Tag Archives: Cha-cha

Charter change, Free trade, SONA 2018

SONA 2018: Cha-cha, US free trade deal, and all-out economic liberalization under Duterte

(US Pres. Donald Trump with PH Pres. Rodrigo Duterte at the ASEAN gala dinner in Manila on November 12, 2017; Photo from here)

Manila’s ambassador to Washington Jose Manuel Romualdez recently announced that the first round of negotiations for a bilateral free trade agreement (FTA) with the US will start in September in the US capital. The FTA negotiations, with an estimated timeline of one to two years, is the direct result of US President Donald Trump’s Manila visit in November last year where he agreed with President Rodrigo Duterte to, among others, discuss a potential FTA between the two countries.

(Based on a report which came out two days prior to the statement by Romualdez, and quoting Finance chief Carlos G. Dominguez III and US Deputy Trade Representative for Asia Jeffrey Gerrish, the bilateral FTA talks appear to be still exploratory. Nonetheless both camps are said to be “prepared to move forward” and proceed to “high-level discussions in the near future”.)  

The envoy’s announcement came as the Duterte administration shifts into high gear its charter change (Cha-cha) drive, with the President planning to endorse the draft federal charter as a priority measure and a new Constitution already ratified as early as next year per Malacañang’s target.

US remains a key player in PH economy

We may thus be seeing the real possibility of a new wave of liberalization of the economy under Pres. Duterte where foreign business interests could be allowed as much as 100% ownership of Philippine lands and public utilities, among others. Although the Duterte administration has depicted the shift to federalism as the main motive behind Cha-cha, current efforts to rewrite the Constitution remain driven, as in the past, by the persistent push of American and other foreign lobby groups to further open up the economy.

While China is rising and cultivates an increasingly more prominent role in the Philippines and elsewhere, the US (along with Japan) remains a key player in the national economy. From 2007 to 2017, the US accounted for 24.1% of the cumulative net foreign direct investments (FDI) that flowed into the country, the second largest behind Japanese FDI.

During the said period, US net FDI flows totaled US$4.10 billion while Japan had US$4.36 billion (25.6%). European Union (EU) countries’ net FDI flows to the Philippines recorded US$1.46 billion (8.6%) while ASEAN members had US$1.38 billion (8.1%). China, on the other hand, posted a measly US$84.74 million or just 0.5% of the total. (Note: the figures exclude reinvestment of earnings and debt instruments where country breakdown data are not available, per the Bangko Sentral ng Pilipinas or BSP.)

Direct bilateral trade with the US remains significant at US$168.58 billion from 2006 to 2016 or 13.3% of total trade during the period (second largest behind Japan’s 14.4%), based on data generated from the World Bank’s World Integrated Trade Solution (WITS) online database. The US is the second largest foreign market for Philippine exports, accounting for 15.6% of total exports (behind Japan’s 18.5%) at US$88.95 billion, and second largest source of imports with 11.4% of total imports (behind China’s 11.8%) at US$79.63 billion.

American businesses operating in the Philippines are bullish about the country’s growth prospects and the potential to generate greater profits here as the Duterte administration and its economic manager remain firmly committed to liberalization. In the 2018 ASEAN Business Outlook Survey conducted by the US AmCham, 85% of Manila-based executives representing US firms anticipate increased profitability from their Philippine operations while 70% expect to expand their operations in the country in the coming years. (As cited here)

Talks of a US-Philippines FTA have long been floated by various American and Filipino trade officials but have not really taken off. Under former Pres. Barack Obama, the US had focused more on plurilateral or regional FTAs, especially the Trans-Pacific Partnership (TPP) of which the Philippines – despite the previous Aquino administration’s repeated expression of interest – never became a party to mainly due to foreign ownership restrictions in the 1987 Constitution.

PH bilateral FTA with US to have TPP elements

While Trump has abandoned the TPP and now prefers bilateral arrangements, it remains the standard with which the US will pursue bilateral FTAs including with the Philippines. As one trade official put it, a US-Philippines FTA must have the elements of the TPP as a “new age” FTA, which means that it should cover not just trade in goods but also services and international standards.

