Let’s not get left behind

ANAHEIM, California – Free trade, and how to benefit from it, is as misunderstood here in this bastion of capitalism and free enterprise, as it is back home. The big issue that is looming in the horizon here is the proposed free trade area with Central American republics. As in the case of NAFTA, the debate centers on potential job losses for American workers.

It is not surprising. Here, as back home, there are vested interests who are pretty happy with the way things are and are not that keen to face competition from overseas. Cotton farmers are not keen to lose subsidy from the American taxpayers, they don’t mind that American consumers pay more simply because lower cost cotton farmers from elsewhere are kept out.

The election season has brought about an abundance of politically motivated rhetoric about the so-called evils of globalization, making one wonder if America needs as much re-orientation on the concept as a lot of third world firebrands. Somehow, there are those who do not appreciate the role of free and open trade in creating wealth and enlarging the pie to be shared by everyone. This is true in America and in the rest of the world.

Of course there are preconditions for free trade to work as it should. A country has to be ready with the right conditions and infrastructure to maximize benefits from free global trade. There are also obvious winners and losers in the game and the losers are those who are unprepared to face the reality of globalization in trade.

For instance, there is the need to have the right policy structures in place. There is a need to recognize that a country cannot be good in producing and trading all sorts of products. There must be some products and services a country is particularly good at, sectors where it has competitive advantage. A country must concentrate on those where it has competitive advantage and be the best in producing and marketing these goods and services in the world.

I am glad that the Department of Trade and Industry has already picked five such sectors, IT, electronics, automotive, mining and infrastructure. Electronics, a sector that accounts for 70 percent of our merchandise exports, is particularly vulnerable to inroads from China and Malaysia. We have to do what is necessary not just to attract new investments in this sector but to keep what we already have.

In IT, there are now a lot of premature hosannas about how we will become the world’s call center capital because of our educated, English-speaking workforce. The reality is, our competitive advantage in this sector is tenuous at best. I understand that only one out of a hundred applicants for IT jobs, including call center positions, are hired. That means, investors in, for example, call centers, must process four million applicants to fill up 40,000 positions that is required for now. No one will want to do that.

As I keep on saying in this column, education is the one investment we must make in our people if we are to benefit from free trade in goods and services. Even if we may seem to be increasing the peso value of the budget we allocate to education, in dollar terms, our investments are declining at a time when our population is increasing. It is clear that government alone cannot do what is necessary, given its fiscal problem. The private sector must pitch in a more meaningful way.

Then there is a need to improve the investment environment that will help us attract the capital we don’t have to get competitive in the key areas government now says it wants to promote. Definitely, the political bickering in Congress over the canvassing of votes cast almost a month ago, is not helpful. We have to actually put our divisive past behind us and unite to compete with the rest of the world.

I do not think Ate Glo is the best possible leader to emerge from the election, but neither is FPJ. But that’s irrelevant now. We have to use the victory of Ate Glo as an opportunity to finally get our act together and move on. We have the ability to do just that, as the first quarter economic performance indicates. We would be stupid to lose the momentum for sheer partisan politics. We shouldn’t be left behind again.

Agri Performance

Congratulations are in order for Agriculture Secretary Cito Lorenzo for that spectacular performance of the agri sector in the tempestuous first quarter. The 7.7-percent growth of the agri sector powered the economy’s record 6.4-percent growth. I am sure, good weather is not the only reason why the agri sector performed as well as it did.

Just before I left for the US, Cito was telling me about his high expectations for agriculture. Some may say that the attention given to farmers was politically motivated in aid of Ate Glo’s election. But I say, so what? Giving our farmers attention in the form of better access to certified seeds, low cost credit, farm to market roads, irrigation and other infrastructure support, are all things government should be doing, anyway.

A large majority of our people are trapped in the poverty of our farming sector. This is the root of most of our social evils. This is the reason why our urban areas are bursting at the seams with squatters. This is why we have a festering communist insurgency problem when the ideology has evaporated in most parts of the world.

The other important piece of information Cito gave me is the need to exploit that rising prices of farm commodities arising from increased demand in China. We can earn precious foreign exchange, make our farmers a little richer and boost our economic growth rates to the point where we can take care of every Filipino’s needs. This is no longer just a dream. This is within our reach, if only we can get organized to do what we must.

Maybe, the best thing about Ate Glo’s victory is the continued service of Cito in the agriculture department. He has a long "to do" list, and the ability to accomplish each and every item, if he has support and time on his side.

Let’s get on with the work of being competitive. We can’t be left behind again, or should I say, still?

The Truth, Now

Here’s Dr. Ernie E.

Golfer: Well, I have never played this badly before!

Caddy: I didn’t realize you had played before, sir.

Boo Chanco’s e-mail address is [email protected]