Will America take it out on our exports?

One of the negative consequences of the government’s decision to pull out our "humanitarian" contingent in Iraq is the possibility that our export sector will experience a competitive disadvantage in the American market. Of particular concern is the local garments industry. Not only will the quota system be a thing of the past, some of our competitors in the trade are working to get a Free Trade Agreement (FTA) with the United States.

Thailand, which is the closest mirror of our economy (only they are a lot better), is already in the first stage of negotiations for such an agreement with the US. I understand we will be at a 17-percent tariff disadvantage against Thailand for garments once they get their FTA and we don’t have one. Reading between the lines, the Americans through their Ambassador here seemed enthusiastic about helping us get a similar FTA during the inaugural at Cebu. I doubt if they will be in any hurry to help us now.

Actually, this rush to get FTAs with America is an unfortunate development. America is succeeding in its strategy of divide and conquer of the developing world. The US is getting what it couldn’t get in multilateral trade talks such as the one in Cancun. After all the brave speeches have been delivered, countries seemed to have rushed to protect their own interests at the expense of the collective interests they so valiantly defended in Cancun and Doha.

In an article last week published by the International Herald Tribune, Joseph E. Stiglitz, a Nobel prize winning economist, called those bilateral treaties unfair, hurting the poorest partners. The Bush administration, Stiglitz observed, has used the same approach that earned the enmity of so much of the rest of the world. "The bilateral agreements reveal an economic policy dictated more by special interests than by a concern for the well-being of poorer trading partners."

That’s why in Morocco, the signing of one such trade agreement was greeted by protests. The new agreement, many Moroccans fear, will make generic drugs needed in the fight against AIDS even less accessible in their country. According to Morocco’s Association de Lutte contre le SIDA, an AIDS agency, the agreement could increase the effective duration of patent protection from the normal length of 20 years to 30 years.

In fact, Stiglitz pointed out, access to lifesaving drugs becomes a problem after a bilateral trade agreement is signed. "In all its bilateral agreements, the United States is using its economic muscle to help big drug companies protect their products from generic competitors. For a country like Thailand, which is facing a real AIDS threat, these are issues of more than academic concern."

Stiglitz calls George Bush’s trade policy hypocritical. "While he talks about a global campaign against AIDS, and has offered substantial sums to back it up, what he is giving with one hand is being taken away with the other. Most Americans, I believe, would support greater access to life-saving generic drugs. The loss to the drug companies would be small, and must surely be dwarfed by the huge tax breaks they get."

Just to show how influential the pharmaceutical industry lobby is, during the vote to ratify the FTA with Australia, some senators expressed concern about a provision in the Australian pact that they said could block efforts to reduce pharmaceutical prices in the United States by allowing imports from Canada and elsewhere. "What the administration is doing," said Senator Charles E. Schumer of New York, "is giving the drug companies the tools to raise prices in other countries while pushing policies that keep low-cost drugs out of this country."

The problem is not limited to life-saving drugs. The United States has used its economic power to advance special American interests. The agreement with Chile limited its ability to restrict the inflow of speculative, hot money that can come in and out of a country on a moment’s notice. One of the lessons even the International Monetary Fund learned from the 1997 Asian economic crisis is the danger that capital market liberalization can lead to more instability instead of faster growth.

Chile, Stiglitz pointed out, had recognized the potential destabilizing effects of these unrestricted capital movements, and had imposed moderate taxes on these flows. "Such restrictions had helped Chile grow a remarkable seven percent a year in the early 1990s. That is because, unlike many of its neighbors in Latin America, Chile did not have to face the economic havoc caused by capital suddenly flowing in and then just as quickly flowing out."

Now, Chile’s sovereign right to restrict the flow of hot money has been compromised by the bilateral trade agreement with America. Still, given the size of America’s consumer market, a bilateral agreement is more than tempting. If you talk to our exporters, it is a life and death issue. If only the rest of the world can stay firm in their commitment to negotiate trade rules on a multilateral basis, we may be able to get a fairer treatment from America. Divided, we will definitely be conquered.

Crisis Management 101

We got this reaction from a Pinoy expat in America to our column last Friday.

I couldn’t agree with you more about the apparent lapse in crisis management as it pertains to the Filipino hostage situation. One component I find seriously missing is Managing Expectations – in simple terms, know what you’re getting into. One small detail overlooked in the brouhaha was the fact that De la Cruz was already earning a decent wage in Saudi Arabia but chose to drive in Iraq on his own free will because it promised to pay three times more than what he was making at that time. Had the risks been imparted unto him very clearly before he took the job, he probably would not be asking the Philippine government to withdraw its troops.

An article published a few months ago in the Wall St. Journal told of how American truck driver applicants for Iraq are given a risk orientation even before they apply for the job. They are told in very clear and simple terms that on any given day, there is a good chance that they will either die or be seriously wounded.

At the end of the orientation, only a few eventually push through with the application. But those that do are well rewarded for taking the risk, even if some of them really do get killed. The same goes for US soldiers who knowingly risk their lives joining the army in exchange for free college education, health care and a pension.

That’s why when American nationals are taken hostage, they weep and plead for mercy, but they never ask their country to compromise itself for their own sake. The most sorry people in this crisis are the thousands of Filipinos lining up outside what were once Iraq-bound employment agencies. Some may back out but many of them will still be willing to work in Iraq even if they are clearly and systematically informed of the risks, if only to pay for the medicines of ailing relatives, send their children to school or eat three full meals a day.

If they are willing to face the risks, why deny them the chance that nobody else can give them at home? Because of this hostage crisis, their employment opportunities are severely diminished – all because there were Filipinos who went ahead of them who didn’t know what they were getting into.

Ingrate

Now, it is time for Dr. Ernie E’s contribution.

A waiter brings the customer the steak he ordered ...with his thumb on the meat.

"Are you crazy?" yelled the customer, "Your hand is on my steak!"

"Oh?" answers the waiter, "Would you rather that it falls on the floor again?

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