The Philippines TPP readiness assessment, a 2016 report backed by the US Chamber of Commerce (AmCham) and US Agency for International Development (USAID), identified key areas of policy reforms that the country must undertake to meet the TPP’s requirements. This report could serve as a useful guide in what the US could seek in its negotiations with Filipino trade officials on the planned bilateral FTA.

According to the report, while the Philippines “is already ‘TPP-ready’ in many key respects, pursuing TPP membership will demand… further significant adjustments in the policy environment, as embodied in administrative measures, laws, and the Constitution itself.” It noted that constitutional provisions restricting foreign ownership and participation in Philippine businesses is the biggest hurdle to our TPP accession.

These include, among others, the provision of national treatment obligations (i.e., foreign investors and investments must be given treatment no less favorable than what Filipino investors and investments enjoy) to trade partners that will require the Philippines to “revisit the current range of constitutional constraints relating to nationalized industries and service sectors, and adopt policy reforms in selected areas” namely mass media, private radio networks, advertising; natural resources or mining enterprises; land ownership; public utilities; and education and practice of professions.”

If Duterte’s Cha-cha pushes through, many of the US concerns – also annually reported as foreign trade barriers by the US Trade Representative (USTR) such as its 2018 report on the Philippines and other US trade partners – would be substantially addressed.

Federal charter for all-out liberalization

In the draft federal charter prepared by the Consultative Committee to Review the 1987 Constitution, the new Article XV on National Economy and Patrimony gives Congress the authority to change by law the constitutional requirements on the lease of alienable lands of the public domain supposedly “considering the general welfare of the people and the necessities of conservation, ecology, development and agrarian reform” (Section 3). Congress can reduce or even eliminate the constitutional limit on foreign ownership or control (pegged at 60% Filipino shares of stocks) of entities that can lease a maximum of 1,000 hectares for 25 years (renewable for another 25 years).

Another is on the exploration, development and utilization of natural resources (Section 4) which shall be a shared power of the federal and regional governments. While setting a minimum requirement of 60% Filipino-ownership or control of voting capital for entities with whom the federal or regional governments can have a co-production, joint venture or production-sharing agreements, Congress is again given the power to change by law the said voting capital requirement for the “federal and regional interest of the people, and thus theoretically allow up to 100% foreign ownership or control.

Meanwhile, ownership and management of mass media is reserved exclusively to Filipinos while the advertising industry is restricted to Filipinos owning at least 70% of the voting capital (Section 12) and educational institutions at 60% (Section 15). But similarly, these constitutional requirements can be changed (reduced or removed) by Congress through legislation supposedly for “public welfare and national security” although “for this purpose, such entities shall be managed by citizens of the Philippines”. In other words, such entities can be fully foreign owned although still managed by Filipinos.

For public utilities, the proposed charter (Section 13) states that Filipinos shall own at least 60% of voting capital of a public utility which can be operated through a franchise, certificate or authorization for 25 years (renewable for another 25 years). But like in mass media and advertising as well as educational institutions, Congress can modify the voting capital requirement (allow greater foreign control or ownership) provided that management will still be reserved to Filipinos.

It is also worth noting that Philippine telecommunications which is a particular concern for the US (as pointed out in its TPP readiness assessment) may be already liberalized even before Cha-cha is implemented through the ongoing amendment of the Public Service Act (also a priority legislation of the Duterte administration) that will limit public utilities to the transmission and distribution of electricity and waterworks and sewerage systems.

Duterte to implement long-standing US agenda

Other key provisions of the 1987 Constitution pertaining to preference for Filipino investments over foreign capital have been removed entirely in the proposed new charter of the consultative committee. Most notable is the current Section 10 of Article XII which states that: “The Congress shall… reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.”

Aside from economic sectors, the so-called federal charter is liberalizing as well the practice of all professions (Section 14) which while limited to Filipinos could be opened up to foreign professionals not just through federal law but also by “international agreements providing for reciprocity” (e.g., an FTA). This modification in the Constitution is consistent with the US push to open up to foreigners the practice of professions reserved to Filipinos as noted in the AmCham/USAID TPP readiness assessment of the Philippines (e.g. on nationality requirements for senior management position).

Beyond liberalization, however, is the greater protection for American investments that the US seeks in so-called 21stcentury FTAs such as the TPP. A bilateral FTA with the US thus will likely require an investor-state dispute settlement (ISDS) provision that affords US investors with full protection under international law and allows them to sue governments for failure to provide, fulfill or ensure such protection for American investments.

