated are always seen as an imposed strategy of development totally removed from the experiences o f the human machinery which runs the trade.  In the T h i r d W o r l d experience, this notion o f development is considered by some grassroots people's movements as an ethnocentric imposition of the First World's precept of progress. There is a growing resistance to the imposition o f development which is seemingly oblivious o f workers' interests. Critics o f this Western precept o f progress believe that it only serves the needs of the prosperous industrialized countries. The developed world's tenacious preoccupation with opening up the markets o f developing world for the purpose o f improving its own economies represents the hegemonic nature o f the current process o f global change.  Clarke, Tony. 1997. "Global corporate rule: Unmasking the political agenda of transnational corporations in APEC and the process of globalization." Paper presented at People's Conference Against Imperialist Globalization, Vancouver. B.C., Canada (November). 1  2  Ibid.  ''Ibid.  8  A t this juncture, it is clear that there is a need to reconstruct a vision o f development which w i l l champion the diversity, complexity and needs o f participating economies in the process o f globalization. Only then would people's movements in the developing economies truly participate i n creating their own destiny and i n moving towards the alleviation o f poverty. Only then can there be economic growth and market competitiveness with equity.  A s the Philippines continues to convalesce from the Asian economic contagion, it nevertheless 4  stands firm on its commitment to further liberalize its trade policies to remain competitive in the global market. It is now difficult to find a foreign analyst who is negative on the Philippines despite the fact that it was once touted as the laggard among its Southeast Asian neighbors.  5  Optimism is based on the spate o f good news against the backdrop o f a region-wide crisis: a stabilizing peso, a declining current-account deficit, 23 per cent growth export, $10.8 billion i n foreign revenues equal to a comfortable 2.3 months o f imports. The country recently elected 6  its thirteenth president, Joseph Estrada, in a generally clean and honest election. Analysts also credit former president Fidel Ramos for getting the lights back on in the Philippines: he dismantled a number o f monopolies and cartels, made peace with M u s l i m rebels o f the M o r o National Liberation Front ( M N L F ) and has started a dialogue with the communist National Democratic Front (NDF). Ramos, a former Armed Forces of the Philippines C h i e f o f Staff, also 7  Laquian, Aprodicio A. 1998. The Centennial President. Institute of Asian Research, University of British Columbia and College of Public Administration, University of the Philippines. Lopez, Antonio. 1998. "Rite of passage" Asiaweek 24 (15) (17 April): 58. Ibid. Asiaweek Editorial. 1998. "Followthe leader". Asiaweek24 (6) (13 February): 14. 4  5  6  7  9  ended threats o f military coups by reconciling right-wingers to the government. He launched "Philippines 2000", a program which aims to make the Philippines a tiger economy by the turn of the century.  Although by no means immune to the economic storm ravaging the Asian region, the Philippines is weathering it better than other nations. President Estrada, barely a month in office, promises 8  to continue his predecessor's economic reforms, particularly those which strengthen the country's drive to be more competitive in the global market. He vows to go along with free trade because he believes this is the only way to keep abreast with the country's Asian neighbors. H e plans to calibrate the country's tariff reduction program, simplify rules for business and investments, and give assistance to local industrialists.  9  One of the most positive achievements of the country that gives it stellar points among economic analysts is the fact that the Philippines has just ended 35 years o f tutelage under the International Monetary Fund (IMF) last March 1998. The country's "graduation" from the I M F came at a time when its Asian neighbors like South Korea, Indonesia and Thailand were just starting with their restructuring program with the I M F . A s a caveat, however, the Philippines also signed up for a two-year I M F precautionary agreement that w i l l give it access to $1.37 billion i n case o f  8  9  Ibid. Asiaweek. 1998. "The nations: Philippines". Asiaweek 24 (21) (29 May): 94.  10  emergencies.  10  But market analysts still view this with optimism as it w i l l ensure that the  country "is not going to get knocked by broad-based shifts in market sentiment."  11  This optimistic scenario, however, is o f little significance to the common folk in the Philippines. The National Statistics Office o f the Philippines (NSO) recently reported that unemployment in the country rose to a seven-year high o f 13.3 per cent.  12  The N S O gave no reason for the  alarming increase, up from 10.4 per cent a year ago, but the unemployment rate came i n the wake o f the economic slowdown which economists attributed to the peso devaluation, the Asian crisis, high interest rates and the ravaging o f the agricultural sector by the E l N i A o weather phenomenon. Philippine society is characterized by social fragmentation. 13  14  The main division  i n Philippine society is socio-economic: the richest twenty per cent o f Filipinos owns 50 per cent o f the wealth while the bottom 40 per cent have only 17 per cent.  15  Some Filipino economic analysts also question the assertion o f the Ramos administration that the reason why the Philippines was less hurt by the Asian economic crisis is because the country's economic fundamentals were right. This claim supports the Philippines' unwavering 16  commitment to be globally competitive by further liberalizing trade. In debunking the past Lopez, supra. Ibid. Canuday, Jowel. 1998. "Seven-vear high: 4.3M Pinovs have no jobs due to crisis." Philippine Daily Inquirer (17 June). "Ibid. Laquian, supra. Ibid. Ibid. 50 11  12  14 15  >6  11  administration's claim o f having sound economic policies that kept the Philippines somewhat buoyant amidst the crisis, these analysts likened the situation i n Asia to two vehicles. "The 17  Philippines, with a G D P growth rate o f 5 per cent is like a car travelling at 50 kph while another country, say Thailand with a double-digit G D P growth rate, is like a car travelling at 100 k p h . "  18  Thus, i f both cars meet an accident, the slower car sustains less damage. It does not necessarily 19  mean however that the slower car is better that the faster one.  20  Another explanation is that  unlike it's Asian neighbors, the Philippines did not have the credit rating nor the economic vigor to sign up billions in private foreign debt to venture into speculative assets which triggered the Asian economic f l u .  21  ) Furthermore, Ramos has managed to conceal his administration's shortcomings under the guise of seeming economic stability because o f several other factors. One is the E l N i n o phenomenon which can be blamed for massive environmental destruction and low agricultural yields. Another is the Asian currency which is a plausible and an easy excuse for the rising unemployment rates and inflation. With these external forces at hand, it is easy to make false claims and assert that the country has been pursuing the correct road towards progress and economic recovery. One of the biggest hurdles in pushing the country forward is not the lack o f political w i l l to resolve the country's problems; rather, it is the inability to accept the magnitude o f the country's  ibid. Ibid. Ibid. Ihid.  17 xs  19 20  21  Asiaweek Editorial, supra.: 17, note 7.  12  problems and the fact that the past administrations have failed in addressing them. There is no true assessment of where and why Ramos' as well as the past presidents' administrations failed. This prevents Philippine governments from achieving a better prescription for saving an ailing economy and pursuing alternative paths to development.  In his first ever State of the Nation Address delivered on 27 July 1998, Estrada gave a grim but realistic account o f how and where the nation he had just began to lead stood. It was the first time in history o f Philippine politics that a president admitted and accepted the magnitude o f the country's problems. He said that the previous administration left a monstrous budget deficit and an even bigger foreign debt. The economy was in shambles and is in fact bankrupt i n the midst o f a region-wide financial storm. Unemployment is on the rise. The gap between the rich and the poor continues to grow in a system that allows the rich their privileges while the poor are driven to deeper impoverishment. The speech was a much needed wake-up call i n the midst of the favorable economic forecasts foreign analysts had been giving to the Philippines. Estrada's acknowledgement o f the country's predicament was the first step in the right direction something that past administrations refused to do. But Estrada's candor started and ended there. H i s address lacked any consideration o f long term solutions or a careful assessment o f past administrations' failure in salvaging the country from the economic rut. Instead, like his predecessors, he punctuated his speech with the usual prescription for expediting globalization through bolder liberalization measures. Estrada's "wake-up call" accomplished nothing more but  13  to evoke an air o f panic which now makes it easy for anyone to believe in any o f his offered prescriptions.  The different forecasts on and assessments o f the Philippine economy are due to the glaring economic disparity in the Philippine society. The discussion o f a country's struggle for economic recovery is never complete without taking into consideration the effects it has on the marginalized sectors o f the society — the poor, the workers and the farmers. The gap can be bridged only by political commitment to position social justice at the same level as fiscal and 22  trade reforms. President Ramos had always emphasized the necessity o f maintaining an open economy while cushioning its impact on the poor.  23  President Estrada now stresses that the  thrust o f his new government is to share the country's wealth with the greatest number o f Filipinos, to give equal opportunities to everyone and to be unwavering i n its dedication to the poor. He also hopes to reduce poverty by 50 per cent during his term o f office which lasts for 24  25  six years.  Are a l l these simply empty rhetoric? Where and how does the common Filipino place i n the quest for the fruits o f global trade? Is the Philippines compromising too much too soon at the expense of the common folk, particularly the millions o f Filipino workers that make goods for  22 23 24 25  Lopez, supra, note 5. Asiaweek Editorial, supra. Asiaweek, supra. Ibid.  14  export? What is the government doing to cushion the effects o f trade liberalization on the workers? Does social justice really play a major role i n the country's trade liberalization policies? These are some o f the vital issues this thesis aims to address.  Indeed, globalization rewards as well as punishes. The Philippines has, to some extent, benefited from trade liberalization. It is slowly de-robing itself from its "sick man o f Asia" tag. However, it cannot be said that all Filipinos can lay claim to the fruits liberalization has to offer. Some sectors o f the society, particularly labor, have suffered from the process. Thus, a social protection scheme is an imperative.  15  Chapter I  Trade liberalization in the Philippines  This chapter presents a historical perspective on how past Philippine administrations have constructed their trade liberalization policies with outside influences. It is shown that the articulation of trade policies is a product of the combined exogenous forces o f colonialism, postcolonial geopolitics, global capital, socio-economic integration and transnational and multinational institutions.  A. The setting  The Philippines celebrated its 100 years o f independence from Spanish colonial rule last 12 o f t h  June 1998. Home to 72 million Filipinos, this archipelago comprising o f over 7, 100 islands, 26  weathered over three centuries o f Spanish colonization, 42 years under American rule and four years o f Japanese occupation. The United States formally acquired the Philippines at the turn of the century after crushing a national liberation struggle by Filipino revolutionaries that freed the islands from Spanish colonial control. From 1899 to 1941, the Philippines was transformed 27  into a colonial dependency of the United States. Thus, the recent centennial celebration o f the 28  Laquian, supra (NSO reports a 2.3 percent increase in Philippine population per year), note 4. Bello, Walden, David Kinley and Elaine Elinson. 1982. Development debacle: The World Bank in the Philippines. Birmingham, England: Third World Publications: 7. 2 6  21  *Ibid.  2  16  Philippines may seem anachronistic in the light o f American control. However, Filipino historians and past governments have widely accepted that romanticized moment in history when Filipinos rose up against the first colonizers as the actual moment in history when the Philippines gained independence.  The A m e r i c a n period saw the expansion o f the landlord-tenant system at the expense o f the freeholding sectors of the peasantry. This form of oppression sparked peasant resistance which 29  was, however, interrupted in 1941 by World War II and the Japanese occupation. A t war's end, 30  formal independence from the United States was declared and a constitutional democratic form of government was formed. It can be argued that for some time, the United States secured a 31  semi-colonial grip on the Philippines through its right to maintain, by virtue o f a treaty, over 20 military bases and installations in the country. U S citizens enjoyed equal rights to Filipinos to exploit the country's natural resources.  32  In 1991, however, the Philippine Congress, in a  milestone decision, voted not to renew the United States - Republic o f the Philippines Military Bases Treaty. The former U S bases have since been converted into a bustling freeport zone. The Philippine Congress, particularly its nationalist members who voted against the renewal o f the treaty, was commended for this decision. However, much o f the credit was attributed to the strong mass based movement o f various N G O s and POs which vigorously took the streets and  ibid, '"ibid. " Ibid. Ibid. 19  i2  17  rallied against it. T o appease an angry citizenry, the Congress felt it had the moral duty to heed the call o f the people.  It was in this century-long struggle that the Philippine nationhood was formed.  33  Filipino  nationalism is a powerful force, deeply rooted in the country's history, i n the Filipinos' struggle against oppression and foreign intervention, and i n the struggle for freedom, democracy and independence.  34  The past five years saw a new Philippines emerging from the ruins o f political turmoil and missed economic opportunities which plagued the country for the past three decades. Freed 35  from the isolation from the international financial community and in the new climate o f political stability, the Philippines is now starting to gain strength from the renewal o f investor confidence. Behind this optimism is a new sense o f rejuvenation sparked by a restructuring o f 36  the economy from an inward-looking, protectionist orientation o f the past to a more open trade environment.  37  Constantino, Renato, et. al. 1991. A Filipino vision of development: Proposals for survival, renewal and transformation. Quezon City, Philippines: Foundation for Nationalist Studies: 9.  3 3  /bid. 3 5  36 37  Galang, Jose. 1996. Philippines: The next Asian tiger. London: Economy Publications PLC: 1.  Ibid. Ibid.  18  B. The complex road to trade liberalization  1. Import substitution and industrialization  The 1950s saw a burst o f industrialization which was started by government import controls.  38  These controls were aimed to protect domestic manufacturers o f consumer goods from foreign competition.  39  It was the start o f the Philippines' long and complex travail to economic  modernization through "import-substitution industrialization." The short period o f dynamic 40  growth in industrial production misled the country's leaders into prolonging the importsubstitution stage while trying to attain substantial economic progress. to the next step  41  They failed to move on  an export-oriented strategy that could have led to substantial growth and  channeled more locally manufactured goods into the global market.  42  Tighter import control  continued for the protection o f domestic industries. This regime, however, made the economy less open. While the country tried to perpetuate this economic strategy, its Asian neighbors started opening its doors and servicing the foreign market.  Boyce, James. 1993 The Philippines: The political economy of growth and impoverishment in the Marcos era. London: The Macmillan Press Ltd.  38  39  4 0  Ibid. Galang, supra: 14, note 30.  Ibid. Ibid.  41 n  19  The industrial growth based on "import substitution" stagnated by the 1960s. This scheme o f 43  import and foreign exchange restrictions disfavored non-essential manufactured imports. '"Since the controls only targeted imports and not foreign investment, a number o f U S companies dominated the Philippine manufacturing sector. True industrialization was far from being achieved as industrial facilities set up in the country were merely assembly plants for goods manufactured by foreign companies. A n overvalued exchange rate and tariff protection were employed for some time to protect domestic industries while the country's Asian neighbors were already gaining headway i n the export market.  45  The share o f imports and exports i n G N P  decreased from 15 per cent at the start of the 1950s to a mere 10 per cent by 1960. The import 46  substitution scheme virtually collapsed. The predominant bulk o f studies o f the country's economic policies during the post-war period is unanimous that the inability o f the economy to grow rapidly is due to this scheme.  This period sparked the creation o f a small Filipino entrepreneurial elite which controlled a sizeable chunk o f the national income. This fragile group however was dwarfed by big U S firms like Proctor and Gamble and Mead Johnson which had set up shop in the company. The strong 47  presence o f U S firms was due to the still semi-colonial relationship between the Philippines and the U S and the lack o f nationalist controls on investment despite protectionist measures on  4 3  44  45  Bello. Development Debacle...supra: 129, note 27.  Ibid. Galang, supra, note 35.  "Ibid. 47  Bello. Development debacle, supra: 132, note 27.  20  imports. The dominant U S presence in manufacturing pumped out capital rather than bring it in the country. The Philippines' participation in manufacturing and industrial sectors was limited to producing foreign brands and local products designed for domestic consumption. The production o f Philippine firms was limited to light manufactures like shoes, textiles and processed foods and finished consumer goods while the intermediate and capital goods sectors were slight i f not non-existent.  48  Such reality made the country more dependent on foreign  currency, imported intermediate and capital goods as well as industrial raw materials. It was a vicious cycle which further pulled the country into the rut from which it wanted desperately to escape. What should have complemented this import substitution scheme were stricter measures to support and protect Filipino-owned industries and the encouragement of the creation o f a truly Filipino industrial and manufacturing sector.  2. The introduction of export - oriented industrialization  The lifting o f import and foreign exchange control and currency devaluation in the early 1960s marked the country's first episode o f trade liberalization. However, these policy reforms did 49  not alter very much the strong support scheme enjoyed by consumer goods industries producing import substitutes. The reforms were effectuated by pressures from the World Bank and the I M F as part o f the structural adjustment program accompanying a loan agreement with the said  Ibid. Bautista, Romeo. 1989. Impediments to trade liberalization in the Philippines. London: Trade Policy Research Centre: 8.  21  institutions. They were to be the initiation o f the Philippines into the road to liberalization in a neocolonial international order. These reforms also started to expose the country to external procedures and institutions that were to make significant impact on the socio-economic and political scene.  The effect o f the reforms on labor and the rising Filipino entrepreneurial class was harsh and oppressive.  50  Wages declined by 10 per cent.  51  There was a relatively low share o f  manufacturing sector in employment. "The large share o f workers in agriculture and services, 52  coupled with a high population growth rate, reduced pressure on real wages and had the effect o f weakening labor's market and political power."  53  Some 1,500 Filipino entrepreneurs were  forced into bankruptcy brought about by the doubling in the peso cost o f imported raw materials and repayments on foreign loans.  54  Before the implementation o f such reforms, the country rode on the crest and troughs o f competing policy prescriptions in a distinct way. The nationalists and leftists groups called for stricter regulation o f foreign investments massive income redistribution to create a market big enough for a sustainable industrial growth. The opposing group, on the other hand, prescribed 55  Bello. Development debacle...supra: 131, note 27. Ibid. Dohner, Robert and Stephen Hagard. 