The challenge of China’s ‘coolie’ labor offensive

We had a big turnout yesterday morning at our Tuesday Club in the EDSA Plaza Hotel. There was Jose Mario "Jojo" Buñag who happily has been confirmed, as he deserves, as Commissioner of the Bureau of Internal Revenue.

Jojo, the former BIR Deputy Commissioner, Legal and Inspection Group, succeeded resigned BIR Chief Willy Parayno (alas, one of the "Hyatt 10"), as Officer-in-Charge Commissioner, but now he’s been formalized by President GMA as the boss of the Internal Revenue agency.

Jojo graduated from the college of Law of the Ateneo in 1968, cum laude, as Class Valedictorian, and also holds a Bachelor of Arts, cum laude, from the same university, major in Humanities.

Indeed, he was Class Valedictorian all the way through, from Infanta Elementary School (in Quezon province) to the Ateneo High School where he was the Gold Medalist for Academic Excellence and 1st Honors, also winning the Gold Medals for Religion, Physics, Tagalog and History.

Topping these all, Buñag earned a Masters in Comparative Jurisprudence in 1973 from the New York University School of Law, where he was a University Fellow. He went on to do a graduate course in Taxation (1984-1985) in NYU, too.

However, it’s not university degrees and honors that make a man. Jojo has demonstrated grit and diligence both in the practice of law, and in the BIR which he joined in 2002.

We asked him how tax collections are going and he answered (what else?) that the BIR is doing fine. What about EVAT? "We’re collecting it, but EVAT collection still hasn’t hit its stride."

Right now, I think, the priority is not to dampen the Christmas spirit – which won’t welcome, at this stage of jingle bells, a reminder that the Taxman cometh to check the ring of the cash register.

Everywhere, you see festooned in flaming red the sign: "Ask for your BIR Receipt."

How many are really asking we’ll soon know.

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Also at our breakfast were Metro Manila Development Authority (MMDA) Chairman Bayani Fernando, just back from Singapore.

Senator Fred Lim, one of our most faithful members in attendance was on hand, but then he had to leave for a Senate budget hearing.

Then there was Secretary Roberto "Obet" Pagdanganan, another faithful member, who basked in the successful opening and conduct of the 23rd Southeast Asian Games, where our Filipino athletes are enjoying a sort of "Gold Rush."

Obet, who’s Chairman of the Games, worked hard for this sports fest under daunting budgetary restrictions. Hopefully, the good times there will continue to roll – and no "bird flu" has been manifested anywhere despite (joke only) the influx of thousands of athletes from the bird-flu affected regions.

Pagdanganan, who wears two hats, was asked, owing to his chairmanship of the PITC (Philippine International Trading Corporation), which was created to provide reasonably-priced drugs and medicines for the less affluent, what drugs would be available to combat a feared avian flu "pandemic." Aside from some stocks of Tamiflu already ordered by the Health Department, Obet reiterated, the Philippines could manufacture its own homegrown equivalent of Tamiflu, through Unilab, just as Indonesia – which has already been badly hit by bird flu – is gearing up to do. Jakarta’s advantage is that Tamiflu and Roche, the Swiss firm making it, have no license protection in Indonesia, while in our country a Drug Monopoly cartel not only exists but has been trying to undermine Pagdanganan for his insistence on procuring generic drugs and medicines for the poor at much-lower prices.

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Last Monday’s front page of the London-based Financial Times ought to be of interest to us. Its second lead story was bannered, "CHINA’S TEXTILE EXPORTS BOOM."

The fact is that China’s textile boom means "bust" for our Philippine textile industry.

Here’s what FT correspondent Raphael Minder wrote from Brussels:

China’s textile exports to the European Union (EU) rose by 40 percent in the first eight months of the year. Beijing raised market share at the expense of other Asian and African clothing exporters, while overall EU textiles imports were little changed.

The European Commission’s latest trade figures are likely to confirm fears that developing countries are among the main losers after last January’s worldwide removal of textile quotas. They have struggled to keep up with China’s large and modern clothing production facilities in a liberalized trading environment.

Burma and the Philippines were the worst-hit Asian countries with EU imports down respectively by 54.4 percent and 41.4 percent in value terms in the first eight months.