In the TPP, ISDS allows foreign investors to challenge a government’s “conduct, including expropriation measures, through binding arbitration and panel proceedings.” Related to this are national treatment and most favored nation obligations that may require constitutional and other policy reforms for the Philippines, with serious implications for the country’s national sovereignty and patrimony.

Cha-cha for greater liberalization of the economy and a bilateral FTA attest to the leading role that the US continues to play in shaping Philippine economic direction even amid the rise of China as a major actor in the country especially under the Duterte administration. The biggest irony is that these long-standing agenda of the US (expressed through many previous and present initiatives of the AmCham, USAID and other US institutions) may be finally realized under a President who vows a foreign policy supposedly independent from its neocolonial master. ###

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Governance, Human rights

Cha-cha ng mga trapo, dayuhan at negosyo

(Larawan mula sa CNN Philippines)

Ano ang problema sa Charter change (Cha-cha) ni President Duterte?

Dalawang bagay. Una, ang proseso kung paano gusto ng kampo ng Pangulo na baguhin ang konstitusyon. Pangalawa, ang mismong mga probisyon sa Saligang Batas na gusto nilang baguhin.

Sa unang punto, hindi lamang ito ang problemadong moda ng consituent assembly (con-ass) kundi maging ang paraan kung paano ito gustong ipatupad ng rehimen.

Totoong nakakabahala ang con-ass. Alam natin kung gaano kabulok ang Kongreso. Pugad ito ng mga pinakamasahol na trapo. Ipagkakatiwala ba natin sa kanila na kalikutin ang itinuturing natin na fundamental law of the land? Noong panahon ni Pres. Arroyo, malakas ang sigaw ng bayan laban sa Cha-cha at con-ass. Hindi umubra ang pakana ng mga trapo.

Pero ang mas nakakabahala ngayon ay ito –  mas garapal at mas bulok ang liderato ng mga trapong nagpapakana sa con-ass ni Duterte. Kung hindi n’yo pa nababalitaan, ito ang huling sinabi ni House Speaker Pantaleon Alvarez tungkol sa Cha-cha:

“Of course, some provinces would not support the initiative, then they will get zero budget. If you won’t go along with the plan, it’s okay. I respect that. It’s your right, but you should also respect my right to give you zero budget.”

Noong panahon nina GMA at Speaker Jose de Venecia, may pakulo pa ang mga trapo na “great debate” sa Cha-cha. Ngayon wala nang pakulo. Deretsahan na na pera-pera ang usapan. Kaninong pera ang iniyayabang ni Alvarez? Buwis natin. Buwis na lalo nilang pinabigat sa TRAIN (Tax Reform for Acceleration and Inclusion).

Mapapaisip ka tuloy – ang pahirap na dagdag-buwis ba ay para talaga sa infrastructure development at social services, o para sa Cha-cha ng mga trapo? Lalo ka tuloy masusuklam sa TRAIN. Pinabibigat lalo ang buhay ng mahihirap, pinagagaang ang sa mayaman para sa Cha-cha ng mga trapo? (Syempre, ang mga trapo ay sila rin ang mayayaman, at ang mga pinakamayaman ay mga backer ng trapo. Sila-sila rin ‘yan.)

Isipin n’yo, pera iyon ng mamamayan. Pinipiga sa bayang 10 milyon ang pamilyang nagsasabing mahirap sila at pitong milyong pamilya ang nagsasabing nakararanas sila ng gutom. Pero kung magsalita si Alvarez, parang galing sa sarili n’yang bulsa ang ipamumudmod sa mga gobernador at mayor na sasayaw sa Cha-cha.

Ito ang mga trapo na gustong mag-con-ass para baguhin ang ating Saligang Batas. Nagkakamali kayo kung inaakala n’yong tapos na ang maliligayang araw ng bulok na sistema ng pork barrel at patronage politics. Buhay na buhay ito sa ilalim ng Duterte administration at garapal na gagamitin para sa Cha-cha.