1994. The political feasibility of adjustment in the Philippines. Pans: Development Centre of the Organization for Economic Cooperation and Development: 23. Ibid. Bello. Development debacle... supra: 132, note 27. Ibid.: 130 50 51  52  53  54 55  22  liberalization that would dismantle protectionist barriers to imports and attract foreign investment and capital. Then President Diosdado Macapagal did a balancing act o f giving in 56  to I M F pressure: he lifted import controls, freed exchange rates, but at the same time retained many elements o f the import substitution program. This convoluted and aimless compromise o f policies left the country burdened with a high inflation rate and a stagnant economy. It also started strong social unrest.  Still determined to free the Philippine economy from protectionist policies, the I M F once again pushed for liberalization with the promotion o f an alternative to inner-directed nationalist industrialization called "export-oriented industrialization." During the late 1960s, under the 57  Marcos regime, three important pieces o f legislation paving the way for an export-oriented industrial development program were passed: The Investment Incentive A c t o f 1967 (Republic A c t 5186), which established the Board o f Investments and gave preference to investors in export-oriented production; the Export Incentives A c t o f 1970 (Republic A c t 6135), which gave additional incentives to exporters; and the Foreign Business Relations A c t o f 1970 (Republic Act 5455), which removed restrictions on the repatriation o f profits. In 1969, legislation was 58  passed creating the "Export Processing Zone" which promised investors a package o f cheap labor, duty-free raw materials and intermediate goods imports, corporate tax holidays,  Ibid.: 131 -"Ibid.: 133 Ibid.: 134-135 56  ss  23  permanently subsidized infrastructure, ready-made buildings for rent or purchase and accelerated depreciation rates on fixed assets.  59  The political landscape changed drastically when Marcos declared Martial L a w in 1972. Martial rule was enforced so that Marcos could maintain power and implement his policies swiftly and without chance o f opposition. It was also utilized to stem the tide o f discontent and social unrest unleashed by growing mass poverty. This was achieved by his government by debasing basic human rights.  The World Bank and the I M F supported Martial L a w as it was thought to  expedite the country's liberalization measures. Through Martial Law, Marcos and the I M F were each able to pursue their own political and economic agenda at the expense o f the public interest. This era spawned dramatic economic, social and political policy aberrations that were to have lingering adverse effects on Philippine society.  Through incontestable presidential decrees, Marcos created a political culture o f "crony capitalism" by dispensing monopoly privileges and behest loans to his coterie o f friends and relatives. The flow o f money from the I M F supported this regime and bred a system o f corruption, greed, exploitation and inefficiency. The concerted internationalist role o f the Marcos government and the institutionalized external forces like the I M F and the World Bank spawned a dialectic relationship o f agency and dependency. The two financial institutions needed a leader like Marcos who doggedly followed and believed their economic prescriptions.  59  Ibid: 135.  24  Marcos in turn acted as agent o f and was dependent on the I M F and the W o r l d Bank to support the perpetuation o f his dictatorial rule and to further enrich himself and his coterie o f cronies by siphoning the loaned funds to his benefit. Marcos crony firms dominated the importsubstituting manufacturing sector as well as the export sector, specifically in auto assembly, peroxide, cigarette filters and coconut-related chemicals. These crony firms were also heavily 60  represented in agriculture, construction, shipping and finance. B i g industrial enterprises owned 61  by non-crony entities were nationalized and formed into state-owned corporations like M a n i l a Electric Company and National Steel Company.  62  Marcos' dictatorial tactics in enriching himself further incensed an already indignant non-crony private sector, the middle-class consumers and the oppressed labor sector. The sentiments o f these groups were galvanized by massive protests and civil disobedience directed at government corruption and mismanagement. The iron rule o f Martial L a w was not enough to temper and stop the various street protests, rallies and demonstrations. These groups which had the Marcos dictatorship as their common enemy gained more strength following the assassination o f popular Marcos critic and arch rival Benigno Aquino. Their unified strength also played a big role in the lifting o f Martial L a w and the historic People Power Revolution which brought down the dictatorship.  Doliner. supra: 21, note 52. Ibid. Ibid.  25  Once again, the impact of the reforms on the labor sector was oppressive. Cheap, repressed labor was one o f the most important factors o f the export regime. The W o r l d Bank admitted i n a confidential report that "the basic objective o f the government's wage-price policy (of exportoriented industrialization) has been to promote the growth o f employment and investment through... wage restraint." Moreover, relative factor pricing was biased against labour use and, 63  as such, the fiscal incentives given to enterprises tended to have a "capital-cheapening" effect.  64  The system relied heavily on the country's strong resource base and its comparative advantage owing to skilled and low-wage labor.  65  The oppressive labor reforms were made possible  through Presidential Decree N o . 823 which enforced a strike ban in "vital industries" - a term which encompassed virtually all types o f industries. The ban was also reinforced by tight 66  restrictions on the organization o f labor unions. To control the labor force and purge militant elements i n the workforce, the government established one giant labor federation per industry in the guise o f "nationalizing labor-capital relations." A Labor Code extremely biased in favor 67  of employers was also instituted. The labor specific oppressive laws and administrative acts 68  made possible the following: arbitrary suspension and lay-off o f workers; hiring o f workers with  6 3  6 4  6 5  Bello. Development debacle... supra: 132, note 27. Bautista, supra: 15, note 42. Bello. Development debacle... supra: 142, note 27.  *Ibid.  f  Ibid. ("As part of this effort, the government sponsored the formation of the Trade Union Congress of die Philippines [TUCP] to assist the Ministry of Labor in efforts to control the labor force and purge militant unions. The TUCP-Ministry of Labor combine [sic] refused recognition to 5,640 out of 7,000 registered unions and labor federations, resulting in the dissolution of many and the harassment of others by the government.") Ibid: 143. (To illustrate how the Labor Code was invoked extremely in favor of the interest of the management and die government at that time, Bello further explains: "Among the most controversial provisions of this code was the 'preventive suspension' of any worker who 'poses a serious danger to the life or property of his employer.' Not surprisingly, the clause has been extensively invoked; in 1977 alone, for instance, 6,000 trade unionists were placed on the 'preventive' blacklist. Management could afford to be arbitrary in employing this weapon, for out of every 1,000 cases of preventive suspension, The Ministry of Labor decided only 13 in favor of workers.") 61  68  26  only 75 per cent o f the basic minimum wage: creation o f aberrant employee status such as "permanent casuals;"  69  changing o f the system o f industrial relations in ways unfavorable to  labour; and the institution o f a tripartite collective bargaining pattern that strengthened the 70  government's power and discretion in wage settlements. The export industry also brought about 71  the feminization o f labor. Most manufacturing companies preferred to employ women because they posed no threat to management as they were less inclined to j o i n and form labor organizations and other union activities.  72  B y the end o f the 1970s, the Philippines gained insurmountable competitive edge i n labor costs for having the "cheapest [wage] in the world."  73  Non-traditional manufacturing exports  continued to grow at 33 per cent per year and by the 1980s they were responsible for more than 32 per cent o f total export earnings.  74  But someone had to pay the price o f industrial  development. The brutal reduction in the real income o f Filipino workers, the World bank Poverty M i s s i o n itself ironically reported, was "startling."  75  Ibid. ("[The] Labor Code [which has since been amended] allowed employers to pay new employees only 75 per cent of the basic minimum wage during a six-month probation period. After this probation period, workers were supposed to graduate to full pay. It was common practice, however, for employers to fire workers just prior to the close of the 6-month probation, then rehire them on a probationary basis to get around paying the full wage. Many workers became so used to this practice that they jokingly referred to themselves as 'permanent casuals'.") Dohner, supra: 23, note 52. (There were increases in penalties to workers for breaking the law and management was given greater leeway infiringemployees.) 69  7 0  Ibid.  n  7 2  73 74 75  Bello. Development debacle... supra: 144, note 27.  Ibid: 146. Ibid. Ibid.  27  3. Exogenous shocks and structural adjustments  In the 1980s the Philippines experienced economic collapse brought about by internal and external factors: the world-wide o i l crisis, the country's $4 billion account deficit and $15.2 b i l l i o n external debt, increased protectionism in major international markets, the decline o f 75  the G N P growth rate to twenty-five percent a year , and the overall deteriorating living 77  standards o f Filipinos which once again strengthened political and social unrest. H i t on a l l sides by these factors, economic growth in the Philippines was dismally low compared to its Asian neighbors. Before the end o f the decade, it had practically reached a standstill.  Marcos once again sought the World Bank's aid through the Structural Adjustment Loan ( S A L ) . Trade liberalization during this time was a part o f a large scale program o f restructuring the protectionist domestic industry. Through this program, the country was granted access to credit designed to improve industrial efficiency and to work out a tariff reduction program to attract certain manufacturing industries.  78  The lending agreement was made conditional on the  enforcement o f policy reforms for the improvement o f resource utilization and global competitiveness o f domestic industries. Under the financing accommodation scheme, the government was also compelled to live within its means by trimming its deficits on the balance of payments and its national budget. Ibid. 165. Ibid. Galang, supra: Ibid.  79  The S A L was projected to be the "final offensive against  1G 77  7 8  79  16, note 35.  28  protectionism and an effort to fully consolidate export-led industrialization." It was designed 80  to liberalize commodity import procedures and tariff reform to strengthen fiscal incentives for exporters, and to expedite administrative actions to promote and facilitate exports.  81  Several  reforms also allowed foreign companies to acquire capital through loans from local savings, the concentration o f capital and the further devaluation of the Philippine peso. Access to the loans 82  was largely given to big foreign and crony firms. This led to the eventual closing o f smaller domestic firms which simply could not compete with the volume o f production and cheaper goods provided by the giant corporations. A concrete example o f this trend happened in the textile industry. About 46 per cent of the work force in the garment and textile sectors lost their jobs because of the closing o f the small domestic firms.  83  The reforms proved to be ineffective  in creating jobs and a strong domestic industrial sector.  The Philippines during late 1970s and early 1980s experienced the continuing wide labor unrest which could no longer be tamed, not even by the repressive force o f Martial Law. Workers defied the strike bans and were successful at shaking the export sanctuaries o f the Export Processing Zones. Despite a strict rule against strikes and labor organizations, militant labor unions were able to thrive i n these supposedly "strike-free" industrial zones. There were widespread labor and human rights violations through arbitrary arrests and illegal detention o f  Bello. Development debacle...supra: 167, note 27. Ibid. Ibid. Ibid: 171  8 0  81  S2  S3  29  union leaders and strikers. However, the labor sector was able to drive home its point which eventually compelled Marcos to lift Martial L a w on 17 January 1981.  Loans from the World Bank supported dismal investments and instead facilitated capital flight.  84  This spun billions o f dollars in private external assets and public external debts. Most o f the 85  investments i n the country were o f poor planning and quality as they were merely used to acquire foreign loans with the objective o f diverting a percentage to safe havens abroad.  86  A  monumental example of this scheme is the Bataan Nuclear Power Plant, costing over $2 billion, which never generated a kilowatt o f electricity and remains, until this day, a mammoth o f a "white elephant."  The imposed austerity measures gravely affected those who shared least in whatever few benefits liberalization measures produced. Most of the big businesses and enterprises that were 87  enhanced by the S A L and which were actively participating iri the export-led liberalization scheme were crony firms or dummy corporations owned by the Marcos family. Thus the political w i l l behind the trade liberalization program during this era was not backed by sound macro-economic policies but by the personal interest o f the ruling class. "... Marcos continued  14  Boyce. supra: 348. note 38.  "Ibid, Ibid. "Ibid. 16  30  dispensing economic largesse to favored groups and... [pjopular disenchantment continued to grow." In 1986 Marcos was ousted i n a nearly bloodless "People Power Revolution". 88  4. The political economy of reformism'  Marcos left the country a legacy of $25 billion in foreign debts , heavy taxation on agricultural 90  products, debt servicing problems, a greatly devalued peso, and a corrupt political and economic system o f bribery and extortion. Corazon Aquino, Marcos' successor, was burdened with the great expectation o f rising from this rubble and remedying the ills o f the country. Aquino was president from 1986 to 1992. She was credited for restoring democracy and the rule o f law which were debased during Marcos' authoritarian rule. However, she was not able to effectuate the much needed reforms expected from an administration which was put in office by a popular and peaceful people's revolt. After all, Aquino was a captive o f her class — the old rich landlord class.  91  She signed a land reform law that was watered down by the landlord-dominated  Congress. Thus, lacking in political conviction and carefully planned economic philosophy, 92  **Ibid. Dohner, supra:. 68, note 52. "The estimated external debt of the Philippines in 1998 | is] US$51.9 billion according to the Central Bank of the Philippines," (Laquian, supra: 34, note 4) Bacani, Cesar and Antonio Lopez. 1998. "Unfinished Revolution." Asiaweek 24(23)(12 June): 72. Ibid. (Mrs. Aquino could have implemented a land reform law that would truly distribute land to the farmers through Presidential Decrees or Uie emergency powers accorded to her during herfirstyears in office which was termed as "Freedom Government" (as it immediately succeeded the popular people's revolt). But instead, she passed this task on to the landlord-dominated Congress. She belongs to a family of large sugarland owners. Thousands of hectares of land belonging to her family would have been directly affected by the proposed distribution of land. Through the new land reform law passed by the Congress, rich land owners were able to escape having to distribute and share their land to the farmers. Most were able to convert perfectly arable land into industrial and residential zones before the law took effect.  8 9  9 0  91  92  31  A q u i n o was unsuccessful i n carrying out vital economic change. The situation was further aggravated by six unsuccessful coup attempts by right-wing rebels against the Aquino government.  Despite Aquino's political shortcomings she was able to initiate several policy reforms that became the foundation o f full scale trade liberalization scheme which the Philippines continues to pursue to this day. Pluralistic and monopolistic interventions o f the Marcos government were dismantled.  93  Some crony monopolies and dummy Marcos businesses which were funded by  money stolen from the government coffers were sequestered by the Aquino administration. A privatization program o f several government corporations and sequestered crony corporations was initiated. The government's public spending priorities were re-oriented towards a public 94  investment program focused on "agriculture and the rural areas and away from capital-andimport-intensive-projects." Under the Aquino government, economic policies were based on 95  greater reliance on market forces and private sector participation and initiative which took a backseat under Marcos' crony capitalism. T w o major policy directions were pursued: "(i) 96  correction o f price biases against agricultural products and (ii) raising farm productivity through increased public investment i n rural infrastructure."  97  During her term, Aquino enacted the  Omnibus Investment Code which consolidated all investment laws o f the "country and provided  Dohner, supra: 70, note 73.  9 3  Ibid. Ibid.  9A 95  9 6  97  Bautista, supra: 59, note 49.  Ibid.  32  for better incentives, and the Foreign Investment Act, aimed to make the country more attractive to foreign investors.  Despite their promising vision and rationale, Aquino's reform policies can be characterized as "a few hits and a lot o f misses." Her term was too short to assess the effect o f her policy initiatives. In the meantime, while the Aquino administration was too pre-occupied with the deregulation o f trade and foreign exchange transactions, little was done to the system o f repression which has made Philippine labor wage one of the lowest i n Asia. Again, the highlight o f her administration's scheme to attract investment and to enhance trade was still the skilled and low waged labor that remained unable to share whatever fruits liberalized trade had to offer nor to parry the harsh impact o f increased globalized competition.  C "Blazing the Trail" Toward the Free Market System  President Ramos, Aquino's successor in 1992, declared that his policies on trade liberalization would focus on deregulation o f trade and foreign exchange transactions to follow up on the small gains during the Aquino administration. Ramos got things moving again by passing 228 reform laws which paved the way for a new approach to development which can be summed 98  up  in  four  "Ds": decentralization,  devolution, deregulation  and  democratization.  99  Lopez, supra. 59, note 5. Galang, supra: 7, note 35.  33  Decentralization was set to expand development beyond Metro M a n i l a , the national capital region, and bring it to the countryside though the establishment o f regional agri-industrial centers.  100  To facilitate decentralization, there was a devolution of government authority to local  government units to afford them a pro-active role in development.  101  Deregulation was also  implemented to encourage the private sector to take a bigger role i n the economy.  102  Through  a deregulated economic climate, the government sought to provide the "proper environment for private initiative to flourish on a more level playing field."  Democratization was aimed at the  103  economic and social empowerment o f ordinary F i l i p i n o s .  104  Initiatives with this policy were: an  agrarian reform program (which remains unrealized to this day), financial and technical support programs for small- and medium scale enterprises, the development o f cooperatives, and promotion o f greater competition (specifically in sectors that were traditionally highly concentrated and/or monopolized).  105  Ramos stressed that his administration's basic strategy for economic progress hinged on a firm belief in a market economy and privatization. to attract foreign trade and investment.  107  106  During his term, he pursued policies designed  Ramos launched "Philippines 2000" which is based  on the following vision:  ibid. Ibid. Ibid. Ibid. Ibid. Ibid.: 8. Ibid: 6. Ibid.  100 101  102 m  104 m  106 107  34  \  "The objective... is to improve the quality o f life. Underpinning this goal is people empowerment, which starts with the basic notion that people have economic, political, social, cultural and spiritual aspirations. The task o f the government is to provide a public-policy environment that facilitates the harmonious attainment o f these human goals. T o achieve the quality-of-life objective, the economy must be transformed from one that is largely agricultural to one that an be considered newly industrializing. Such an economic transformation is anchored in the twin strategies o f human development and international competitiveness." 