South Korea, Thailand, Pakistan and Bangladesh also saw significant falls, by 28.6 percent, 15.1 percent, 16.3 percent and 9.3 percent respectively.

Imports from the group of African, Caribbean and Pacific nations – essentially poor former European colonies given preferential trade treatment by the EU – dropped 24 percent in value and 28.1 percent in volume.

But the figures also undermine the doomsday scenario of some European textiles companies, which forecast the EU market would be flooded by cheap clothing from China and other countries after the abolition of quotas on 35 key products. Instead, the EU’s overall textile imports rose by 2.1 percent in value and 2 percent in volume.

The figures confirm China’s boom in clothing exports, with EU imports from the country increasing 43.9 percent by value and 39.9 percent by volume in the first eight months. The influx of Chinese clothing sparked serious trade tensions between Beijing and both Brussels and Washington earlier this year.

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A few days ago, our friend ANC (ABS-CBN) Talk Show Host ("Straight Talk") Cito Beltran – who’s the son, by the way, of our former colleague and pal, the late "Straight From the Shoulder" Louie Beltran – asked me to help in convincing President Arroyo to extend the "life" of the Garments Textile Board for another two years. He said that the GTEB, an office under the Department of Trade and Industry (DTI) will cease to exist on December 31 as a result of the Philippine commitment to the World Trade Organization, i.e. WTO-GATT. Since there will no longer be quota arrangements, Cito noted, the government has deemed it practical to abolish the GTEB.

If this happens, Beltran argued, the garments industry – already floundering I must add parenthetically – will lose a vital and effective representation in government and international trade. The fact is that an estimated P750 million directly contributed by the garments industry will be turned over to the DTI, Cito says, and is now the target of non-industry organizations for their use to the great disadvantage and loss of our garments industry.

"At a time the President is calling for the creation of jobs," Beltran complained, "she has unwittingly been convinced to terminate 30 to 40 government positions in an office which has consistently provided support for the government in the form of collected fees and dues from our garment industry." Perhaps, La Presidenta can reexamine the consequences of the Executive Order she issued abolishing the GTEB. She, if I recall, knows the GTEB and the garments industry well. When she was Undersecretary of Trade years ago, this was a sector which came under her own direct supervision.

Well, our garments industry, now shell-shocked by the new free-for-all in textiles worldwide, needs all the help it can get.

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The real problem is China.

The world is being swamped with Chinese textiles and other products. As I’ve written earlier, Chinese-made silk sarees are overwhelming the Indian market, outselling to Indian consumers their own domestically-woven silk sarees. Indian buyers themselves explain that they find Chinese-manufactured silk sarees both "silkier" and cheaper. Indian silk-weavers are already starving in Varanasi (Benares) and its environs, and the livelihood of 12 million Indian weavers is threatened.

This is a significant threat. The great Mahatma Gandhi chose the spinning wheel as the symbol of Indian progress and economic independence – and the spinning wheel, if you’ll look again, is enshrined, in the national flag of India. What if those wheels no longer spin – owing to the deluge of Chinese silk, from the country where, after all, the ancient Silk Road originated, beginning in the ancient capital of 11 Chinese dynasties, Chang-An (now known as Xian, where the Emperor of Qin, the great Shi Huang Di’s terracotta warriors were unearthed only decades ago after 2,000 years of being buried underground, forgotten even by the chroniclers of history)?

China’s challenge, really, is that it has millions of workers laboring at one-dollar a day, or less. Who can match that? Coolie labor is alive and well, to invoke that old, repulsive term, in the People’s Republic of China.

They are swamping us at home, too. Just go to "168 Mall" in Divisoria, a four-story building crammed with the cheapest of products from China – do they pay tax there? China manufactures everything – including knock-offs of knock-offs.

"TIME" Magazine’s latest issue, December 5 edition, has a Terracotta Warrior arm-wrestling on its cover with Michaelangelo’s David. The cover headline: "ITALY VS. CHINA." The subtitle goes: "What Happens When Old World Manufacturing Faces the Challenge of Asian Competition?"

The answer, alas, is that China wins. It overwhelms even other Asian competition.

What to do? You answer that yourself, please. When 1.3 billion Chinese are on the march, they can make all sorts of stuff, including fake Viagra and even, almost genuine Tamiflu.

The herb needed to make Tamiflu comes from four provinces in China. Talk about home-court advantage!