Lumilikha ng tensyon sa iba pang paksyon ng mga trapo ang kagaspangan ng pamamaraan ng mga ka-partido ng Pangulo sa House of Representatives. Para iratsada ang Cha-cha, joint voting ang con-ass na gusto nina Alvarez. Dito, magsasama bilang iisang assembly ang House at Senate para aprubahan ang mga pagbabago sa Konstitusyon sa botong three-fourths ng pinagsamang bilang ng dalawang kapulungan. Dehado syempre ang Senate na meron lamang 23 myembro sa House na merong 292.

Kung hindi payag ang Senate, sila-sila na lang daw sa House ang magku-con-ass, sabi ni Alvarez. Hinamon n’ya ang mga may kwestyon sa ganitong proseso na dumulog sa Supreme Court (SC). Ang parehong SC na inaatake nina Alvarez ng impeachment laban sa Chief Justice nito para kontrolado rin nila at maging sunud-sunuran sa agenda ng Malacañang.

Ito ang pangalawa (at mas mahalagang) punto, ano ang laman ng Cha-cha, para saan ito at para kanino?

Nakapaloob ang mga inihahaing pagbabago sa Saligang Batas sa Resolution of Both Houses (RBH) No. 8, ng Study Group ng Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-Laban) Federalism Institute (executive summary), at ng binubuong mga panukala ng House committee on constitutional amendments.

Importanteng maintindihan ang Cha-cha bilang isa sa mga larangan ng pagtutunggalian ng iba’t ibang interes sa ating lipunan. Pangunahin dito ang pagtutunggali ng interes ng mga naghahari (dayuhan, pinakamayayamang negosyante’t landlords at kinatawan nilang malalaking trapo) at pinaghaharian (ordinaryong mamamayan, manggagawa, magsasaka, urban poor at iba pang mahihirap).

Noon pa, interes na ng mga dayuhan ang mas mahigpit na kontrol sa likas-yaman at ekonomya ng Pilipinas para higit nila itong mapagsamantalahan. Nagawa nila ito sa pamamagitan ng colonialization at globalization. Pero hindi nila maitodo nang husto dahil bawal sa Konstitusyon ang ganap na dayuhang pagmamay-ari sa ilang susing sektor ng ekonomya (kahit pa na madalas naiikutan).

Kaya ang Cha-cha para payagan ang foreign ownership/control sa lupa, public utilities, mass media, at iba pa ay matagal nang agenda ng mga dayuhan, lalo na ng US at mga negosyong Amerikano. Binubuhusan nila ng milyun-milyong dolyar ang mga pag-aaral at lobbying sa Kongreso para bigyan ng justification ang lalo pang liberalization ng ekonomya sa pamamagitan ng Cha-cha.

Para sa malalaking negosyo kabilang ang mga dayuhan, taliwas sa interes nila ang constitutional safeguards sa karapatang panlipunan at pang-ekonomya ng mamamayan. Kaya isa sa mga aatakehin sa Cha-cha ang mga ito gaya halimbawa ng consitutional provisions sa living wage, seguridad sa trabaho, makataong kondisyon sa paggawa, serbisyong panlipunan at iba pa.

Binabaluktot ang papel ng estado sa pagtiyak sa mga karapatang ito – kabilang ang epektibong state regulation sa mga negosyo sa ngalan ng national o public interest – habang binibigyang-diin kung paanong higit na makikinabang ang mga negosyo.

Iisa rin ang agenda ng mga trapong nagtutulak ng Cha-cha mula pa noong panahon nina Ramos, Erap at GMA – ang manatili sa poder at pahigpitin pa ang kapit sa kapangyarihan ng mga nasa pwesto. Hindi ito nagbabago hanggang ngayon kay Duterte. Ang kaibahan, bukod sa mas agresibo at mas garapal ang mga trapo, mas tampok ang tunguhing diktadura ng Cha-cha ngayon.

Kinukonsentra ng Cha-cha nina Duterte at Alvarez ang kapangyarihan sa kamay ng iisang paksyon ng mga trapo habang pinahihina ang mga kalabang paksyon. Itinatago ito sa federalism bilang porma ng gobyerno. Pero kung susuriin, makikita ang authoritarian agenda at konsolidasyon ng poder ng nakaupong rehimen sa panahon ng mahabang transition sa federalism (na diumano ay pwedeng umabot sa 10 taon). Ito ang parehong istilong bulok ng diktadurang Marcos noon.