108  "People empowerment" and "global competitiveness" were the two prime objectives set forth in this policy which has, among other things, set to liberalize trade by eliminating quantitative trade restrictions and reducing tariff rates, and by pursuing a tariff phase-down program.  109  The  country also started actively participating in multinational trade liberalization initiatives such as the Asean Free Trade Area ( A F T A ) , the W o r l d Trade Organization ( W T O ) and the A P E C .  The Ramos government's adjustment measures under the W T O were focused on enhancing the competitiveness o f Philippine industrial products and opening new markets for them.  110  Such  measures were being undertaken through modernization o f domestic industries, effective market and trade information system, anti-import surge and anti-dumping measures, promotion and credit support to small medium enterprises.  investment  111  ibid. ibid.  im im  10  Galang, supra: 41, note 35.  Ibid.  xu  35  Ramos committed the country to achieve a single tariff rate by the year 2004.  112  Gradual  reduction o f the rates is being pursued with the following targets within the following time frame:  •  "Rationalization o f the 1994-95 rates towards a four-tiered tariff structure, with a maximum rate o f 30 per cent and a minimum,of 3 per cent;  •  Phased reduction o f tariffs towards a two-tier structure, consisting o f 3 per cent on raw materials and 10 per cent on finished goods starting in January 2003 and:  ®  Adoption o f a uniform tariff o f 5 per cent by January 2004."  113  D u r i n g incumbent President Estrada's debut on the global stage at the annual meeting o f the A S E A N s foreign ministers, he underscored his intention to continue Ramos' trade policies and the country's unwavering firmness i n its international commitments.  114  Estrada is prioritizing  further trade liberalization in his government's list o f reforms. The new administration is endorsing reforms i n banking, retail trade and privatization.  115  Estrada is pushing for  amendments to the N e w Central Bank A c t and the General Banking A c t to "strengthen the  112 1 , 3  Ibid Ibid.  Nazareno, Rock}' and Armand Nocum. 1998. "Erap to ASEAN: Let's take control of future." Philippine Daily Inquirer (25 July). Torrijos, Elena. 1998. "Banking reforms, liberalized trade top Estrada programs." Philippine Daily Inquirer (28 July). 114  1 1 5  36  prudential supervision of banks and other financial institutions... for protection against financial crisis."  116  H e is also endorsing the proposal to allow foreign groups to own 100 per cent o f a  troubled bank to expand options on rehabilitation o f the financial sector.  117  Other banking  reforms include the liberalization and rationalization o f the equity and citizenship structure o f banks.  118  This would mean that bigger foreign-owned banks w i l l be allowed to set up business  in the Philippines. Estrada has also vowed to continue initiatives to further open the country to foreign investors. He is pushing for the liberalization o f the domestic retail industry which has been exclusively allocated to Filipino-owned companies.  119  Retail giants like K - M a r t , and W a l -  Mart have long wanted to penetrate the Philippine market. But as the law and the Constitutions now stand, only 60 per cent Filipino-owned companies can j o i n the retail business. Estrada is also supporting the move to allow foreign firms to own 100 per cent o f companies with a paidup capital o f $US500,000.  120  A l s o included in the line up o f reforms is the approval o f the  horizontal application o f the Condominium L a w which would enable foreigners to own industrial lands i n economic zones.  121  Estrada is also set to further restructure the Omnibus  Investment Code and the Board o f Investment which w i l l allow, among others, regional headquarters o f multinational companies to derive income from local operations.  122  'Ibid. Ibid. Ibid Ibid.  ue ul  us  U9  Ibid. ("The previous Congress wants a 49 per cent equity limit on retail firms with a minimum paid-up capital of $5 million to $10 million.") 120  121 122  Ibid. Ibid.  37  A s can be gleaned from the proposed legislative reforms, the Philippines has had a history o f bias against the ownership and exploitation o f land by foreigners. This safeguard has been, for decades, well entrenched and protected in the Philippine Constitution. Nationalist groups fear that with the advent o f all the trade liberalization reforms, large tracts o f lands and business opportunities will be allocated to foreign interest, while Filipinos who cannot compete and are lacking i n capital w i l l never get to share and participate i n all these proposed reforms.  Amidst these very specific and detailed reforms,. Estrada also stressed that the fruits o f globalization should distributed to benefit a greater number o f F i l i p i n o s .  123  As to how he intends  to accomplish this, he did not specify. Indeed, economic growth without social justice and equity is meaningless. But the country's giant steps toward "global competitiveness" cannot overshadow, the missing steps towards "people empowerment" which Ramos promised. Yet another president made pronouncements as to sharing with the poor and taking the labor sector's interest in consideration in the formulation and execution of government policies. But no president has yet fulfilled this promise.  D. Conclusion  The collective policies o f the past three administrations were indicative o f the country's blind submission to the lure o f globalization while compromising social protection. Ramos recently  123  Nazareno, supra, note 114.  38  "who needs the nation-state in this age o f globalization" is that "we all d o . " will continue to be needed to mitigate the downside o f globalization.  125  124  The nation-state  The nation-state w i l l not  be withering away as globalization w i l l need effective states to reconcile priorities o f global markets with peoples' need for social cohesion.  126  Ramos believes that his administration has  been effective in such a role. But jubilation over the country's regained economic strength is easily dampened by the fact that a third of the Philippine population still live below the poverty line and that the issue o f workers' rights and welfare has always taken a backseat i n policy formulations.  Clearly, the promise o f "people empowerment" has not been fully realized. Despite Ramos' and Estrada's proclamation that their administrations took and w i l l take charge o f the country's march toward globalization, in reality, "letting the market work its magic" has become the new panacea, trivializing social reform and protection necessary for genuine development.  127  The  free market system has become the country's new colonial master. This now frustrates Ramos' claim that the nation state is still strong i n the phase o f globalization. Ohmae's claim about the withering away of the state, stressing the state's powerlessness to change much i n the face o f the dictates o f the global economy, seems to have some veracity in the Philippine experience.  Ramos, Fidel. 1998. "Nationalism and Globalization". Asiaweek 24(23) (12 June): 68. Ibid. Ibid. Chavez-Malaluan, Joy. 1996. "Philippines." In APEC: Four adjectives in search of a noun, ed. Walden Bello and Jenina Joy Chavez-Malaluan. Manila: Manila People's Forum on APEC Focus on the Global South and Institute for Popular Democracy: 108.  124 i2S  126  127  39  However, i f the Philippine nation-state has failed to assuage globalization's downside, labor and social movements must continue to exercise their persuasive power and influence the government to truly represent their interest in the trade liberalization process. History shows that the Philippine social movements have had a significant role i n influencing government policies - they were instrumental in the lifting o f the Martial L a w , the dismantling o f the U S Bases, the fall o f the Marcos dictatorship, Aquino's rise to the presidency, and preventing Ramos to seek a second term and to implement a charter change,  128  among other things. A l l these were done  without having to take arms. The private sector and N G O s achieved these through peaceful civil disobedience, mass demonstrations and street protests, continuous dialogue with the ruling power and participatory discussions in policy-making. Social movements can once again exercise their power in the A P E C process by influencing the present administration to include social support measures in the country's trade reform submissions to the forum. It w i l l be learned i n the succeeding chapter that N G O s and POs have started participating in the trade consultations for Philippines' A P E C commitments. This seems to be a more effective route than forcing the issue on the whole economic alliance on each and every member economy.  The smaller the country, the less power it has to bargain internationally.  129  This has historically  led smaller countries to be wary o f trade liberalization. In the past, small countries like  Before the expiration of Ramos' term of office, he contemplated on the idea of remaining in power beyond the constitutionally mandated one-time, six year term through an amendment to the Constitution lifting term limits. This was however frustrated by mass protests. The Catholic Church, the People Power "revolutionaries" and other NGOs and POs joined forces through mass demonstrations to stop what they believed to be a possibility of another dictatorship if Ramos was to be allowed to stay in power. Bautista. supra: xv, note 49. 123  129  40  Singapore, Switzerland and Sweden liberalized their trade policies only when it was determined to be i n their own interest.  The Philippines however, is going at it at a very vigorous pace  130  during this decade. This is still true even at a time when other Asian countries have started assessing their respective strategies and the promised benefits o f free trade. In explaining Thailand's reticence to open its markets more fully to foreign competition, Thai Prime Minister Chuan Leekpai stressed: "We are not fully ready for full globalization and liberalization ~ therefore we have to take measures to protect our people from its full impact."  131  Malaysia is  proceeding cautiously too. Although Malaysian Prime Minister Mahathir Mohamad confirms that his country remains committed to keeping its economy and markets open, he also stresses the need to improve economic fundamentals and assess what real gains, losses and risks liberalization has triggered.  132  While it is true that openness is very important, each country w i l l  have to define its own balance.  1 3 3  It is dangerous to put worldwide pressure on countries which  are not ready to keep their economies wide open. Forcing them to open rather than helping these economies move quicker certainly has adverse effects.  If one examines what has happened to wage rates and labor productivity in countries which have joined the global market through liberalization o f trade using the labor sector for comparative advantage, it is clear that these economies are losing ground.  130  M i c h e l Camdessus, Managing  ibid.  131  1 3 2  1 3 3  1 3 4  134  Asiaweek. 1998. "Frontlines." Asiaweek (24) 14 (10 April): 9. Saludo, Ricardo and Assif Shameen. 1997 "A question of openness." Asiaweek (23) 19(13 October): 63. Asiaweek. 1997. "Brainstorming for solutions." Asiaweek (23) 43 (31 October): 57. Ibid.  41  Director of the IMF, drew one lesson from the present economic turbulence i n Asia: "Freedom has its risks! Let's go for an orderly liberalization. Countries cannot compete for the blessings of global markets and refuse their disciplines. Hence, the importance o f pursuing policies that give market confidence."  135  To this, Mahathir concedes and continues to push for globalization:  "... (I)f this (being poor) is what is meant by globalization, and because o f it we are going to be poor, since we accept globalization, we must also accept being poor.  136  Indeed, Filipinos seemed to have had no choice but accept being poor. A s reported by Estrada in his first State o f the Nation Address, the country has a $1.75 billion budget deficit, a $45.6 billion foreign debt, $55 billion a declining tax collection, a double digit inflation, rising interest rates, a free-falling peso, 10 million Filipinos unemployed and 15 million underemployed. O f course, trade liberalization cannot be blamed for all o f these. As earlier discussed, political and social  factors, both foreign and domestic, a l l contributed and left this legacy o f  underdevelopment. B u t accelerated globalization without social support measures has also largely contributed to the present predicament o f the Philippines. The following discussion on electronics and agriculture illustrates how the Philippines is unable to fully enjoy the benefits o f liberalization.  Saludo. supra:. 62-63, note 132. Asiaweek. 1998. "I've lost my voice." Asiaweek (24) 12 (27 March): 33.  42  Despite the presence o f electronics giants like Intel Corporation which put up assembly plants in export processing zones the government has acknowledged that the industry has been plagued with low technological development, too much concentration in one product (semiconductors), and marginal local value added.  137  A 1997 W o r l d Bank study cited l o w level o f technology  employed by local electronic component manufacturers compared to Malaysia, Taiwan and South K o r e a . growth o f  138  Multinational firms are reluctant to share their technology because o f the stunted  Filipino manufacturers due to the government's low priority for research and  development.  139  There were accelerated land conversions when Ramos initiated his privatization and liberalization scheme in attracting foreign investors. Arable tracts o f land were converted into golf courses, residential subdivisions, industrial estates and tourist resorts. A s a consequence, the Philippines, an agricultural economy housing the International Rice Research Institute which provides rice fanning technology to other countries, ironically became a rice-importer. Peasants and farmers were dispossessed of their land and livelihood. The environmental devastation was unalterable.  A concrete example o f a land conversion deal gone wrong is the multi-million dollar Samal Island Tourism Estate project which is being spearheaded by Malaysian investors. The land on  137  138 1 3 9  Cabacungan, Gil C. 1998. "Electronics development remains slow in RP." Philippine Daily Inquirer (24 August). Ibid. Ibid.  43  which now sits a casino used to be the source o f everyday sustenance for former tenant farmers who acquired title to the land as part of the Comprehensive Agrarian Reform Program ( C A R P ) . Instead o f coconut and traditional cash crops, the fanners' 250 hectares now have a 300-room luxury hotel.  140  The Philippine government helped the fanners' cooperative broker a deal to lease  their landholdings to the Malaysian conglomerate. Part o f the agreement is that the farmers w i l l have priority in the employment and training opportunities offered by the project. But now, the jobs are being denied them because the Malaysian firm says they have failed to meet the qualification standards. The farmers were not given priority even in the lowest ranks o f laborers. It is clear in this case that the government bartered away the rights o f the farmers and failed in safeguarding their interests in its effort to attract foreign investment.  W i t h other new Taiwanese and Korean sweatshops and Japanese assembly factories in the Cavite andLaguna (two cities just outside Metro Manila), hundreds o f palm o i l plantation and mining applications in Mindanao and Luzon, industrial and export processing zones, and speculative real estate and construction,  141  it is time to study the initial lessons from trade  liberalization and see beyond the glitter o f globalization.  Indeed, open markets exact a price. But it seems that the labor sector is the one taking the losses all its own. Based on the international trade policy reforms of the Philippines within the past two  1 4 0  141  Pabico, Alecks. 1998. "Luxury resort rises on CRP land." Archipelago (20 June) Mayuga, Sylvia. 1998. "Cautionary tales for Thailand." Archipelago (13 July).  44  decades, it seems that the Philippines is not about to slow down on globalization to reposition all the interests at stake. The past three administrations have pursued trade liberalization using labor for comparative advantage. Although significant improvement i n the labor sector in terms of wages, rights and welfare have yet to be seen, the present administration o f Estrada seems to have relegated them to the sidelines yet again.  The buzz phrase during the Ramos administration was "global competitiveness." Estrada heralds the same mantra. But the term has been so often invoked that it has become slightly more than a platitude. The past administrations did not have the proper fundamentals to make an entire economy globally competitive. The present administration is pursuing the same prescription o f disaster. The Ramos administration dismantled safety nets for health, education and other social services.  142  Estrada should complement Ramos' vision with considerations o f both social and  economic equity.  In a government sponsored study o f the Philippines' participation in A P E C edited by Federico Macaranas, Undersecretary o f Foreign Affairs for Economic, Science and Technology and Development Cooperation, "global competitiveness" is measured by a country's "ability to become a significant base o f world production."  142  143  This necessitates the capacity to spawn,  Tan, Michael. 1998. "Growth without equity." Philippine Daily Inquirer (13 August).  " Macaranas, Federico M., ed. 1996. A P E C and the Philippines: Catching Department of Foreign Affairs, Philippines and The Asia Foundation: 12. !  3  the next wave.  Manila: APEC Substantive Group,  45  develop and attract a significant number of individuals and world class f i r m s .  144  A country must  be able to attract new resources from the international market while raising the income and quality o f life o f its people. It is not enough that a country enjoys an ample share o f world output and exports. The true test o f global competitiveness hinges on being able to disseminate the benefits of international trade to a greater number o f its participants — from the big corporate owners down to every single worker in the assembly line, from the whole national economy to every consumer who gets to choose between imported and local goods.  It is also necessary for a "globally competitive" economy to provide a local environment that can keep capital and natural human resources productively utilized at home. This challenge is specially significant i n the light o f regional trade arrangements  which can facilitate  globalization. Capital flight and brain drain are the two most destructive factors i n the economy.  The Philippines, which for the past decade pursued global and multilateral negotiations to eliminate or reduce trade barriers, has failed in the government's very own gauge o f "global competitiveness." Despite the country's vigorous efforts to liberalize trade, the path towards competitiveness has remained rough and rather slow. It has been increasingly difficult for the Philippines to hold on to its own domestic productive factors and at the same time attract additional external factors. There has been massive capital flight in the past. Political turmoil, government corruption and red tape, social unrest and the ravages o f natural disasters were big  Md.  XM  46  contributing factors to this obvious manifestation o f an economy that is not competitive. Although the Philippine economy's share in world exports has shown modest increases during the past few years, its present share is not even one-third o f one per cent.  145  Unhampered labor exportation is the clearest indication o f the country's failure to be globally competitive. Although the country has recently seen a number o f Filipino overseas contract workers coming home for good to become entrepreneurs, the recent Asian crisis has bolstered the exodus again. Filipino capital and labor consider foreign conditions, unfamiliar and adverse they may be, as more conducive in making them more productive than what the Philippines has to offer.  Estrada presents some promising prescriptions to help finance these other tools for gaining competitive edge. He has vowed to make severe cutbacks in government spending by cutting red tape and government bureaucracy and forcing government agencies to save. H e is also adamant in abolishing the "pork barrel", discretionary funds given to members o f Congress for projects for their constituency, which will save close to $1 billion i n 1998 alone. These cost-cutting measures should be complemented by increasing the budget in agriculture. The increased funds can be used to provide loans and free irrigation services to farmers, and the prioritization o f the production specific food items for domestic consumption and exportation. Instead o f continuously lowering labor's wage to keep at par with steadily decreasing wages o f other A s i a n  ™lbid.  47  countries, social services and support structures should be enhanced and created to improve the quality o f the labor force. These mechanisms should be directed to education, health, training and research to improve the quality o f the Philippine labor force.  