Charter change, Economy

EU and DFA deceiving the public on European lobby for Cha-cha

The Head of the European Commission (EC) in the Philippines, Mr. Alistair Macdonald, and the Department of Foreign Affairs (DFA) are deceiving the public by claiming that there is no “request” from the European Union (EU) for the Philippine government to modify the 1987 Constitution, specifically to lift the constitutional ban on 100% foreign ownership of land and foreign practice of certain professions in the country.

Such document exists and is actually available online. Click this link and browse the page and look for the link “Philippines” to access the document in PDF format.

This document, which the EU has attempted but failed to keep secret, forms part of the negotiation process for the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO). The objective is to achieve further economic liberalization through a “request and offer process”, i.e. a country will submit a list of sectors it wants liberalized, identify the legal barriers to  foreign investment, and request that such barriers be eliminated. The party to which the request is made will then have to make an offer (which sectors the country is willing to eliminate the barriers identified by the EU). The EU made a request to a total of 109 WTO members, including the Philippines.

Reading this document, one would not find the phrase or term “Cha-cha” or an explicit request to modify the Constitution. Instead, the document simply enumerates the identified liberalization barriers and then proposes that such barriers be eliminated. For instance, on page 3 of this document, we will find these entries:

  • Participation of foreign investors is limited for certain expressly reserved activities reserved by law to Philippine citizens (MA). EC request: Eliminate this requirement of citizenship…
  • Acquisitions of land (MA) require 60% local capital. Foreign investors may lease only private owned land. EC request: eliminate

Limits on foreign investors on certain economic activities and land ownership are implemented because the 1987 Constitution mandates the government to do so, obviously to protect the national interest. By requesting that these prohibitions be “eliminated”, the EU is in effect lobbying for Cha-cha to accommodate their “requests” under the GATS.

External pressure from the rich countries to implement Cha-cha for more economic liberalization has already been raised in the past. In fact, it is the Americans, and not the Europeans, who are more vocal and explicit in their demand for Cha-cha to allow unbridled foreign investments in the Philippines. While the EU veils its Cha-cha lobby under the negotiation process of the WTO-GATS, US-based corporations bluntly state in their official papers the need for Cha-cha.

The American Chamber of Commerce of the Philippines Inc. (AmCham), for instance, candidly said in its advocacy paper “The roadmap to more foreign investment” that when the 1987 Constitution is amended, restrictions on foreign investment and land ownership should be removed. In its 2006 Investment Climate Improvement Project (ICIP) advocacy plan, AmCham vows to seek “removal from the Constitution of all restrictions on foreign investment and professions” to “further liberalize the foreign investment regime to bring needed capital, skills, and technology into the country.”

AmCham’s ICIP, which aims to initiate investment climate reforms in the Philippines, is being funded with an undisclosed amount by the US government.

Meanwhile, the office of the US Trade Representative (USTR), an agency of the US government in charge of directly negotiating trade agreements with foreign governments , as well as resolve disputes, and participate in global trade policy organizations, has identified several provisions of the 1987 Constitution that it considered as “trade barriers.”

These papers are all publicly available, just Google them.

Over and above the narrow, self-serving political agenda of the Arroyo administration, there has always been intense and persistent pressure from the rich and powerful countries to implement Cha-cha and liberalize the economy. While the Philippine economy has already achieved a relatively advanced level of liberalization, such opening is still not enough to meet the insatiable need of powerful countries like the US for markets and profit-making opportunities. And as Arroyo herself has declared, the next phase of liberalization in the Philippines will be in the form of Cha-cha. Arroyo and her clique have been riding on this imperialist agenda to implement their own political agenda to stay in power.

Thus, if Cha-cha is implemented, we will end up with the illegitimate Arroyo government and at the same time surrender to the US and EU whatever is left of our lands, our jobs, our industries and our economic sovereignty.

The people must defeat this evil scheme.

Agrarian reform, Economy

Notes on the rice crisis

  1. The current rice crisis is a manifestation of the permanent crisis of Philippine agriculture and the economy in general. This permanent crisis is characterized mainly by backward production and intense concentration of the means of agricultural production, most especially land, in the hands of compradors and landlords.

  1. Such backwardness and lack of genuine agrarian reform have been aggravated by the neoliberal restructuring of agriculture, which has been most intense since the 1990s. They include the WTO-AOA (Agreement on Agriculture), rice trade liberalization, privatization of the NFA (National Food Authority), land use and crop conversion that prioritized production of high value crops for export instead of food including rice for domestic consumption, among others.

  1. The direct impact of these neoliberal reforms is the substantial erosion of the country’s self-sufficiency and self-reliance in food production. Farm area for palay contracted by 86,606 hectares between 1991 and 2002 as a result of land use conversion, based on the 2002 Census of Agriculture (CA) of the NSO (National Statistics Office). Corn, which like palay is also a staple crop, saw its farm area contract by 298,064 hectares during the same period.

  1. Overall, the country has become a net food importer after decades of surplus food production. From a yearly surplus of $667.5 million in food trade from 1980 to 1994, the Philippines recorded an annual average of $724.6 million in food trade deficit from 1995 to 2006.