Kabilang sa mga panukalang inihahain ang abolisyon ng Kongreso at pagbibigay ng kapangyarihan kay Duterte na bumuo ng mga batas; pag-abolish sa opisina ng Bise Presidente, ang pagkontrol sa mga constitutional commission; at maging ang posibilidad ng pagtatalaga ng mga bagong myembro ng judiciary. Kung matutuloy ang maitim na planong ito, kumpleto at absoluto ang magiging kontrol ni Duterte sa lahat ng branches ng gobyerno.

Kung tunggalian ng mga interes ang Cha-cha, ang nagtutunggali sa pangunahin ay ang interes ng naghahari at pinaghaharian. Pero sa mga paksyon ng naghahari, mayroon ding tunggalian. At lalo itong matingkad sa diktadurang agenda ng paksyon nina Duterte. Kayan naman matigas ang pagtutol ng Senado sa gusto nina Alvarez na joint voting sa con-ass. Ito rin ang posibleng dahilan ng preference ng ilang ng malalaking negosyo sa constitutional convention (con-con), at hindi con-ass, bilang moda ng Cha-cha.

Pero iisa ang pinagkakasunduan ng buong naghaharing uri ng malalaking negosyo, dayuhan at trapo – lalong supilin ang mga karapatan ng kanilang mga pinaghaharian at lalo silang pagsamantalahan. #

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Economy, Global issues, Governance

Obama and the US Cha-cha lobby

Photo from here

Photo from here

Malacañang announced that defense and security would be on top of the agenda during US President Barack Obama and President Benigno Aquino III’s meeting on April 28. This, of course, is expected. In time for the visit, negotiators have rushed a new defense accord that will facilitate greater US access to and use of Philippine military facilities amid the country’s continuing territorial row with China. Obama and Aquino may sign the controversial Agreement on Enhanced Defense Cooperation next week as one of the concrete results of the highly anticipated meeting.

But another controversial topic may be discussed when the two presidents meet – Charter change (Cha-cha). Obama may discreetly push Aquino to give his open support to ongoing efforts to amend the 1987 Constitution.

Note that the US government and American corporations are among the long-time advocates of removing the constitutional restrictions on foreign investment. In fact, the Obama administration is more direct in its lobbying for Cha-cha compared to its predecessors.

Behind the cover of development assistance and promoting good governance, the Obama administration is quietly propping up the Cha-cha campaign through its so-called Partnership for Growth (PFG). The PFG is a signature inter-agency effort of Obama’s Presidential Policy Directive on Global Development, which claims to “elevate economic growth in countries committed to good governance as a core priority for US development efforts”. It supposedly aligns with policy reform areas outlined by the Aquino administration in its Philippine Development Plan (PDP).

The PFG is defined by the active participation and coordination of more than a dozen US government agencies led by the State Department, US Agency for International Development (USAID) and the Millennium Challenge Corporation (MCC), as well as multilateral donors like the World Bank, International Monetary Fund (IMF), United Nations (UN) agencies and even non-government organizations (NGOs) and private corporations.

In the Philippines, among the initiatives being supported by the PFG through the USAID is the Cha-cha lobby, which is being led by US companies under the American Chamber of Commerce (AmCham). In February 2013, AmCham and USAID launched The Arangkada Philippines Project (TAPP). This initiative pushes for the implementation of the policy proposals contained in the comprehensive advocacy paper “Arangkada Philippines 2010: A business perspective” prepared by the Joint Foreign Chambers of Commerce in the Philippines (JFC) where AmCham is a key member. Among the numerous policy proposals of the Arangkada initiative is addressing the 60-40 constitutional restrictions on foreign investments as well as other reforms for liberalization, deregulation, privatization and denationalization.

Meanwhile, even before the TAPP, the US government has been advocating Cha-cha through the Office of the US Trade Representative (USTR), which regularly brings attention to policy makers the restrictive economic provisions of the Constitution and the implicit message to remove them because they are barriers to US trade and investment. In March this year, the USTR released the 2014 edition of its National Trade Estimate Report on Foreign Trade Barriers covering 58 countries and trade partners of the US. The report is an inventory of the most important foreign barriers affecting US exports of goods and services, US foreign direct investments (FDI) and protection of intellectual property rights (IPR).