The most important task for the country right now is to temper the administration's unwavering submission to trade liberalization with social support measures to cushion the risks and concomitant effects o f pushing to be globally competitive. The Philippines must vie for resources based on its own merits and achievements. Competitiveness cannot be based on special colonial arrangements or on the simplistic fundamental o f lowering labor costs. The past administrations' strategy for competitiveness seemed to be hinged on, more than anything else, cheap and skilled labor alone. If this is to be pursued once again, nothing w i l l be gained but artificial growth which does not benefit the labor sector. The Philippines can compete armed with ample physical infrastructure, peaceful and stable political and social environment and the good quality o f human resources. The country's inability to provide these minimal conditions in the past is a crucial factor on why it missed out on the past investment and trade boom its neighboring countries enjoyed. Thus, i f the present administration's avowed proposals and policy changes w i l l truly be followed, going global may not prove to be so fatalistic after all!  The following chapter reviews what the Philippine government has specifically promised the A P E C community. For Philippine labor groups, N G O s and other cause- and socially oriented organizations, A P E C is another trade alliance that should be watched out for. It is an alliance  48  w h i c h , l i k e the G A T T a n d the W T O , augurs the negative effects o f g l o b a l i z a t i o n . H o w e v e r , unlike the other multilateral trade forums the P h i l i p p i n e s participates i n , A P E C s o m e h o w a l l o w s the c o u n t r y to have a bigger standing i n d e f i n i n g its path to l i b e r a l i z a t i o n i n its o w n pace and terms w i t h i n a specific t i m e frame. G i v e n the i n f l u e n c e P h i l i p p i n e s o c i a l m o v e m e n t s have h a d i n the past, their v i g i l a n c e a n d p o w e r o f persuasion c a n o n c e again prove i n s t r u m e n t a l i n c h a m p i o n i n g l a b o r rights a n d s o c i a l issues.  49  Chapter II  APEC and the Philippines  A. Introduction  In response to the growing interdependence among world economies and the recent striking economic growth in regions outside the sphere of Western domination, regional alliances are formed and multilateral trade and labor negotiations take center stage in international cooperation. The Asia-Pacific Economic Cooperation and the General Agreement on Tariffs and Trade (which paved the way for the establishment of the World Trade Organization) are two of the primary regional and global vehicles for promoting practical economic cooperation and open trade.  The major economies in the Asia-Pacific region and the most dynamic, fastest growing economies in the world are signatories to or member-states of the two alliances, A P E C and the WTO. APEC's 18 current member countries had a combined Gross National Product of over US $13 trillion in 1995,  146  amounting to half the world's annual output. APEC members also  represent almost half of the world's total merchandise trade.  The region still enjoys this  economic zenith despite the recent Asian crisis which sent South Korea to the IMF asking for  1,6  APEC Secretariat. 1997. "Asia Pacific Economic Cooperation." APEC Homepage <http:/>  50  a US$50 billion bailout package. Indonesia and Thailand have recently asked for multi-billion dollar aid packages too. However, with China, Japan, the U . S . , and the ever-growing Southeast Asian countries, A P E C still dominates just by sheer tyranny o f numbers — by population, that is. The W T O is the legal institutional foundation o f the multilateral trading system. It provides the principal contractual obligations determining how governments frame and implement domestic trade legislation and regulations. It is also the platform on which trade relations among countries evolve through collective debate, negotiation and adjudication.  Both alliances endeavor to make possible the development o f the open global multilateral trading system where different economies can interrelate. While member states o f the A P E C , amounting to 18, are oumumbered by the W T O ' s over 100 signatories, A P E C ' s move to reduce barriers to trade o f goods and services among participants is kept consistent with G A T T principles. Actually, the goal o f A P E C is to reduce by half the transition periods for trade liberalization set out in G A T T . This would mean bolder initiatives in the reduction o f tariff and agricultural subsidies, at discouraging indiscriminate use o f anti-dumping laws and at harmonizing competition policies. A P E C w i l l be to the W T O what A S E A N (Association o f Southeast Asian Nations) has been to A P E C .  1 4 7  A P E C is seen as a fall-back plan for what W T O  would fail to cover. Although A P E C functions more as a moral suasion from 'peers' as opposed to the binding treaty provisions in the W T O , the informal process o f A P E C is projected to have stronger outcome.  1 4 7  Business World (Philippines). 1997. "This economic bloc called APEC." Business World (22 November).  51  Although A P E C has been welcomed with some degree o f optimism, pressing concerns have been raised over the impact and implications o f the alliance's policies on trade and labor i n a region where economies do not exist and operate on the same level. There have been concerns about the likely effects on labor rights and standards once trade liberalization becomes fully operational. A P E C has been both vilified and praised. Some positive views o f A P E C include: the coalition o f some o f the world's wealthiest and influential economies w i l l bring economic growth, generate employment and improve the living standards o f all the citizens o f the region; and the exchange o f trade and investment w i l l assist the less developed member nations in economic and technical development leading to the equitable distribution o f income. Since A P E C is synonymous to globalization and trade liberalization, it is also subject to negative views such as: the "race to the bottom" in terms o f labor, environmental, social and human rights standards; the wealthier members w i l l just bully the less developed nations into getting r i d o f their trade barriers and sow the seeds o f economic and cultural dependency and exploitation. These a priori assumptions, attributed to the whole concept o f trade liberalization i n general, w i l l be discussed more fully i n the third chapter.  As A P E C nations made their declarations of commitment towards the achievement o f free crossborder and transcontinental trade, concern by some market analysts was focused on having too much, too soon. A P E C continues to be the subject o f raging economic discourse on how it would affect the domestic economic order o f member states and the international economy; A P E C ' s critics fear that the alliance w i l l nurture and exploit, rather than reduce, economic  52  disparities. Many also believe that corporate globalization will do nothing but harm to the workers and economies of the world. These fears and observations are validated by the massive relocation of factories and assembly plants of multinational corporations from the US, Japan and Canada to the less developed APEC countries - the Philippines, Mexico, China, Thailand, Malaysia and Indonesia - for their extremely low wages. Though these factories provide jobs, albeit in substandard conditions, they are of limited benefit to the economies of the host countries because most of them are in export processing enclaves which mostly require the importation of raw materials and the exportation of finished products. Concerns about the devastation of the environment are fueled by the environmental destruction brought about by large mining and forestry firms which are exploiting the natural resources of the developing nations in APEC. Placer Dome, a Canadian mining firm, has caused the virtual death of a river depended on by several villages in the Philippines. The mining firm has also set-up several mining projects in Papua New Guinea which have affected the health of hundreds of villagers through the indiscriminate dumping of toxic wastes.  With the Asian crisis which has been brewing since the first quarter of the year, analysts further ask if liberalizing trade is really the only way to make the global market function and develop. The crisis could lead to some degree of conservatism regarding the further opening of markets. Asian leaders will definitely be more cautious now. Thus there could be a step away from the ideal barrier-free trade system. What could perhaps tame these fears would be a serious discussion of a viable social clause to be included and considered in the discussions and  53  agreements. In the GATT/UR, leading economies like the United States and France campaigned for the inclusion of the provisions on "social clause" that would correlate trade agreements with some degree of compliance to labor and social standards. Most of the participants from the South saw this as a clear form of protectionism. These countries argue that inexpensive labor and a distinctive set of labor standards (which economies of the North may consider as substandard) are their aces in the race for successin a tariff-free and liberalized economic interdependence.  APEC's deliberations and considerations concerning social issues in liberalized trade have been lackluster. APEC leaders have successfully dodged labor and human rights and social issues by hiding behind the hollow "feel-good" double speak of globalization ~ heralding economic cooperation for regional prosperity and stability. It was only during the APEC Summit in Subic Bay, Philippines in 1996 that social issues were considered. Point 15 of the Economic Leaders' Declaration provides that liberalized trade should advance "sustainable growth and equitable development" and reduce "economic disparities." Point 16 further provides that economic and technical cooperation must give a human face to development. APEC's social agenda hinges on matters relating to human resource development, income distribution and community development. "The question is how the labor movement can position itself on the social agenda of the APEC process." As will be discussed in the succeeding chapters, NGOs and POs have 148  been invited by the Philippine government to forums concerning the government's commitments  H S  Harcourt, Tim. 1997. "Labour issues in APEC." A paper for the Australian APEC Study Centre.  54  to A P E C . Some groups like the Bagong Alyansang Makabayan (New Nationalist Alliance) ( B A Y A N ) , are totally against A P E C and any participation i n its process. These groups view A P E C as an agent o f imperialist globalization and thus see no point in integrating with what they consider as an oppressive global capitalist system. While other groups such as the Philippine C o u n c i l for Sustainable Development ( P C S D ) are pursuing critical collaboration with the government to push for the inclusion o f social issues, particularly labor and environment, i n the country's A P E C agenda. This faction is pushing the government to include labor rights i n trade discussions during A P E C leaders' meetings and to complement the government's individual trade commitments with social support measures for workers and the environment. This thesis w i l l concern only those groups which seek participation in A P E C consultation activities. The significance o f social movements and N G O activities linked with A P E C w i l l be discussed i n the concluding chapter.  The 'leveling o f the playing field' towards economic globalization and integration and trade liberalization is a tremendous task. Ensuring fair competition and establishing a stable and predictable trade regime seem to overlook and compromise crucial issues such as international labor rights and standards and the developing nations' small and medium-sized business and industries' capacity to exist within that projected world order.  55  B. The APEC  Process n  A t its inception in 1989, A P E C had neither a clear structure nor a definitive set o f objectives.  149  In the Seoul Declaration o f 1991, the process was outlined as a "consultation and exchange o f views among high level representatives o f A P E C economies"  150  for research, analysis and  exchange o f policy formulations. It is also non-institutionalized and informal, non-regulatory and non-binding, depending solely on consensus.  151  Recently, however, the U S , Canada and N e w  Zealand, have started pushing for more formal and binding and legal approach. Other A s i a n members on the other hand, particularly Japan, Indonesia and Malaysia have stood firm on flexibility and voluntarism.  152  A P E C functions through a yearly rotation o f meetings o f ministers, officials, and working groups. These meetings are coordinated by a small secretariat based in Singapore. The working programs and serious business matters are conducted  through regular meetings o f senior  officials o f member economies. The "cooperation" has two standing committees: (i) The Committee on Trade and Investment, which coordinates initiatives focused on trade and investment liberalization; and (ii) The Economic, Committee, which promotes discussion and  Kelsey, Jane. 1996. "How does APEC work?" In APEC: Four adjectives in search of a noun, ed. Bello, Walden and Jenina Joy Chavez-Malaluan, eds. Manila: Manila People's Forum on APEC Focus on the Global South and Institute for Popular Democracy: 10-11. 149  Ibid.  l5u  151  Ibid.  152  Ibid.  56  analysis o f various issues, with particular focus on economic trends.  153  Research for A P E C ' s  various discussion groups and policy analysis is based mainly on findings o f a tripartite body, the Pacific Economic Cooperation Council ( P E C C ) , consisting o f representatives from the academe, private sector, and government officials acting in their private capacities.  134  A  permanent A P E C Business Advisory Council ( A B A C ) was formed to encourage more private sector participation.  155  Member economies get to nominate their own representatives from one  major and one small or medium enterprise. Official observer status is limited to A B A C , P E C C and the South Pacific F o r u m .  C. "APEC:  156  Four Adjectives In Search of a  Noun"  151  Literature on A P E C , whether for or against it, are often couched in general and vague terms. Since A P E C members gave their individual strategies for trade liberalization only in 1996, there is a dearth o f academic and factual studies on the concrete effects o f these liberalization measures on the economies and citizens o f A P E C members. Most o f the arguments for or against A P E C , as previously discussed, are based on positive and negative a priori assumptions of globalization and trade liberalization i n general. This section traces the volatile foundation  '"Ibid. ™lbid. 155  Ibid.  156  Ibid.  .  Term borrowedfromWalden Bello's book bearing die same tide, cited at note 127. The term was coined by fonner Australian Foreign Minister Gareth Evans. ,5/  57  upon which A P E C was formed ~ the different purposes and meanings the organization had for the members.  Before the idea o f A P E C was conceived, there were already several regional groupings which were formed to try to establish regional links and advance awareness o f the immense economic potential o f the A s i a Pacific region.  158  Most consisted o f academics, business people and  government officials meeting informally. But it was i n 1989 when ministers from 12 Pacific nations met i n Canberra to formally inaugurate A P E C .  1 5 9  It began as informal dialogue group  and grew to become the pre-eminent forum for promoting open trade and practical cooperation in the A s i a Pacific region.  160  It now includes the major economies o f the world. Since its  inception, it has organized five summit meetings.  The creation o f A P E C started as a suggestion from the Japanese. It was actually the brainchild of then Minister of trade and Industry Chief Hajime Tamura.  161  The Japanese envisioned a forum  for technical cooperation on economic issues similar to the Organization for Economic Cooperation and Development ( O E C D ) . redirecting the US's attention back to A s i a .  162  163  The proposal was drafted for the purpose o f During the 1980s, Europe was the principal focus  De Koning, Martine. 1997. "APEC: Seven years of Progress in Trade Liberalisation in the Asia Pacific." Australian Business Law Review 25 (August): 259. 158  119  Ibid  ibid. Bello, Walden. 1996. "APEC primer (Four adjectives in search of a noun: The unauthorized History of APEC." In APEC: Four adjectives in search of a noun, ed. Walden Bello and Jenina Joy Chavez-Malaluan. Manila: Manila People's Forum on APEC Focus on the Global South and Institute for Popular Democracy: 4 160  161  162 163  Ibid. Ibid.  58  of global economic development. The U S was also preoccupied with the Uruguay round o f the G A T T and showed little interest at first. Australia, however, took up the idea o f a regional economic forum enthusiastically.  164  However, when discord on trade measures and sanctions  emerged in the W T O / G A T T forum, the U S shifted its interest to the proposed A P E C as a fall back mechanism in the event that its W T O agenda was not fully achieved and as a supplement to its interests i n the N A F T A .  1 6 5  During the first summit meeting in Blake Island i n 1993, the member countries concluded an " A P E C Vision" thus: "to form a community of Asia Pacific Economies i n which the spirit o f openness and partnership is enhanced, trade and investment barriers are reduced, the population o f A P E C economies share in higher incomes, highly-skilled and highly-paying jobs, increased mobility, and unproved education and training; and the environment is improved through the protection o f the quality o f air, water, and green spaces and the management o f energy sources and renewable resources." 166  Beyond the rhetoric of this promising vision, no consensus on the ways to realize it nor a process for implementing it was reached. However, because of this lack o f consensus, A P E C introduced the concept o f "open regionalism", in contrast to the highly structured and strictly regulated trade agreements offered by the G A T T A V T O and N A F T A . A P E C ' s "open regionalism" operated through voluntary trade facilitation.  167  In the A P E C ministerial meeting o f the same year, the  ""ibid. ibid. 165  166  deKoning. supra.: 260-261, note 158.  167  Ibid  59  cooperation's basic principle was also reconfirmed, underscoring the "open regionalism." A P E C trade ministers called for G A T T consistency, consensus-building, flexibility and diversity.  168  At  the same time, members also established the group on economic trends and issues (ETI) to encourage a dialogue that would facilitate economic cooperation without going into the realm o f economic policy coordination.  169  It is clear at this stage that A P E C members were trying  desperately to complement the G A T T A V T O vision and at the same time creating its own brand of regional trade alliance through voluntary participation.  In the 1994 Bogor summit, the members committed to establish free, open and borderless trade by 2020. However, to this commitment, Malaysia, Thailand and China were quick to append their understanding that the declaration was aspirational and non-binding in nature.  170  Aside  from the tension as to what the A P E C forum really meant and what its goals should be, several areas o f concern were created or left unsettled after the conclusion of the summit in Bogor. First, there was an initial controversial clash on whether the forum would pursue "open regionalism" or merely create a "trade b l o c "  171  for consultation on technical economic cooperation. Second,  the identity o f "developing countries," which were to receive preferential status in the timetable of commitments, was not defined.  172  It was unclear as to which countries qualified for this  certain degree o f laxity. In a region where "newly industrialized," "tiger" countries exist, such  168  169  1 7 0  171  172  Kodama, Yoshi. 1995. "Asia Pacific region: APEC and ASEAN. The International Lawyer 30 (2) (Summer).  Ibid Bello. supra.:5-6, note 159 de Koning, supra.: 263. note 158.  Ibid.  60  oversight has serious implications. Third, some sectors (industrial and agricultural) and industries (mining and forestry, telecommunications and transportation), are much more likely than others to question the implementation and interpretation o f the principles o f free trade because o f their protectionist trade policies.  173  The Bogor Declaration which seemed to  encompass almost all sectors o f trade, did not address this issue at all. It is because o f these lapses, void, vagueness and ambivalence that A P E C started to gain notoriety for being one powerful secretive group where people's interests are compromised without ever having prior consultation. The Bogor Declaration was clear though on A P E C ' s commitment to trade liberalization. The leaders' common resolve stressed that the region should achieve free and open trade and investment by the 2020. Different deadlines were set: 2010 for industrialized members and 2020 for developing members.  174  In Osaka, during A P E C ' s third summit meeting, the member countries sought to address the problems of the Bogor Declaration. The "Osaka Action Agenda" reaffirmed the Bogor goal o f regional trade liberalization and declared that all economic sectors would be included i n the liberalization scheme.  175  It was nevertheless concluded that liberalization would be pursued  through the Asian way: voluntarily, flexibly and in a non-binding manner. fundamental  principles was  "comprehensiveness;  also  [GATT/]WTO  asserted  to  guide  consistency;  176  A set o f  liberalization and facilitation:  comparability;  non-discrimination;  ibid.  173  ibid.  