  1. Thus, the current rice crisis can be summed up as the country’s incapacity, because of years of neoliberal agricultural restructuring, to meet domestic requirements through local production amid a situation of tightening global supply of rice. At present, the global supply is pegged at 323.3 million metric tons (MT) while demand is already 323.2 million MT.

  1. In the past years, the share of rice imports to the gross domestic supply of rice has been significantly increasing. BAS (Bureau of Agricultural Statistics) data show that from 1990 to 2000, imports comprised an average of 5.9% of the country’s annual gross supply of rice. The figure has jumped to 9.7% for the period 2001-2006. In 2005 and 2006, the import ratio was 13%.

  1. For 2008, Bayan maintains that imports could account for as much as 20% of the country’s rice consumption. This is much higher than the government claim of an 8%-share of rice imports to national rice requirements. Media reports in March quote the Department of Agriculture (DA) as saying that rice imports this year could reach as high as 2.4 million MT. This volume is equivalent to almost 20% of the country’s average annual rice consumption of around 11.9 million MT.

  1. With such a high level of dependence on rice imports, the country is definitely facing a serious insecurity in rice supply given the tight situation in the global supply-demand balance for rice. Worse, Vietnam, which in 2006 supplied more than 85% of our rice imports, is itself facing grave concerns on its own supply security.

  1. Vietnam needs to secure its own rice supply as it faces rapid contraction in its farmlands due to land use conversion, losing 125,000 hectares of rice fields in 2007 alone. It projects rice exportation to fall by one million MT per year and considers totally stopping exportation to protect its own food security.

  1. The Philippines is already feeling the impact of these developments in Vietnam. Out of the 1.5 million MT in rice imports that the country asked from Vietnam for 2008, Vietnam committed only one million MT. With a volatile situation in the global rice market – and other factors that contribute to this volatility such as extreme weather changes, US recession, energy/oil insecurity, etc – there is no assurance that Vietnam and the country’s other sources like Thailand can deliver. Note also that China, which used to export rice to the Philippines, is now a net rice importer.

  1. Because of tightening global supply, combined with uncertainties in the US economy that encourage massive speculation in commodities including rice, the price of rice has been soaring. Rice from Thailand and Vietnam, for instance, is already at the range of $600-700 per ton from only $320-340 per ton in 2007. As a consequence, local retail prices have been increasing rapidly. As of the second week of March, the retail price of fancy rice is pegged at P33.17 per kilo from an average of P30.76 per kilo in 2007; premium rice, from P26.93 to P28.91; special rice, from P24.72 to 26.91; and ordinary rice, from P22.39 to P24.58. Under the Arroyo government, the price of rice has increased by an average of around P7 a kilo.

  1. The NFA has been ineffective in stabilizing rice prices, which is one of its mandates, as it has been substantially weakened by commercialization and privatization efforts of past and present governments. While the government intends to keep NFA rice at P18.25 per kilo, NFA’s limited participation in the local rice market (only 5% according to IBON), which continues to be dominated by a cartel, do not make a dent on overall increases in rice retail prices.

  1. Tight supply and high prices will hurt the poor most. The rich have extra money to buy a big volume of rice, even at unusually high prices, that could meet their families’ need for a couple of months. For most families, however, they buy rice to meet a day’s need, or in many cases, a meal’s need. (Aside from those who could not afford a meal at all.)

  1. The urgency of drastic reforms, both in the short and long terms, is highlighted by the fact that the various reasons behind the tightening global supply of rice – climate change, energy insecurity, US recession and the crisis of monopoly capitalism in general – are far too complex to be resolved very soon. On the other hand, indicators show that they will continue to worsen in the coming years, and thus put even greater pressure on the country’s food security. Changing weather patterns, for instance, will significantly reduce production and yield in the generally backward agricultural systems of the world’s rice producing countries, including the Philippines. The mad rush to biofuels to meet growing energy needs, in particular in the First World, will continue to undermine food production, especially in the colonial and neocolonial countries.

  1. To ensure food security, the country needs to be self-reliant and self-sufficient in its food production, especially of staples such as rice.

  1. Medium to long-term reforms must include the implementation of genuine agrarian reform (land distribution, substantial and reliable state support/subsidy, etc) to encourage farmers to be more productive; reversal of agriculture liberalization (stop WTO-AOA, rice tariffication, etc); strengthen the mandate of the NFA in ensuring sufficient and accessible supply at affordable prices of food crops including rice and reverse its privatization and commercialization; dismantle the rice cartel; and stop land use and crop conversion and expand domestic food/rice production to levels of self-sufficiency (including a reliable buffer supply), among others. These policy reforms must start now.

  1. Immediate interventions (GMA must stop downplaying the crisis and recognize the urgent need for significant State intervention): Centralized procurement of imported rice of the NFA (cancel import licenses of private traders), increased presence of NFA distribution/retail outlets particularly in areas where poor families are concentrated (urban and rural); emergency fund that will directly go to rice farmers to subsidize production cost; price control (under RA 7581 or the Price Act, government can impose a price ceiling during times of calamity, disaster, or emergency).