For the Philippines, the USTR identified the 30% constitutional limit on foreign ownership in advertising; 40% limit on foreign investment in the operation and management of public utilities (water and sewage treatment, electricity distribution and transmission, telecommunications and transportation); ban on foreigners to practice law, medicine, nursing, accountancy, engineering, architecture and customs brokerage; and restrictions on foreign ownership of land, aside from existing national laws, as among the barriers to trade being implemented by government.

Providing the backdrop to the US Cha-cha lobby is the Trans-Pacific Partnership (TPP), a potential free trade agreement (FTA) to create more profit opportunities for American businesses. The TPP is a key component of the so-called US pivot or rebalancing to Asia, which is the overarching agenda of the Asian tour of Obama that aside from the Philippines also includes Japan, Malaysia and South Korea. Obama’s former national security adviser called the TPP the centerpiece of US economic rebalancing to Asia and platform for regional economic integration. Aside from their territorial disputes with China, another common thread among the four Asian countries that Obama will visit is the TPP where Malaysia is already a negotiating party while Japan and South Korea are expected to join soon, and the Philippines pushing for its inclusion.

While the TPP and US-PH bilateral economic ties are not as controversial as the rushed and secretive new defense agreement between Manila and Washington, these items in Obama’s agenda during his meeting with Aquino do have far-reaching implications, such as Charter change and its impact on Philippine sovereignty and economic development. Several US officials have declared – and admitted by some of Aquino’s Cabinet secretaries – that Philippine membership to the TPP will require amending the Constitution given the highly ambitious liberalization that the US-led FTA is aspiring for.

Obama’s discussion with Aquino on TPP will further heighten persistent US pressure to implement Cha-cha. Last month, a top official of the USTR was in the Philippines and met with Trade, Agriculture and Tariff Commission officials to discuss the country’s possible participation in the TPP. In January last year, a “powerhouse” trade mission composed of executives from US giants Citigroup, Chevron, Coca Cola, General Electric, Procter & Gamble and JP Morgan Chase, among others, also met with Aquino to lobby for Cha-cha and the TPP. The US trade mission was facilitated by the US-Philippine Society (USPS), a business lobby group co-chaired by Manny Pangilinan, a perceived Cha-cha supporter whose businesses are bankrolled by substantial foreign capital (beyond constitutional restriction, such as PLDT).

Do not expect Obama’s Cha-cha lobby to land in official press statements after the visit because the US is not supposed to meddle in the Philippines’ internal affairs and violate its sovereignty. We may just notice, however, a Cha-cha campaign that is more energized than ever. ###

Read more on US-Philippine relations under the Obama and Aquino presidencies

US-PH Partnership for Growth: Greater economic intervention

Obama’s victory: the fallacy of lesser evil and illusion of choice

“2+2” equals more secret US bases in PH

Obama’s dreaded drone war arrives in PH

US agenda in Asia and the risks that Aquino is courting

Tubbataha grounding: expect more abuses as US pivots to Asia

IBON infographic: US military operations in PH, 2001-2011

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Charter change

More economic liberalization via Cha-cha is anti-people and anti-development

Nationalists and anti-liberalization advocates must expose the deception that increased liberalization through Cha-cha will create more jobs and address poverty. (Photo from sulekha.com)

First published by The Philippine Online Chronicles

On Thursday (Sep. 29), the leaders of the House of Representatives (HOR) and the Senate announced that they have agreed in principle to adopt a bicameral constituent assembly as a mode of changing the 1987 Constitution. Senate President Juan Ponce Enrile and House Speaker Feliciano Belmonte made the announcement at the conclusion of their legislative summit.

Without Aquino’s consent?

Malacañang was quick to distance itself from the latest campaign to push for Charter change (Cha-cha). Secretary Butch Abad of the Department of Budget and Management (DBM) was quoted as saying that President Benigno S. Aquino III remains firm on his position that Cha-cha is not a priority of his administration.

But the active role that Senator Franklin Drilon, a prominent member of the President’s Liberal Party, is playing in the current Cha-cha initiative could not be without the approval, or at least prior knowledge, of Aquino and the ruling party’s leadership. It was Drilon who proposed during the lawmakers’ summit that the House and the Senate use the legislative process and lawmaking procedure in amending the Constitution.