Ui  1 7 5  176  Bello. supra:!, note 161.  Ibid.  61  transparency; standstill; simultaneous start [timing], continuous process, and differentiated timetables;  flexibility;  and technical cooperation."  177  Flexibility,  comparability, non-  discrimination and technical cooperation were considered because o f the different levels o f economic development o f members. Despite the principles o f comprehensiveness, a sensitive issue for Japan, China, and South Korea which traditionally have a high level o f market protection for agricultural products, there were still the underlying theme o f the voluntary and non-binding nature o f liberalization measures. This was considered a success for Thailand, Malaysia, and China who earlier lobbied for liberalization at their own pace, in their own way. Thus, in the view o f the U S , Canada, Australia, N e w Zealand, Singapore, Hong K o n g , Brunei and Taipei, and the Philippines, considered as the "liberalization a l l the way" bloc i n A P E C , Osaka was a step back from what had been reached in Bogor. But for the "liberalization with caution" bloc, it meant actively participating in the global market while at the same time protecting the interest o f their economies.  In the fourth A P E C summit at Subic Bay, Philippines i n 1996, members  affirmed their  commitment to sustainable growth and equitable development. Members presented their "Individual Action Plans" (LAP) detailing how they plan to achieve their commitment in Bogor. A careful reading o f each I A P reveals that some governments were vague about their strategy to liberalize and that member economies remained discordant on how far they would push their  i?/ ''APEC Economic Leaders' Declaration for Action." 1995. The Ministry of Foreign Affairs Japan., Osaka, (19 November): 2  62  economies in tariff reduction, import duties; investments and competition policy, among other issues. A s expected, the "liberalization all the way" bloc were quite detailed in their liberalization plans. This group committed to a great deal beyond what had been covered by the Uruguay Round o f the W T O talks. Yet, countries which had consistently  expressed  apprehension regarding absolute liberalization managed to get their message across at the summit. Thailand, for example, did not state any plan for tariff reduction.  178  Malaysia vaguely  committed to "regularly review the level o f import duties (and to) ensure the transparency o f investment regime." trade measures."  180  179  China gave an uncertain commitment to "identify and review non-tariff  Japan, true to its original stance o f cautiousness, managed to maintain  ambivalence by committing "not to apply non-tariff measures that are not justified under international agreements." The Philippine government's position w i l l be discussed i n the next 181  section.  In Vancouver last year, amidst the grim backdrop of the Asian crisis, the fifth summit facilitated an agreement on strengthening the global financial system to avoid financial risks. Members reaffirmed their commitment to j o i n forces in meeting the challenge o f sustaining regional prosperity and stability.  182  Commitment to "sustainable growth", "equitable development," and  Bello, Walden -1996. "Commitments and non-commitments: The APEC Individual Action Plans." In APEC: Four adjectives in search of a noun, ed. Walden Bello and Jenina Joy Chavez-Malaluan. Manila: Manila People's Forum on APEC Focus on the Global South and Institute for Popular Democracy: 35. 178  'APEC Economic Leaders Declaration: Connecting the APEC Community." 1997. Vancouver: Canada.  63  "unlocking the full potential o f the citizens o f A P E C countries" was also underscored i n the Leaders' Declaration. The summit was concluded with the final communique: "There is no doubt that the fundamentals for long-term growth and prospects for the region are exceptionally strong."  183  While others may argue that there is some truth to the statement, the optimism that  accompanied it seemed misplaced and hollow amidst the brewing crisis which had started to rock Asia. Once again, Vancouver was a showcase o f the volatility o f the "cooperation" among the A P E C group. Member economies had some trouble just agreeing on what issues were to be discussed. Malaysia's Prime Minister Mahathir insisted that Asia's financial crisis should be first in the agenda.  184  Roberto Romulo, Philippine Finance Minister and Chairman o f the A P E C  Business Advisory Council asserted that trade cannot be discussed without also talking about the financial survival of member countries.  185  The host, however, insisted on the Canada-centric  v i e w o f sticking to the A P E C staple — trade liberalization.  186  The conduct of.the summit  meetings at Vancouver recent was indicative o f a growing frustration within A P E C . Member economies were starting to become merely "fair-weather-friends" It seems the group was easily put off balance by a very real problem like the Asian crisis. The test o f A P E C ' s success in trade through cooperation is whether promised liberalization would hold up in the face o f a regional or global recession. Using the Vancouver summit as a gauge, A P E C has definitely failed in this aspect.  183  184  Healy, Tim and Alejandro Reyes. 1997. "Serious business." Asiaweek 23 (48) (SDecember): 20 Ibid.  Fbid.  1HS  ' Ibid.  l S6  64  There is a lingering ambivalence toward globalization among the member countries o f A P E C . The Philippines, as will be explained in the next section, has always been a firm believer o f the benefits o f globalization. With economic, cultural and political differences, it is inevitable that there would exist varied expectations as to the appropriate pace and likely benefits o f trade liberalization.  187  The W T O talks have failed i n this respect. It is i n this light that the A P E C  process is worth noting. But can a process which is voluntary, informal and often vague offer something significant to where an otherwise institutionalized organization has failed? Chapter IV will explain how the A P E C process can be used by social movements to advance labor rights and social issues.  A P E C banks on the following features: (i) the encouragement o f statesmanship; (ii) a degree o f peer group pressure; (iii) that the process is "taking place i n a region characterized by rapid growth and intensifying economic interdependence which is largely independent o f the deliberations o f governments and officials."  188  However, these pillars o f A P E C seem to be  slowly crumbling.  After almost a decade of existence, A P E C has not fully taken off for the simple reason that the member economies themselves cannot even agree on what A P E C is or should be. Beyond being an economic forum o f 18 countries bordering the Pacific, it is still just "four adjectives i n search  7  8  Ong, Timothy. 1997. "APEC's new challenges." Asiaweek 23 (45) (14 November): 75. Bello, supra:. 4, note 161.  65  of a noun." Some members believe that A P E C should just be a consultative group where technical cooperation on economic matters concerning governments might be discussed and facilitated.  189  For other members, it should be an alliance aimed at a creation o f a formal free  trade area where tariffs w i l l eventually be brought down to zero and a l l other barriers to trade w i l l be eliminated.  190  D. The Philippines' Commitment to APEC and its Emergent Effects  "... (T)he Philippines must bear the burden the burden o f A P E C leadership by example. We must blaze the trail that others w i l l follow. We must steer A P E C toward the broad implementation o f the broad Agenda. A n d we must foster the people-to-people linkages that in fact precede and make real the concert o f nations and governments." Former Philippine President Fidel Ramos Speech delivered at the National Preparatory Summit for A P E C 1996  The seriousness o f the Philippines' commitment to the 1994 Bogor Declaration o f C o m m o n Resolve which set the deadline for free and open trade and investment in the region by the year 2010 for industrialized member economies and 2020 for developing economies, cannot be made any clearer than the statement o f Former President Ramos as quoted above. T o show that the country really means business, the past administration submitted a very detailed liberalization scheme as part o f its Individual Action Plan. The 18 member economies' individual  189 190  Ibid. Ibid  66  commitments were submitted in the 1996 M a n i l a Summit and were collectively called M a n i l a Action Plan for A P E C ( M A P A ) . Aside from Singapore and Hong K o n g , the Philippines submitted one o f the most detailed and boldest liberalization measures among all the Asian member economies. A s it stands, the government's commitment to future measures is a doctrinal surrender to the very tenets o f free trade. A n d since it attributes the inability o f the economy to join in the past surges o f investments and trade expansion i n the region to the country's history of inward looking and protectionist trade measures, the government vows to unilaterally liberalize trade ahead o f other countries' commitments.  The five pillars o f the overall focus o f the Philippines in the A P E C process are: (1) trade and investment liberalization and facilitation; (2) small and medium enterprises; (3) Information technology and telecommunications; (4) human resource development; and (5) sustainable development.  191  In forging a national agenda for the trade sector, a set o f resolutions were approved by the National Preparatory Summit for A P E C in 1996, a sectoral dialogue organized in preparation for the drafting of the Philippines' Individual A c t i o n Plan. Resolutions pertaining to trade cover the following issues and priorities: "(a) complete the trade policy reforms; (b) strengthen the country's export development and promotion program; (c) finance; (d) competitive exchange rate; (f) marketing; (g) technical skills; (h) technology acquisition, dissemination, and  191  Macaranas, supra:. 16, note 143.  67  utilization; (i) simplification and harmonization o f administrative procedures; (j) information exchange; and (k) infrastructure."  192  The following discussion o f the Philippines' trade  liberalization commitment to A P E C indicates that all these concerns and issues have been addressed.  Some o f the highlights o f the Philippines Individual A c t i o n Plan liberalization package are: Executive Order 264 and Executive Order 288, decreeing a uniform tariff rate o f five per cent for all products by 2004 and lowering o f tariff rates to three per cent for raw materials and ten per cent for finished products by 2003; Republic A c t 8179, liberalizing the foreign investment regime by opening up more industrial and service areas to foreign investment and equity requirements for.both domestic market and export oriented foreign-owned firms.  193  These laws  are also enacted in anticipation o f the country's commitments to the W T O and A F T A . They enable the country to move a step ahead by minimizing the possible trade diversion o f regional trading arrangements by making all available changes on a "most favored nation" basis.  194  Customs valuation based on home consumption value, viewed as highly protectionist, is giving way to a more universally acceptable basis for valuation.  195  A s part of the Ramos administration's Medium Term Development Plan ( M T D P ) or Philippines 2000, which is still being pursued by the present administration o f President Estrada, the export  192  Ibid:. 31-33.  1 9 3  Bello, supra., note 174. Macaranas. supra.: 23, note 143.  ! 9 4  195  Ibid.  68  development strategy is being overhauled. Adrnimstrative bottlenecks w i l l be eased with the ongoing reforms in customs procedures which include: harmonization o f tariff nomenclature, computerization, and other changes aimed at better facilitation o f trade.  196  The creation o f an  Export Development Council has also been enacted into law for the purpose o f formulating policies that will efficiently boost export growth.  197  In line with this law, other reforms are also  underway such as: improvement o f export-financing and credit guarantee schemes, creation o f one-stop duty-drawback scheme, one-stop action shop for trade and investment, and the enhancement o f information and financial networking facilities for trade.  198  Under the M T D P , the Philippine diplomatic corps w i l l also be utilized as part o f an economic diplomacy strategy which calls for the foreign service corps to act as "diplomat-merchants."  199  The diplomatic front is being tapped to promote trade and investment in the Philippines by disseminating positive information on the country's political, economic and social climate.  200  The Philippines has also signed into law a M i n i n g A c t which fully liberalizes the mining industry. Under this law, foreign mining firms are now allowed full ownership, full repatriation of gains, tax-free operations and liberal environmental requirements.  ibid. ibid. *ibid. Ibid.:24. Ibid.  196 191 l9  ,99 200  69  In the matter o f intellectual property rights, the Philippines commits to hasten the alignment o f its laws with the W T O A c c o r d on Intellectual Property Rights (TRIPS) and to toughen enforcement laws by increasing criminal penalties for infringement.  201  Moreover, long before  Congress has proposed, discussed and enacted some economic measures into law, the executive already committed the following measures as part o f its A P E C liberalization package: •  "an amendment to the Condominium L a w , which would allow foreign investors to own factory and residential structures i n industrial estates;  ®  repeal of the Retail Trade Nationalization A c t , which would open retail trade to foreign ownership, initially up to 40% and after 3 years, to 100%;  •  amendment to Republic A c t 7721, which would allow more foreign banks, besides the 10 earlier allowed entry to operate in the Philippines;  •  an amendment to the Financing Company Act, which would allow foreign ownership o f up to 100% o f financing companies and delete nationality restrictions on board membership;  •  amendment to liberalize provisions on foreign equity participation i n investment banks and investment houses; and  Bello, supra., note 178.  70  ®  amendment  o f the Investment  Company A c t in order to allow  membership o f foreign investors i n the board o f investment companies and open up the mutual fund industry to foreign investors."  202  A s can be gleaned from the country's A P E C commitments, trade liberalization in the Philippines encompasses a wide range o f services: trade in goods; telecommunication; transportation; energy; and tourism.  203  In telecommunication, there w i l l be a standardization of parts and mutual  acceptance of test results and procedures.  204  In the field o f energy, deregulation is being pursued  through the Power Sector Restructuring and Privatization Plan which encourages private sector participation.  205  The M T D P also undertakes certain policy initiatives aimed at ensuring the transparency o f standards and conformity assessment in line with the A P E C objective of technical and economic cooperation. T o assist i n the standardization o f rules, the following policy shifts are being pursued: •  "align the country's standards with international standards in certain priority areas, such as electrical and electronic appliances, food products, car parts, etc;  Ibid.: 31.  )2  13  Macaranas, supra.: 25, note 143.  "Ibid.  71  ®  identify priority areas for the development o f mutual recognition arrangements in regulated areas and participate in the network o f mutual recognition arrangements in voluntary sectors;  •  cooperate on technical infrastructure development within A P E C ;  •  assure transparency by, inter alia, developing a database and network system by 2010 to provide information on its standards and conformance system accredited testing/calibration laboratories, quality systems, accreditation bodies, etc., and aligning its standards with international standards."  206  In the field o f investment, the government has instituted some policy reforms aimed at the simplification o f rules and regulations. The Foreign Investment Act (Republic A c t 7042) opened up various industries to as much as 100 per cent foreign equity. T o further increase foreign participation, various legislative revisions are underway to free up certain investment areas which remain reserved for Filipino ownership. The telecommunication industry and infrastructure development are being liberalized, deregulated, demonopolized and privatized for increased private sector and foreign participation.  Ibid:.!!.  72  E.  Conclusion  The government has totally embraced globalization, hook, line and sinker. Because o f its stance in various trade forums, particularly A P E C , it is viewed as the Trojan Horse o f the Northern free trade lobby in Asian ranks.  207  For the drafters o f the national trade agenda, globalization is a  done deal. Within that circle, it is actually spoken like a mantra. The government has been obsessed with globalization in its desperation to catch up with the new Asian tigers.  The Philippine government distinguishes A P E C from other regional trade arrangements because it also emphasizes economic and technical cooperation.  208  It is hoped that this cooperation can  translate into the transfer o f resources from developed to developing countries which w i l l ultimately enable the Philippines to participate and benefit from the whole process.  2 0 9  F o r a "late  industrializer" like the Philippines, the twin objectives o f A P E C , trade and investment liberalization and economic and technical cooperation must be pursued with equal effort and attention.  210  Liberalization without the promised cooperation and assistance by the developed  members o f A P E C can never be sustainable. For the Philippines, it would be giving up everything without getting anything i n return.  207  2 0 8  Bello, supra:. 38, note 178. Macaranas, supra: 15, note 143.  Ibid. Ibid.  209 2]0  73  It is evident from the Philippines' Individual Action Plan that the government has a very positive view of the A P E C process. It has placed so much faith on the projected positive effects o f free trade that it has somehow failed to consider any possible risks involved in totally opening the economy to the free market system. This faith seemed to have trivialized the need for support mechanisms for labor and the domestic market, as the country's A P E C commitments do not contain any of these. The possible impact o f such commitments falls heavily on domestic firms and industries which w i l l be exposed to bigger competition. The impact w i l l likely hit the economy in terms o f production cutbacks, lay-offs, and even bankruptcies i n sectors o f comparative and competitive advantage.  211  During the National Preparatory Summit, it was  discussed that the potential benefits and costs o f A P E C w i l l be obtained depending on how the principal actors o f the country's trade sector react to market forces.  212  In this light, the  government challenges the trade industry to become competitive as it believes that it is the only way to survive. A s earlier discussed, competitiveness involves the responsibility o f the government to provide for viable permanent resources. It cannot merely commit the whole economy to trade liberalization and leave the principal actors unarmed with even the minimal requirements for staying competitive.  The faith of the Philippine government i n the A P E C process could not be more evident than in its v o w to unilaterally liberalize regardless o f the pace o f its other Asian neighbors which are  ibid.  2U  2,2  Ibid  74  on the same level o f economic development. The danger o f pursuing unilateral and blanket liberalization measures in a regional trade arrangement is that it w i l l likely expose the economy to counter-productive measures from the principal actors in free trade. A n d when political and economic conditions are altered or reversed, which is a big possibility i n the light o f the recent collapse o f the "Asian miracle," the country is left with few tools to combat whatever impact such change entails. Such a unilateral commitment leaves little room for flexibility in policy formulation.  Therefore, the A P E C process should be understood with a caveat. Although A P E C members are unanimous in liberalizing trade, most Asian members, particularly the Philippines' A S E A N neighbors like Malaysia and Indonesia are, as earlier discussed, unclear and non-committal as to how liberalization will be carried out in their countries. The Philippines however has been crystal clear with its liberalization strategy — even going as far as compromising legally and constitutionally protected interests. L i k e the wealthy members from the North, the Philippines is raring to go ahead and start the race in gathering the promised benefits o f globalization. But given the voluntary nature o f the A P E C process and the clear sentiment o f its A S E A N neighbors, it is not surprising that the Philippines w i l l find itself all alone and vulnerable i n the wealthier Northern group which is proceeding with the race at a very fast pace. These are countries which are definitely way beyond the Philippines' economic league. The Philippines may just very well find itself bullied, empty-handed in the end.  75  Certain aspects o f the country's trade and investment commitments to A P E C  prejudice  constitutional provisions on national economy and patrimony. The Individual Action Plan's focus to reduce and eliminate restrictions on foreign market access in the field o f retail trade and land ownership run counter to the constitutional protection accorded to Filipinos. Section 1, Article X I I states:"... [T]he State shall protect Filipino enterprises against foreign competition and trade practices." Furthermore, Section 11, Article X I I provides: "No franchise, certificate, or any other form o f authorization for the operation o f a public utility shall be granted except to citizens o f the Philippines or to corporations or associations organized under the laws o f the Philippines at least fifty per centum o f whose capital is owned by such citizens..."  The committed reform measures concerning retail trade and condominium ownership, as well as the ongoing reforms in mining and privatization, are bound to collide with the principles laid out in the 1987 Philippine Constitution. In the Cordillera, an ancestral domain where a large portion o f our indigenous minorities live, two-thirds o f the entire land area is now under mining application. If these applications are to be granted, the national minorities o f the Cordillera w i l l be evicted from their ancestral lands as the Philippine M i n i n g A c t o f 1995 also provides easement rights.  Ramos started selling government assets i n 1992. H e has implemented the "build-operatetransfer" and  "built-operate-own" schemes, in which foreign and domestic private sector  constructs a utility, runs it for a number of years and then turns it over to the state or keeps i t .  2 , 3  213  Fletcher, Matthew. 1997. "The sell-off blues." Asiaweek 23 (7) (21 February): 47.  76  However, recently, the Supreme Court o f the Philippines voided a 1995 deal for Malaysia's Renong Overseas Berhad to buy 51 per cent o f a historic hotel because it was ruled that the hotel is part of national patrimony. The Supreme Court anchored its ruling on Section 10, Article X I I of the Constitution which provides: "In the grant o f rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos." This is an example o f a foreign company buying only half into a local enterprise. The government cannot commit 100 per cent ownership to foreign companies without going against the Constitution. The government cannot support some o f its commitment with proper enforcement and implementation procedures.  Indeed the Philippines is sending the wrong signals to prospective foreign investors and trading partners in terms o f attracting trade and investment. With such a detailed liberalization plan, the Philippines is exposing itself to risks. It is true that the other face o f risk is opportunity. Risks can be possibly converted into gains. But this is only possible i f these liberalization reforms are accompanied by the proper enforcement measures, support mechanisms for the social repercussions and the right fundamentals o f global competitiveness in policy formulation and implementation.  For all the grandstanding o f the Philippine Individual A c t i o n Plan, it falls flat on how exactly the governments w i l l execute its commitments. Glaringly missing in the priority issues and national agenda are provisions on labor standards and on the protection o f the labor sector. Even  77  in the discussion during the National Preparatory Summit and i n the final resolutions, there was no mention o f such issues. The closest the discussion and resolution got to these issues was when manpower development through training and education and recognition o f labor rights were included in the Resolution o f Commitment to Human Resource Development signed at the end o f the summit. The commitment to such issues were limited to further studies and consultations. It was not clear as to how the government intends to concretize that recognition.  The Philippine government has been exposed to numerous debates and discussions on labor rights and the social clause issues i n international trade agreements. The government was actively involved in seven years o f tough negotiations which led to the signing o f the G A T T Uruguay Round which later created the W T O . Philippine officials and concerned groups who are involved in the preparatory and consultative talks initiated by the government i n preparation to its trade agenda for the yearly A P E C summits should be aware o f the debate on linking trade with social issues and human rights. This knowledge is vital i n developing a critical and informed participation in trade discussions in order to properly and effectively advance social interests. The following chapter historically outlines the labor standards and social clause debate in relation to international trade agreements.  78  Chapter HI  The Social Clause in the Globalized Economy: The South - North Debate  A.  Introduction  Discussions on globalization and. more specifically, trade liberalization inevitably include the interrelated issues enveloping the social costs and repercussions relating to the mass o f human capital which fuels this global activity. Although there has been a plethora o f literature on the benefits and ills o f liberalizing trade and the whole globalization o f the world economy, very little has been written on how to bridge the widening gap between the proponents o f free trade and the advocates o f human rights, specifically labor rights. These two opposing camps are to be further categorized according to which countries involved in free trade actually support them. The debate can be generally termed as 'industrialized countries against developing countries'. If geographic locations of these countries are to be further considered, then it could be said that it is a friction between the North and the South.  The aim of this chapter is to review the issues relating to the impact of globalization, particularly trade liberalization, on labor standards with emphasis on the emergent international public policy issues that have been raised. This discussion is elaborated against the backdrop o f the North - South divide. The chapter starts with an analysis o f how the North - South divide was  79  entrenched in the debate on the social clause in global trade. It proceeds to discuss and analyze the conceptual disagreement involving 'free trade' and 'fair trade' which have been the bone o f contention between the South and the North. There w i l l also be an analysis o f the shifting rationale o f the linkage between labor standards and trade.  B. The North - South divide in the social clause and world trade issue  The term 'social clause' usually referred to in this context consists o f a clause in trade agreements which would protect the 'core' standards embodied in I L O Conventions. The clause includes the right to collective bargaining, the prohibition o f forced labor, freedom o f association, minimum age and wage, and equality o f treatment and non-discrimination i n employment. References to these I L O conventions are utilized because the Organization's mechanisms have been considerably well-tested, effective and acceptable to both the South and North. Although the term 'social clause' also connotes issues relating to the environment, culture and sustainable development, for purposes o f this chapter, it is used to focus mainly on labor rights and standards. The term as used in this thesis is also the same clause projected to be imposed on all exporting countries which are party to trade agreements. The clause w i l l enable importing partners to impose sanctions against those countries which do not comply with the, specified minimum labor standards in the clause.  80  Using the paradigm o f post-development thought, the South's distrust o f the North's persistent drive to establish trade links is indicative o f a deeper desire to carve their vision o f progress in their own terms ~ reflective o f and according to the historical, social and cultural experience of their peoples. Post-developmentalist writers argue that it is necessary to reject the very idea of'development' as a preordained global g o a l .  214  The traditional approaches on development  institutionalize the idea that the undeveloped nation as an inferior entity i n need o f transformation.  This suggested dualism — developed and underdeveloped — automatically  assigns superiority to the former and ensures the continued hegemony o f the dominant culture and capital and institutional control reflective o f the Western model o f success in a liberal, industrial market economy.  213  It is in the rejection o f this dualism ~ developed and underdeveloped or first and third world — that the terms North and South seem to be more acceptable. Although whichever way you put it, this geographic definition always connotes the economic definition underlying each country involved. However, this chapter does not seek to explore the wisdom o f the North and South terminology. It is merely used here as a given, the way it was conveniently used in the literature gathered oh the opposing views in the social clause issue.  Kelly, Philip and Warwick Armstrong. 1996. "Villagers and outsiders in cooperation: Experiences from development praxis in the Philippines." Canadian Journal of Development Studies 17(2). Ibid. 2 , 4  215  81  A g a i n , using the paradigm o f post-developmentalism however, it now seems ironic that opposition to a social clause which aims to protect human rights, particularly labor rights, emanates from the developing world or the South.  It would appear more logical i f the  governments from the South would champion the cause o f their workers by pushing for international cooperation towards a set o f labor standards honored by everyone involved i n the global economy. In various international trade fora, the proponents o f a social clause are the prosperous industrialized countries of the North while the developing countries o f the South are vehemently against it. Taken with issue o f globalization and free trade, however, the advocacy o f labor rights through a social clause i n international trade agreements takes a whole new different dimension.  E v e n in the North, there has been a rejection by workers' unions and labor groups o f globalization's projected and actual ills. Within the last thirty years, U . S . unions have seen a burgeoning o f overseas runaway shops and multinational corporations shifting and diversifying operations overseas.  216  Globalization is seen by labor unions in the North as hurting domestic  labor in various ways: it impairs labor's bargaining power against employers; it creates a disincentive for labor to vigorously seek labor protective legislation (the 'race-to-the-bottom' syndrome); it leads to organizational fragmentation; and it effectuates an atrophy o f labor's  Murphy, Betty Southard. 1977. "Multinational corporations and free coordinated transnational bargaining: An alternative to protectionism?" Labor Law Journal 28. 2 1 6  82  political clout.  217  This threat o f globalization, actualized i n some industries i n the North, has  made a stronger case for a social clause.  The South and North have approached the challenge o f globalization in different ways. The ruling power o f the South takes the challenge by enhancing its export industries and making the labor and trade climate enticing for investors and import partners. The North counters this move to gain comparative advantage by asking for the inclusion o f a social clause in trade agreements to cushion the effects o f the transfer o f businesses to the South and protect workers and industries back home. The two entities clearly exist and function on opposite poles. Economic strategists and trade scholars have tried to find a middle ground between these two conflicting interests.  The deep barrier o f distrust that lies between industrialized and developing countries is suggestive o f North - South confrontations over the N e w International Economic Order during the 1970s.  218  A s was the case during the drafting o f the United Nations Declaration  on the  Establishment of a New International Economic Order and the Charter of Economic Rights and Duties of States, there is still the belief among the developing countries that the industrialized countries are continuously trying to "impose conditions i n international economic relations  217  Van Wezel Stone Katherine. 1995. "Labor and the global economy: Four approaches to transnational labor regulation."  Michigan Journal of International Law 16 (Summer). 218  Lee, Eddy. 1997. "Globalization and labour standards: A review of issues." International  Labour Review  136 (2) (Summer).  83  which violate the sovereignty and block the development prospects o f poor countries."  219  This  suspicion has never been more pronounced than in the recent debate over a social clause in international trade agreements.  C. Conceptual  disagreement  Before the perspectives from the two opposing poles can be considered, the popular normative debate on the issue should be briefly reviewed. This concerns the prevailing conceptual conflict between the fair trade claims and the free trade challenge. The merits o f the debate w i l l not be assessed in this chapter. The introduction shall only set the backdrop o f the fundamental disagreement between the South and North.  Fair trade is seen as the most fundamental threat to the liberal trading order that has arisen i n recent decades.  220  The issue o f labor standards is the crux o f economic and political discourse  between developed and developing countries. Fair traders believe that optimal social protection necessitates political negotiation and that the setting o f standards cannot be left to the mercy o f market forces.  221  They attribute 'social dumping' to. the increased mobility o f capital and the  freedom o f ftnns to locate their fixed investments anywhere they deem most beneficial. This  219  Ibid.  Hovvse, Robert and Trebilcock, Michael J. 1996. "The fair trade - free trade debate: Trade labor, and the environment." International Review of Law and Economics 16: De Wet, Erika. 1995. "Labor Standards in the Globalized Economy: The inclusion of a social clause in the General Agreement on Tariff and TradeAVorld Trade Organization. Human Rights Quarterly 17. The Johns Hopkins University Press. 2 2 0  221  84  power o f capital and its freedom o f movement pressures countries to lower labor standards i n order to make their economic site more inviting to investors. Thus, fair traders advocate the inclusion of a social clause in trade agreements to prevent and redress social dumping, a process through which exporting countries use unacceptable or substandard labor practices to lower the cost o f production.  The fair trade approach which addresses the labor issue through an international framework is fueled by fair traders' belief that national policy makers are powerless when faced with market forces. Since the mobility o f capital pressures countries to succumb to lower labor standards, it is clear that the power of nation-states to manage their own economic activities and the factors surrounding it is diminished. This also implies that their sovereignty and autonomy over these matters are curtailed.  222  A n d when issues o f sovereignty and autonomy are raised, developing  countries are immediately antagonized. Such issues are tainted  with the threat o f western  hegemony. A n d in this post-colonial era, such a theme is never welcome. The term "imperialist globalization" figures prominently in anti-APEC rallies and forums. B A Y A N , an N G O actively opposing A P E C , views the alliance as an "instrument being dominated and manipulated by two imperialist rivals, U S and Japan, with the member states consenting to its pro-monopoly capitalist globalization thrust."  223  This sentiment may seem infused by too much paranoia, but  Marshall, Ray. 1994. "The importance of international labour standards in a more competitive global economy." International Labour Standards and Economic Interdependence, ed. Werner Sengenberger and Duncan Campbell. International Institute for Labour Studies Geneva. Santiago, Nathaniel. 1997. "A report on the people's campaign against imperialist globalization." Paper presented at No to APEC Conference, Vancouver, Canada (November). 2 2 2  2 2 3  85  for the Philippines which has experienced colonization by three nations (Spain, U S and Japan), the prospect of being once again "colonized", economically and culturally, poses a very serious threat.  Free traders, on the other hand, as briefly introduced before, view recent demands to link trade to compliance with certain labor standards as galvanized by the fervor to protect jobs at home against increased competition from the developing countries o f the South.  224  Free traders  consider fair traders as "protectionists masquerading as moralists...and as irrational moral fanatics, prepared to sacrifice global economic welfare and the pressing needs o f the developing countries for trivial, elusive, or purely sentimental goals."  225  The argument o f free traders is rooted in the neoliberal economic doctrine. This doctrine projects regulatory labor standards as an obstruction in the market forces, restraining growth and suppressing competition by deterring investments and forming an unequal appropriation o f labor. It is believed that a highly competitive and unrestrained labor market is the best tool for protection for workers because employers utilizing substandard working conditions w i l l lose the skills, experience, and other benefits o f a stable workforce.  226  Thus, this group suggests that the  market mechanism itself is the best way to regulate the standards.  2 2 4  225  Howse and Trebilcock, supra, note 220.  Ibid.  2 2 6  de Wet, supra, note 221.  86  1. The North  perspective  The North advocates a link between international labor standards and the liberalization o f international trade. A s w i l l be gleaned from further discussions on the historical background o f the advocacy o f the social clause, various groups have their different rationale behind the inclusion o f a social clause in trade agreements. The North camp can be further divided between advocates who are 'enforcement driven' and those who take the 'fair trade' approach. Advocates who are 'enforcement driven' suggest that trade sanctions can be meted out to those countries who violate agreed international labor standards as mandated by a proposed social clause in trade agreements. The rationale behind this position is that there is a need to eliminate unfair trade advantage from unjust and exploitative labor practices, which are widely reported to be occurring in developing countries. A s this group suggests, this could be best achieved through the imposition o f trade sanctions. A n underlying dictum to this is that a globalized market economy necessitates global economic management through the regulation o f market and labor standards and conditions.  The basic argument of fair traders against trade liberalization is that domestic labor policies are exposed to unfair competition from countries where labor standards, or their enforcement are  87  lower.  227  "Jurisdictions compete for mobile capital by lowering regulatory standards."  228  Thus,  it is this regime o f fair trade that proposes to implement a social clause which would equalize regulatory standards ensuring a leveling o f the playing field and to avoid a 'race to the bottom'. The 'fair traders' are further grouped into the 'economic camp' and the 'moral camp'.  The  'economic camp' stresses the unfair competition angle which is derived from low labor standards.  In this camp, greater emphasis and value are accorded to commodities and  productive efficiency. The 'moral camp' on the other hand simply recognizes the dignity o f labor and the value o f workers' life and rights. Vigilance towards unjust practices is taken in the name o f social justice for the prevention o f socially and morally unacceptable labor practices that are sustained and nurtured by unregulated international trade. Considerations o f this nature effectively strengthened the moral suasion against abolition o f slavery, forced labor and the denunciation o f apartheid.  229  The 'moral' and 'economic' camps, while both arguing that a social clause is necessitated, look at the purpose of the clause rather inversely. The crucial issue is the identification o f when the advantages arising out o f factor endowment are artificially enhanced by labor utilization constituting 'social dumping'.  230  The moral camp considers the social clause as operating to put  Langille, Brian. 1994. "Labour standards in a globalized economy and the free trade/fair trade debate." In International labour standards and economic interdependence, ed. Werner Sengenberger and Duncan Campbell. International Institute for Labour Studies Geneva. 227  Ihid.  22s  Caire, Guy. 1994. "Labour standards and international trade." In International labour standards and economic interdependence, ed. Werner Sengenberger and Duncan Campbell. International Institute for Labour Studies Geneva.  2 2 9  230  Ibid.  •  88  a ceiling and a value to be promoted within a framework o f universally recognized human rights.  231  In the economic perspective, the social clause is projected as a floor or minimum  threshold in order to allow the ceteris paribus principle to function within a framework o f equitable trade rules.  232  2. The South perspective  The South on the other hand argue that the link is nothing more but disguised protectionism. The imputed motive behind this link is to raise labor costs in developing countries to paralyze their competitive advantage hinged largely on lower wage costs. The conceptual approach o f the South's position can be categorized as one for 'free trade'. This position can be viewed strictly from an economic perspective on one hand and from a political perspective on the other.  