As Drilon explained, each chamber will deliberate separately on Cha-cha proposals like an ordinary bill and then “exercise constituent function through a bicameral assembly.” But unlike a regular bill, the proposed amendments will be submitted not to the President but to the people for ratification.

Contentious issue

Cha-cha has always been a contentious issue since former President Fidel Ramos first pushed for it in 1997. Various sectors had massively mobilized against past attempts to tinker with the Constitution due to persistent fears that the incumbent Chief Executive and his allies in Congress have ulterior political motives. From Ramos to Joseph Estrada, and most especially under Gloria Arroyo, Cha-cha was widely perceived as a ploy to perpetuate the incumbent to power.

For Cha-cha advocates, the perfect time to push for constitutional amendments is now when the current President enjoys high trust ratings and is widely seen as uninterested in prolonging his stay as a leader. In fact, Drilon’s proposal is unoriginal. The process of amending the Constitution through the regular process of the legislature in enacting a law was first espoused by former House Speaker Prospero Nograles.

Like Drilon, Nograles also said that only specific economic provisions of the Constitution will be amended through this process. Despite such assurance, the scheme did not prosper because of the widespread distrust in Arroyo and her allies including Nograles. Drilon and the Cha-cha proponents are hoping that this time around, the public reception will be different.

Expose the deception

The political landscape may have changed and created a favorable condition for those advocating for Cha-cha, which include not only the politicians who want to consolidate their power and preserve their political dynasties but also the big business groups in the US and Europe who have long been pushing for more liberalization of the economy.

Thus, there is a looming serious challenge for nationalists and anti-liberalization advocates to persistently expose the deception being peddled by Cha-cha advocates that increased liberalization through constitutional reforms will bring in more foreign investments and create more jobs, and thus address the country’s backwardness and worsening poverty.

At present, arguments for further economic liberalization via Cha-cha are being articulated by Rep. Loreto Ocampos (Misamis Occidental, 2nd district), who chairs the House committee on constitutional amendments. Ocampos has merely revived the very same proposals that previous Cha-cha attempts had already proposed.

These are: (1) Removing the 60 – 40% equity limitations; (2) Removing exclusive control and management by Filipinos in companies with foreign equity; (3) Expanding the role of foreign investors in exploration, development, and utilization of natural resources; (4) Allowing foreign ownership of industrial lands; (5) Liberalizing media by allowing foreign investments; (6) Liberalizing the practice of profession by allowing foreigners to practice their profession in accordance with the principle of reciprocity; (7) Liberalizing investments in educational institutions by allowing foreign investment in tertiary education; and (8) Extending the 25 + 25 land lease agreement.

According to Ocampos, amending the economic provisions of the Constitution has two main objectives: (1) To open up the economy to attract foreign direct investments and (2) To make the economic policies more flexible to meet the ever changing dynamics of domestic and foreign economic environment.

Oblivious to lessons of global crisis

Such arguments are oblivious to the lessons of the raging global financial and economic crisis and to the lessons of the past three decades of intense liberalization of the economy. The global crisis and the country’s experience under neoliberal globalization have affirmed the need to develop a self-reliant economy instead of depending too much on external drivers of growth including unbridled foreign investment. Since the financial meltdown in 2008, foreign direct investment (FDI) has been declining by almost 16% a year, contributing to the significant slowdown in the expansion of the gross domestic product (GDP).

Despite the supposed constitutional restrictions on foreign capital, actual policies especially since the globalization frenzy of the 1990s have created an environment very favorable to the influx of FDI in the domestic economy. But the economy has not only failed to develop but became even worse, with poverty and joblessness today at their most intense.

Policy makers must disabuse themselves of the notion that more FDI means less poverty and more development. FDI and foreign investors have no altruistic, humanitarian goals to help the poor and whatever development gain is merely secondary to profits generated by their investment. As such, unregulated FDI can be merciless, draining host economies of their resources and destroying local industries and productive forces like what the country has been undergoing for decades.