From the economic perspective, the South believes that regulatory diversity is part and parcel o f comparative advantage. Thus, to argue against diversity through a ratification o f a social clause is going against the rationale o f trade itself.  233  This position is founded on neoliberal  doctrine which propounds that regulation o f labor through a social clause is antithetical to the free market process. The South believes that such a clause would impede efficiency, create suboptimal allocation o f labor, stifle competition, and deter investments, thereby thwarting  Ibid. 'Ibid.  231 232  2 3 3  Langille, supra, note 227.  89  economic growth.  234  Free traders adhere to the doctrine that the best protection for workers can  be obtained in a highly competitive, unregulated labor market that is unrestrained by artificially imposed set o f standards.  235  Thus, following this paradigm, the most efficient means o f  regulating labor standards is to let the whole market mechanism operate without the help o f outside forces like an artificially imposed social clause.  B y so doing, free trade optimists  believe that countries who tenaciously cling to low wages and sub-standard working conditions w i l l eventually lose the wealth o f a stable workforce.  The political perspective arises from the imputation o f protectionist and hegemonic motives to the industrialized North. This camp argues that the social clause w i l l force the South to raise labor costs artificially which would emphasize the viability o f capital intensive investments, an aggravation o f the dualism o f developing countries' economy, and a reduction o f their employment growth rate.  236  Thus no matter how the North masks the social clause under the  guise o f altruism, morality or neoliberal pathos, for the South, the clause is protectionism, plain and simple. The suspicion o f hegemonic motives stems from the  fear that greater global  regulation, particularly in the highly debatable field of human rights and labor standards, augurs the 'withering away o f states'. B y submitting a country's domestic legislation to an intrusive  Alston, Philip. 1994. "Post-post-modernism and international labour standards: The quest for new complexity." In International labour standards and economic interdependence, ed Werner Sengenberger and Duncan Campbell. International Institute for Labour Studies Geneva. De Wet, supra, note 221. Emmerij, Louis. 1994. "Contemporary challenges for labour standards resulting from globalization." In International labour standards and economic interdependence, ed. Werner Sengenberger and Duncan Campbell. International Institute for Labour Studies Geneva. 234  235  236  90  social clause a valuable part o f sovereignty is sacrificed. This theory now explains why the South's persistent opposition to a social clause i n trade agreements is not so ironic after all. Using post-development theory which has been discussed earlier, this rejection o f the North's precept o f what labor standards to follow, whether they be in pursuance o f neoliberal market goals or strictly because o f moral considerations, is just indicative o f the South's vigilance against the projected superiority and the continued hegemony o f the dominant North. Though it would seem that tables have been turned because the South now apparently goes against workers' rights, the rationale behind this position is still clearly evident o f the South's persistent struggle to carve its destiny according to its own terms.  D. The shifting rationale of the linkage between labor standards and trade  The zeal for the establishment o f links between international trade and labor standards is as old as the standards themselves.  237  In 1788, Jacques Necker, a banker and finance minister under  the reign o f Louis X V I , propounded that i f a country were to abolish the weekly day o f rest, it would undeniably gain an advantage.  238  Linking trade with labor rights and standards also had its foundations during the early stages o f I L O i n 1919. The I L O Constitution provides: "the failure o f any nation to adopt humane  De Wet, supra, note 221. Servais, J.-M. 1989. "The social clause in trade agreements: Wishful thinking or an instrument of social progress?" International Labour Review 128(4). 257  238  91  conditions o f labor is an obstacle in the way o f other nations which desire to improve the conditions i n their own countries." This declaration o f peace and social justice is still echoed by the I L O to this date. I L O Director-General M i c h e l Hansenne recently stressed that the process of trade liberalization "must go hand-in-hand with social progress" and "cannot be left to its own devices."  239  I L O has always stressed the need for all countries who participate i n  globalization to act according to the principle that "all workers in a country, and not only those for the world market, should be able to have a fair share o f the fruits o f globalization."  240  Much  of ILO's effort is devoted to the adoption of international labor legislation for the harmonization of rules and regulations which w i l l protection o f workers.  241  This is aimed to reduce disparities  o f labor costs between countries. Thus this explains why ratification o f some conventions depended on the consensus among competitors in trade. But towards the end o f this century, certain important conventions have been low on ratification. Some ILO members, especially those from the South, are ambivalent about was the true significance o f labor costs. They believe that the final cost o f various products also depends on a host o f other factors other than labor like infrastructure, and social and political stability o f nations.  It is important to note that ILO's call for international action to improve labor were fueled by interrelated motives. First o f these motives hinged on social justice and humanitarian concern  International Union, UAW. 1997. "ILO Seeks Stringer labor Standards." Washington Report (Online) 37 (9) (June 13). <> 2 3 9  240  241  Ibid.  Servais,  supra,  note 238.  92  over labor conditions causing hardship to workers.  242  The second motive was prudential which  sought to stave off unrest threatening the peace and harmony in the w o r l d .  243  This motive was  propounded because o f the effects o f W o r l d War I and the Bolshevik revolution. The third motive is brought by the need to "eliminate the negative cross-border externalities" generated by countries taking advantage o f inhumane conditions o f labor.  244  It is i n this last motive that  fair traders base their advocacy on. But it should be considered that the economic climate upon which this motive was formed has changed drastically from the time o f the ILO's inception. The economies considered before, those o f Europe in particular, operated with the same level o f development. The I L O Conventions were conceived i n the colonial era where colonies participated in trade as merely an extension of the colonial empire. The world trade and economic interdependence o f the present, however, involve the poorest o f the poor and the richest o f the rich. This makes harmonization and compromise in this economic discourse on trade much more complex.  The first linkage in a multilateral set-up was actually applied i n The Treaty o f Versailles o f 1919. "Article 23(a) o f the Versailles Treaty was couched in moral terms o f achieving fair and humane conditions o f labor, but, at the same time, was clearly intended to imply the trade impacts o f sub-standard conditions."  245  Lee, supra, note 218. Ibid. Ibid. Buchanan, Mark. 1996. "The WTO and labour standards: A marriage made in Singapore?" In WTO & Asia-Pacific (The Asia-Pacific region and the expanding borders of the WTO: Implications, challenges and opportunities): 180, ed. Mark A. Buchanan. Victoria, B. C , Canada: Centre for Asia-Pacific Initiatives. 242  243  244  245  93  Links between labor standards and international trade once again emerged when the conditions o f competition in the European market changed. When the European C o m m o n Market was established, which brought about the removal o f customs and fiscal barriers, there were fears that the labor factor would gain leverage in the calculation o f the final cost o f a product.  246  Thus  the Treaty establishing the European C o a l and Steel Community included a social clause to prevent enterprises from paying abnormally l o w wages to gain advantage from charging abnormally low prices.  247  The trend towards this kind o f market regulation continued well into the 1950s. It should be noted however that the political and economic context on which such discussions on social clause thrived during this stage was very different than what it is i n the present. A s previously stated, during those times, the social clause was meant for markets or economies which more or less operated on the same level. Discussion had previously focused on the possible effects of labour standards on the product costs i n countries at very similar stages o f development.  248  The link between trade and labor standards took on a whole new dimension in the G A T T era when the difference in the levels o f development competing against each other became a fundamental aspect of the debate. The developing coimtries o f the South became major players in international trade and was believed to have gained comparative advantage by sacrificing the  Servais, supra, note 238. Ibid. Ibid.  2 4 6 241  2AS  94  legitimate interest o f their workers. Introduction o f a social clause i n an international trade system took on a new path in 1947. During the initial stages o f the G A T T at Bretton Woods, a parallel agreement was being drawn up for an International Trade Organization (1TO) to administer the international agreement on trade.  249  This parallel agreement was known as the  ill-fated Havana Charter.' The U N Conference on Trade and Employment adopted Article 7 o f the Charter o f the ITO. The Charter's chapter on "Employment Economic Activity" provided thus: " A l l countries have a common interest in the maintenance o f fair labor standards, particularly in the case o f production for export, since otherwise one country's product may be undercut by those o f another in which labor is unfairly exploited. Labor standards, cannot, o f course, be uniform i n all countries, but must be related to national productivity. But there was wide support for the view that governments should agree to take whatever action might be appropriate and feasible to eliminate sub-standard conditions o f labor i n their production for export and generally throughout their economies." 250  Although the I T O did not have success in the U.S. Congress, fair labor standards surfaced in international commodity agreements throughout the 1950s and 1960s.  251  Almost three decades later, The International Confederation o f Free Trade Unions (ICFTU), representing 99 million workers in 101 countries, asserted the issue o f health o f workers in relationship to trade in the Tokyo Round o f G A T T negotiations i n the 1970s.  2 4 9  230  252  Most Western  Harcourt. supra, note 148.  Ibid.  ElwelL Christine. 1995. Human rights, labour standards and the new W T O : Opportunities for a linkage (A Canadian perspective): 7. Quebec: Imprimerie LAR1VIERE Inc. for International Centre for Human Rights and Democratic Development.  251  252  Ibid.  95  states rallied behind this cause while developing countries on the other hand, expressed some reservations based on fears o f protectionism aimed at cost equalization. Trade unionists and industrialized countries, on the other hand, argue that a direct link between spread and enforcement o f fundamental standards and the liberalization o f trade is directed at eliminating the most flagrant violations o f working and living standards in all countries and sectors.  253  The 70s saw a shift towards neoliberal views in economic and social policy. This led to the rethinking o f the value o f labor standards in general. Although the move for an inclusion o f the social clause was initiated by labor movements o f the North, its ruling power saw a tremendous amount o f benefit i n opening up newly-independent states and developing countries' markets. This shift emphasized a smaller role for the state especially i n the regulation o f market activity. Regulation is seen as harmfully distortionary because impedes efficient market functions and causes inferior results in employment and income distribution.  234  The view that market  regulation is one o f the primary causes o f the rise in unemployment has become increasingly influential in the industrialized countries o f the N o r t h .  255  This particular shift — i n the view o f  the role o f regulation — is noted as this directly opposes the Northern proponents o f the inclusion o f social clauses in international trading agreements.  A social clause clearly  represents one o f the most constricting tools o f market regulation by imposing a distinct set o f labor standards.  2 5 3  2 5 4  255  de Wet, Erika, supra, note 221.  Lee. supra, note 218.  Ibid  96  The influence of this neoliberal view was not confined to the industrialized countries. It has also gained popularity among the trading countries o f the South. A n important factor behind this popularity is that labour market deregulation has featured conditionality o f structural adjustment programs.  256  prominently in the policy  There is a negative distributional effect o f  labor market regulation i n the creation o f labor aristocracy.  257  A n interesting factor in this ideological shift is that neoliberalism is used by the North to justify its cause o f opening up markets in the developing world. The South, on the other hand, invokes this paradigm when resisting what is thought o f as an overly constraining social clause. After having opened up the market o f the South by deregulation and privatization, the North now tries to temper the natural surge o f the free market economy by regulating how labor should be run. Conversely, after a persistent resistance to the opportunistic free market dictum o f the North, the South now invokes neoliberalist tendencies to oppose a social clause.  In the 1980s, the Independent Commission on International Development Issues, known as the Brandt Commission, concluded that there should be an international consensus on fair labor standards to facilitate trade liberalization and prevent unfair competition and. The Commission also observed that developed and developing nations have conflicting interests because labor standards i n the South is linked to the issues o f labor adjustment in the north.  256 257  238  Ibid. Ibid.  2 5 8  Elwell. supra, note 251.  97  The U . S . formally proposed that the labor rights issue be considered in the trade discussions during the work of the Preparatory Committee for the Uruguay Round in 1986. The U.S. once again asserted that Ministers of the G A T T states should make a blanket recognition that "denial of worker rights could impede attainment o f the objectives o f the G A T T and can also lead to trade distortions, thereby increasing pressure for trade restrictive measures." a non-event as it was again opposed by developing countries.  259  This step was  The European Parliament,  Canada, Norway, N e w Zealand Japan and Sweden supported this U . S . initiative. Once again it came to the issue o f First W o r l d - Third W o r l d divide, hinged on the suspicion o f protectionism hiding behind the proposal o f core labor standards.  The labor debate was again undertaken during the lead-up to the signing o f the G A T T in Marrakech, Morocco in 1994. The negotiating parties were once again divided over the linkage between international trade and labor standards.  260  The vigorous debate during the signing o f  the G A T T focused on the problem o f labor issues i n the global market and on how trade policy institutions can or should be used to ease poor working conditions and problems o f poverty and income distribution i n general.  261  In the first Ministerial Meeting of the W T O i n Singapore in December 1996, the U . S . once again asserted the inclusion o f core labor standards in the trade agenda.  The developing nations  Ibid.  25v  2 6 0  261  Harcourt. supra., note 148.  Ibid.  98  perceived this issue as "new business" and not really related with trade. Malaysia was a staunch opponent o f the U.S. on this matter. The Malaysian representative asserted that labor standards cannot be used as an excuse for protectionist policies and that the low-wage advantage enjoyed by developing countries cannot be questioned. This issue was very controversial and sensitive and created a big gulf between the initial positions o f the developed and developing countries. The Meeting, however, ended rather amicably with the formulation o f the following Ministerial declaration i n a language open to various interpretations and borne out o f compromises acceptable to every member state. It is worded thus: "We (the ministers) renew our commitment to the observance o f internationally recognized core labor standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work i n promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalization contribute to the promotion o f these standards. W e reject the use of labor standards for protectionist purposes and agree that the comparative advantage o f countries, particularly low-wage developing countries, must in no way be put into question. In this regard, we note that the W T O and I L O secretariats w i l l continue their existing collaboration."  Even the International Monetary Fund, the leading global financial institution, recognizes the necessity to address social concerns within its sphere o f economic influence. The I M F has functioned as a bank o f last resort and a fiscal reform school for wayward economies.  262  The  IMF hogged the headlines again when the Asian crisis sent countries like South Korea, Thailand and Indonesia running to its aid packages asking for billions o f dollars i n loans. In the hope o f softening the impact on the poor o f its brutish remedies imposed on countries who seek its aid,  i2  Lacayo, Richard. 1997. "Asian economic crisis: The IMF to the rescue." Time 150 (24) (8 December): 28-32.  99  the I M F is now including social policy directives with its loan package. It recently signed an agreement with Thailand which includes provisions to help the jobless.  263  It is now more  increasingly evident that every global economic interaction always has its social linkage, consequence and implication.  /;.  Conclusion  The campaign for a social clause for a compromise between the opposing positions previously discussed, is in a dismal state. However, discussions regarding a social clause have never been more popular and dynamic. This continuing interest stems from the reality that there are still significant pockets o f poor and morally unacceptable labor conditions like child labour in inhuman conditions, bonded labor, physically taxing work processes, and discrimination in access to employment.  264  The stark reality of these daily occurrences is evident i n the multitude  of sweatshops operated by transnational companies operating the world over, particularly in the South.  A careful analysis o f all the positions presented indicates that the rationale behind them is the unified rejection o f protectionism and o f gaining leverage through unfair labor practices. Both the North and the South quest for improved working conditions for human capital toiling all  Ibid. Ibid.  100  \  over the world. Taking such consensus in this aspect, drafting a 'minimum standards package' doesn't seem to be too far fetched. This argument is further bolstered by the fact that basic labor rights intended to be included in a social clause are actually found elsewhere in a non-trade related covenant. In December 1993, the Covenant on Economic, Social and Cultural Rights was ratified by 127 o f 186 countries including countries such as M e x i c o , South and North Korea, Japan, and India as well as almost all developing nations and Eastern European states.  265  Through this Covenant, all signatories exert effort, to the maximum o f their available resources, towards the full realization o f the rights recognized in the said document.  266  The Covenant  actually gives a more detailed enumeration o f rights and duties relating to labor such as: rights to freedom o f association and collective bargaining; right to free choice o f employment; the absolute abolition o f child labor; and the right to just and favorable working conditions including equal remuneration and equal opportunity for work o f equal value, fair wages which can provide a decent living for workers and their families, rest, leisure and reasonable limitation of working hours and periodic holidays with pay.  267  Some opponents o f a social clause can still dismiss such assertion by arguing that an international human rights covenant should not be discussed in the light o f international trade agreements. This is a mistaken notion because labor and the human capital are vital elements of international trade. It is in the context of moral suasion, however, that perhaps more concrete  2h5 266 267  de Wet, supra, note 221. Ibid. Ibid.  101  action can emanate. International labor standards cannot be merely dismissed as solely a human rights issue which must be dealt with by human rights instruments.  268  Labor standards, have,  through the years taken on a broader dimension transcending human rights and enveloping trade and economics — for indeed the human capital is much more precious than any other factor in the global market.  The unified rejection by the opposing poles o f protectionism and unfair labor practices should be emphasized and explored. Having discussed the theories and debates between free trade and fair trade, and between the wealthy North and the poor South, discussion w i l l now shift to how the Philippine N G O s , POs and social movements can advance this "middle way" i n the A P E C process. The concluding chapter w i l l stress the need to interject issues o f social protection and to advance labor rights and standards in the A P E C through the help o f people's groups.  268  Ibid.  102  Chapter IV  The Advocacy of a Social Clause within the APEC Regime  A. Introduction  Improvement o f labor conditions in a liberalized trade regime should not merely hinge on the much debated social clause. The recognition o f core labor standards as discussed i n the preceding chapter, is o f course, the ultimate goal. But how to interject this issue within A P E C is a crucial barrier that must first be hurdled. Perhaps a different path can be pursued by examining the very foundation o f how globalization operates. To achieve this, it is first crucial to be stripped off the biases brought about by both the positive and negative a priori assumptions of free trade as discussed in Chapter HI. Instead, after noting the rationale behind the policy shifts in the linkage between labor and trade, a new logic o f people-centered participatory policy-making should be pursued in the consensus-based A P E C process.  B. The Non-Government Organizations'(NGO) "ThirdPath"  Some o f the reasons why the people's movements, particularly i n the Philippines, have been obstinate in their rejection o f this whole process o f globalization are: the free market economy has been unable to respond to the diversity and complexity o f local situations and, despite the  103  seeming economic growth, there is continued poverty'. In lyrical discourse, Rabindranath Tagore voices this feeling o f alienation and ultimate submission thus: "We have for over a century been dragged by the prosperous West behind its chariot, choked by the dust, deafened by the noise, humbled by our own helplessness, and overwhelmed by the speed . We agreed to acknowledge that this chariot-drive was progress, and that progress was civilization. I f we ever ventured to ask, 'progress towards what, and progress for whom,' it was considered to be particularly and ridiculously oriental to entertain such ideas about the absoluteness o f progress. O f late, a voice has come to us bidding us to take count not only o f the scientific perfection o f the chariot but the depth o f the ditches lying across its path." 269  Socio-economic change for the Philippines, as earlier discussed, fits the rubric o f the idea o f development propounded by post-modernist and post-colonialist thought.  The dualism  suggested by this paradigm — a developed and an undeveloped condition — automatically assigns superiority to the former and dictates the end towards which the latter should strive for.  270  Together with the idea of'progress' and 'growth', it forms part o f a phalanx o f value assumptions and concrete practices suggestive o f modernist ideology. ascendancy o f the North's capital and institutional control.  271  272  It also ensures the continued This unequal power relation in  development discourse, already sets the very core o f liberalization at odds with true mass economic, social, and political empowerment.  Aziz, Mkhil. 1995. "The human rights debate in an era of globalization: Hegemony of discourse." Bulletin of Concerned Asian Scholars 27 (4) (October-December): 9. Kelly, supra: 244, note 214. Ibid. Ibid. 269  270 271 272  104  Thus, the poor and the working class flinch when an "outside force" meddles with economic affairs.  The Philippines' drive to relax its investment policies through liberalization,  privatization, and deregulation creates the stigma which invokes suspicion from the poor and working class. These policy reforms are the very scourge A P E C is believed to bring. The fruits of democracy, like liberalization and the adoption o f a bullish free market system, are generally viewed by peoples' movements as anti-labor and anti-poor.  To get r i d o f this specter o f post colonial tendencies, there has to be a conscious effort from policymakers and governments to veer away from conventional suppositions and universalized definitions o f development towards a more pluralistic conception o f and discourse on progress and change.  It is at this juncture where discussion on the creation o f a political space for  peoples' movements in A P E C becomes important.  For purposes o f this discussion, N G O s and people's movements are considered as social movements involving some civil action directed at effecting change. (These terms, however, exclude business groups, which are normally accorded ample recognition within international trade forums.) These groups are acting in both national and international level around domestic policies as well as international economic organizations. The role o f N G O s or civil organizations as agents o f change in the international setting has been gaining significant attention. A concrete example o f this is their recognition as a 'major group' i n relation to sustainable development in the United Nations Conference on Environment and Development's  105  ( U N C E D ) Agenda 21, a chapter o f which is dedicated to strengthening their role as partners in sustainable development.  273  C i v i l organizations have also been active around international  economic organizations. Northern environmental N G O s , in alliance with Southern development and indigenous N G O s , have led a relatively successful campaign in the early 1980s in introducing sustainable development concerns into World Bank operations. In the early 1990s, 274  the N A F T A was the focus o f another major campaign by these groups. Recently, N G O activity 275  has been figuring quite prominently around the A P E C forum. A yearly People's Summit is also being held alongside the A P E C Summit.  It is best to understand these groups' activities i n the light o f the new social movement theory. In a microcosm, this theory allows for a broader definition o f social action.  276  It explains these  activities i n terms o f the creation o f collective identities, while widening defending and democratizing c i v i l space and disputing social norms o f the shared cultural field o f society.  277  B y expanding the grasp o f the field for social action and struggle and by enveloping issues o f social norms and collective identity, this theory includes not just the members o f organized civil actions but also just about anyone who can identify with the movements' goals and values.  278  Levenson-Gower, Henry. 1997. "International NGO activity and sustainable development: The case of die Asia Pacific Economic Cooperation forum." Unpublished manuscript (Special project: Masters on Environmental Management and Development). National Centre for Development Studies, Research School of Pacific Asian Studies, Australian National University. 2 7 3  Ibid. ' Ibid. Ibid. Ibid. lbid.  274 275 216 277 2ls  106  It is a process which involves socio-political as well as socio-psychological group information involving the reinterpretation o f norms, the creation o f meanings and the challenging o f the social construction of the very boundaries between public and private or o f the political domains of action.  280  The civil society is not just threatened by the hegemony o f external factors. It is also constantly imperiled by the state's potential to subvert and colonize its own people.  281  The new social  movement theory recognizes this danger and thus prescribes the institutionalization o f civil democracy to defend civil society from the state and lessen the potential for colonialization by the state.  282  Social movements are projected to rally for democratization and accountability o f  civil institutions to protect civil society's continued existence.  283  B y broadening the structures  of discourse and people participation the state's policies and programs become more meaningful and reflective o f and responsive to the varied conditions and needs o f the civil society. M o r e than just achieving recognition, social movements are instrumental in creating political space by engaging i n values discourse and i n politics o f influence through dialogue with the government.  This theory is very significant to the Philippine experience. A s discussed in previous chapters, the Philippine labor movement has always been marginalized and alienated from policy  2  8  281  5 1 1 . /W.:516-517. 0  2 8 2  ibid.  2 , 3  Ibid  107  formulation. In fact, its interests have oftentimes been compromised. It is only recently that a window o f opportunity has been opened for people's organizations to take part in and be consulted for the government's drafting o f reforms and policies which directly affect them.  This ideal mobilization o f people's organization towards participation in the global policymaking arena somehow saw the light during the A P E C Summit in Subic, Philippines. There was N G O participation in the A P E C Ministerial Conference on Sustainable Development i n 1996. A s noted by a Filipino N G O participant, A P E C may prove to be more Asian than American, contrary to how it was widely believed to be. A n N G O participant expressed the view that PostC o l d War realpolitik now seems less threatening and the world may not be, after a l l , i n the hands o f the U S . Countries like Japan, Malaysia, South Korea, and Indonesia have been stalwarts in blocking the U.S. monopoly o f talks and policies. In the A P E C scenario, the main fulcrum o f debate continues to teeter between America's "liberalization a l l the way" and the Japanese, Indonesian and Malaysian's stronger inclination towards progressive liberalization over a period o f time at a pace suitable for each economy. These Asian countries are also leaning towards limiting discussions to economic and technical cooperation rather than bullish and abrupt dissolution o f trade barriers.  The strong Asian color in the negotiations, the  discussions on human resource and sustainable development and the promising N G O participation are positive steps towards the ideal globalized civil society.  108  The Philippines enjoys a dynamic political climate for N G O s and popular people's movements. It was an oppositionist N G O that catapulted former President Aquino's rise into p o w e r .  288  It was  through massive people protest that the Marcos government was overthrown. During Aquino's term, she worked closely with N G O S in several livelihood projects. N G O s also play a major role in support measures extended to Filipino migrant workers. Former President Ramos also tapped the N G O machinery i n policy-making dialogues and had "people empowerment" as one o f the major guiding principles o f his administration. Some N G O leaders have also found their way into government office in the present Estrada administration. Thus, it is now significant to discuss the nature of N G O activity linked with A P E C and its potential role i n promoting a social clause.  The IMF, World Bank, N A F T A , A F TA , and A P E C are not the sole international actors dictating liberalization. Liberalization is also borne out o f each country's individual efforts at joining the global market.  Treating liberalization simply as imposed structural adjustment by external  factors fails to analyze internal causes, the way in which it arose out o f failures o f statist regimes that were inefficient, corrupt and against the marginalized sectors o f society.  289  Retreat from  global economic interdependence may, i n the long run, prove to be counter-productive. A t the risk o f sounding as a "sell-out", it is still best to posit a stance o f responding to economic and  When Aquino's husband, a popular ex-senator who was a staunch Marcos critic, was a assassinated, public outrage was directed at the Marcos administration which was widely believed to be responsible for the assassination. The organization of private citizens called "Justice for Aquino, Justice for AH" initiated civil disobedience and the historic People Power Revolution which led to the ouster of Marcos Omvedt, Gail. 1995. "Reflections on the World Bank and liberalization." Bulletin of Concerned Asian Scholars 27(4) (October-December): 41. 288  2 8 9  110  political realities i n an undeniably interdependent world. This is made possible by opening the economy with a human face through championing a workable and grass-roots based social clause in trade agreements.  The Philippine labor movements and N G O s advocating their cause should be concerned with the following issues: 1) understanding the A P E C process and how it w i l l affect workers' employment opportunities, labour standards, health and safety, job security, wages, and incomes: 2) explain how social integration w i l l accompany economic integration; 3) the labor movement position itself within the human development/social development agenda o f the A P E C process; and  4) the realization o f labor's participation strategy — should lobbying take place  internationally, domestically or merely within the employers o f the industry?  290  Another  interrelated concern is how to integrate different national labor systems into a market system that is essentially international. Integration should be directed at improving labor standards and social conditions as well as business opportunities and economic expansion.  291  International  trade and labor standards should always be considered with great degree o f complementarity.  2 9 0  291  Harcourt, supra, note 148.  Ibid.  Ill  C. Creating political space within APEC  N G O activities linked to the A P E C forum began in 1993 and have since grown. Most o f these activities were just parallel meetings and were limited to peaceful protests and rallies outside the summit venue. Real engagement o f c i v i l movements from the Philippines, U S and Canada started i n 1996 during talks on sustainable development. This participation has also invoked some dissent within the N G O community for it is considered as the participants' submission to the whole idea of trade liberalization or global corporate rule which most groups are inherently opposed to. But for those Philippine N G O s who were branded as "collaborators" by their peers, they considered this move as going for the higher stake: "a stronger voice for marginalized communities they have been serving for the three decades."  292  Leaders o f the N G O Philippine  Council for Sustainable Development ( P C S D ) , considered it a big step when they participated in the Preparatory Summit and helped i n the formulation o f the country's commitment to the Global Agenda 21.  293  This is indeed more significant than holding protest placards outside the  conference halls. Sitting with government negotiators and policy makers and actually being heard and consulted gave more meaning to their cause and existence as a civil organization.  However, given the fact that the A P E C process relies heavily on consensus and operates on a voluntary basis, there are doubts as to how effective such participation can be. But is precisely  Mayuga, supra, note 284. "Ibid. 12  112  in the context o f this voluntary- and consensus-based approach coupled with Philippine government's total submission to the whole free trade order that participation of civil movements in policy making becomes even more significant, i f right from the very beginning — from the very formulation of the country's policy reform initiatives and commitments — the Philippines' agenda is already tempered with values reflective o f the needs o f the people and with social support measures, the ultimate result is a voice within the global forum.  While labor issues have somehow found their way in the debating floor o f the W T O and N A F T A , there is as yet nothing of this sort i n A P E C . If N A F T A and the W T O make a toothless declaration as to the protection o f workers, A P E C , on the other hand, provides none at a l l .  294  A P E C has encouraged detailed liberalization measures in trade and investment flows i n the region but it has dismally failed to encourage, not even at the level o f discussion, any elements of re-regulation affecting labor standards and the protection o f workers.  2 9 5  T o further worsen this  void, business interests have become central to, and privileged actors i n , the A P E C process as evidenced by the establishment o f the A P E C Business Advisory Committee ( A B A C ) .  2 9 6  This  committee is specifically tasked to ensure that A P E C ' s objectives and directions are maintained responsive to "real world problems" such as "harmonizing customs procedures, recognizing  Bowles, Paul. 1997. "Canada and APEC: Why we're in, why it matters." APEC Research Information Network Working Papers (Special Series No.l). Vancouver: Institute of Asian Research. University of British Columbia.  294  295 296  Ibid. Ibid.  113  national product standards, increasing transparency in government procurements and enforcing intellectual property rights."  297  Despite this dearth o f provisions for enforcing labor rights, concerns for workers and ultimately, discussions on the social clause, can be interjected in "human resource development" which is one o f 13 specific areas and issues o f the A P E C Working G r o u p .  298  Although this working group  declares that human capital is the region's main asset as well as the focal beneficiary o f economic growth,  299  nothing is mentioned about its protection. Instead, completed human  resource development projects are concentrated on: cross-cultural management; industrial technology education; analysis o f the region's labor market; management and strengthening o f small and medium enterprises; facilitating the mobility o f persons and information exchange for H R D ; and developing ways to monitor performance o f education system.  300  A s can be gleaned  from the priority projects, emphasis is given to education and training.  However, on the domestic level, i n the Resolution o f Commitment to Human Resource Development i n the 1996 National Preparatory Summit in the Philippines, it was resolved that there should be dignity o f pay as well as due recognition o f labor rights.  301  There was no  mention, however, as to how this resolution w i l l be put into action.  ibid.  2 9 7  2 9 8  299 300  3 0 1  APEC. 1996. MAPA 1996: Manila Action Plan for APEC. Manila: APEC.  Ibid. Ibid.  Macaranas,  supra;  113, note 143.  114  On the international level, i n 1996, A P E C leaders instructed officials through a collective declaration, to give a human face to development by committing to sustainable growth and equitable development. A P E C ministers also issued a statement calling for a framework o f economic cooperation and development that would reduce economic disparities among members. This can be taken as sign that social concerns are finally being considered i n the A P E C forum, a thrust welcomed by those who believe that there has to be more to A P E C than just free trade. commitment.  303  302  Indeed, such language can neither be considered as action or genuine  But the inclusion o f sustainable development, equity and human resource  development i n A P E C ' s focus, creates the elbow room with which developing countries and people's movements can advance the issue o f labor rights and the social clause. But all these, however, should be taken with a great degree o f concern. Real issues, concerns, actions and results should not be obscured by the mere fact that the language o f the N G O s has somehow found its way into the trade discussions as this may be a way o f legitimizing otherwise harmful policies to defuse criticism. vague and tricky.  ):  304  Human rights have never been discussed and equity issues are  305  Son. Johanna. 1997. "Taming APEC." Archipelago. 29 November.  "Ibid. Ibid. "Ibid. M  115  D.  Conclusion  Trade liberalization which seriously includes the concerns o f mass movements and organizations, would mean reversing the discrimination against agriculture, including drastically revising public distribution programs that give "cheap food" to urban groups at the expense o f low prices for fanners.  306  It would mean opening up to foreign investment, but with processes  o f transparency, competitive bidding, observance o f environmental standards and core labor standards.  307  It also means wrestling control o f trade policies from the elite — political  lobbyists, crony capitalists and privileged bureaucrats. Liberalizing regimes should establish an environmentally sustainable development in a healthy economy oriented to the interests o f small producers in a democratic political system. Only then would the face o f the workforce be seen in the trade agenda. In the meantime, the social movement should not be trivialized by empty rhetoric and misguided sloganeering.  There is a great tendency in regional and multilateral trade forums to trivialize immediate and particular local concerns in favor of the "greater good" o f the international trading system. This is further aggravated by inequitable interactions and power play between the North and the South and irreconcilable ideological and cultural differences.  308  However, shared global values  and concerns are possible to find, although their manifestation may be repressed by discordant  3 0 6  307  3 0 8  Harcoiirt, supra, note 148.. Ibid.  Levenson-Gower, supra, note 273.  116  perspectives and priorities.  309  Pluralism in a global civilization is possible i f values are shared  and reoriented from the very core, from the very start — at the national level with grassroots participation. The Philippines has moved towards this direction. 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