Destruction of jobs, assault on labor

It is true that FDI may generate some employment. However, if left unrestricted, it could have a negative impact on net job creation in the long run as local businesses and industries are forced to either close shop because of undue foreign competition or reduce their workforce in order to survive. Even when new openings in the economy are made available to foreign investors through Cha-cha, it still does not guarantee that they will start to redirect their capital here from our neighbors in the region.

What determines foreign investor appetite is still the cheapness of labor power and docility of the workforce. Thus, we should not be surprised when constitutional provisions (although violated repeatedly) that provide social protection to Filipino workers will be dismantled as well once the Constitution is opened up for revisions to complement the increased liberalization of the economy. Consequently, Cha-cha will further legitimize and promote the already rampant contractualization and other forms of labor flexibilization as well as further depression of wages such as in export processing zones (EPZs) where there is a very high concentration of FDI. Under these circumstances, FDI negates the prospects of sustainable, secure, and quality job creation in the country.

Total surrender of sovereignty, patrimony

The existing constitutional restrictions on certain economic activities – despite the overall weakness of the Constitution and repeated violations by the powers-that-be of its protectionist provisions – must not be given up and instead be used to safeguard whatever little is left of the country’s sovereignty and patrimony, which have been seriously undermined by past neoliberal policies.

A case in point is public utility like the provision of water supply and sanitation, distribution of electricity, mass transportation and communication. The 60 – 40 restriction were put in place precisely because of the recognition that these sectors play a key role not only in ensuring that the people live decently but also in promoting national development and building industrialization.

In fact, such crucial role should have made all public utilities in the country controlled and owned by the state but because of privatization, ownership and control have been transferred to profit-seeking private corporations with disastrous results for the people. This situation is surely to aggravate when foreign companies are allowed to fully own public utilities in the country.

Whenever their profits are threatened, private foreign companies will readily compromise the national interest and general welfare to protect its commercial viability. One example is French company Suez, which used to control Maynilad Water Services Inc., a private water concessionaire that the Arroyo administration still bailed out in 2004 after a long dispute arising from a rate hike petition.

Intensified plunder of natural resources

Meanwhile, the proposal to allow foreign ownership of lands, lengthen the duration of land lease deals, and expand the role of foreign investors in exploration, development, and utilization of natural resources in the country will further legitimize and heighten the exploitation and plunder by foreign corporations of the country’s rich resources.

While actual experience shows that the Constitution has not effectively restricted full foreign control over the country’s strategic natural resources like minerals (through the Philippine Mining Act of 1995) and petroleum (through Oil Exploration and Development Act of 1972), dismantling the stated restriction makes the current situation much worse. The country has no shortage of experience showing how the Philippines and the people have been disadvantaged such as the case of the Malampaya natural gas project, which is under the control of global oil giants Shell and Chevron. More importantly, in a situation where a great majority of Filipino farmers are landless, allowing foreigners to own lands in the country is blatantly unjust and immoral.

Undermining self-reliant, independent economy

Globalization and its objective of creating more opportunities for First World capital to maximize the exploitation and plunder of the economies of poor countries are incompatible with the thrust towards building a self-reliant and independent national economy. While international economic relations are important to national development, it can only play an effective and beneficial role if indispensable pre-requisites are met to achieve a truly healthy foreign trade and investment relation, including first and foremost the establishment of a vibrant domestic economy that could stand on its own.

Historically, no country has achieved industrialization without ensuring the protection of its domestic economic sectors and reserving specific economic activities to its own people, which not only continues but in the light of the global crisis has even gained momentum.

A gross untruth

By itself, FDI is not bad and can actually contribute to overall economic development and industrialization. But it can only play a positive role in the economy if FDI attraction is designed in a manner that answers specific requirements or needs of the domestic economy. Unfortunately, this has not been the case in the Philippines. The economy itself is being designed to meet the needs of foreign capital such as the country’s experience with the privatization of public utilities and infrastructure development and liberalization of agriculture, mining, retail trade, etc. in the past three decades.

Finally, the structural flaws inherent in the current social system dominated by elite and foreign interests are the ones behind the country’s perpetual backwardness and worsening economic problems that have long been emasculating our economic development and impoverishing our people. That these problems will be corrected once Cha-cha is implemented is a gross untruth and only intends to mislead the people in addressing the roots of our deteriorating backwardness and poverty. #

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