Fight hard for Philippine interest within the WTO

Rizalino S. Navarro, Chair, Rizal Commercial Banking Corp., Philippine Daily Inquirer, Asia News Network, Manila

It was during my incumbency as trade secretary seven years ago when the Philippines acceded to the World Trade Organization. Since then, questions have been raised and continue to be raised about the wisdom of the Philippines' membership in the WTO. This is not surprising, given that there are gainers and losers in globalization, which is underpinned by the free movement of goods and services across borders. But to get off this global train and abandon the WTO is like throwing the baby with the bath water.

Economic evidence suggests that trade liberalization stimulates economic activity and boosts productivity. More jobs, higher wages, lower prices and more choices for consumers. And because it raises incomes and lowers costs of living, individual citizens and their governments are better able to devote resources to education, health, shelter and protecting the environment. It is the developing countries like the Philippines, particularly the poor and the farmers, who stand to lose more if this process is halted or even reversed.

International trade rules and WTO disciplines promote a level playing field. They give the poorer countries the chance to defend themselves against pressures from powerful trading partners.

This may not happen all the time specially when powerful countries arbitrarily adopt discriminatory measures (e.g., US tariffs on imported steel). But precisely because the WTO is based on nondiscrimination, rich and poor countries alike can be challenged when they violate the agreement. They have an equal right to lodge a complaint in the WTO's Dispute Settlement Board. Decisions are taken by consensus allowing all members, big or small, to have a say and a rules-based fora to say it.

The Philippines is a small trading country. On its own, it does not have much leverage to negotiate as an individual country with the big players. It is, therefore, in its best interest to remain in the WTO. It has allied itself with other WTO member countries with developing economies (e.g., the Association of Southeast Asian Nations) to promote its economic albeit parochial interests.

Membership in the WTO lends predictability and consistency to the trading environment as members are required to grant most- favored-nation treatment to its exports and to adhere to certain rules and disciplines in the conduct of international trade transactions. This is the same strategy adopted in ASEAN through its Common Effective Preferential Tariff scheme. Historical data prove that the Philippines' intra-ASEAN trade had the highest growth among the members.

The process towards global integration and of enjoying benefits is neither instantaneous nor painless.

Globalization and liberalization can lead to the marginalization of some sectors and to widening the income gaps between those who are able to adjust to the new requirements and those who cannot. The Philippine Congress precisely legislated safety nets (i.e., support mechanisms like infrastructure development, institutional capacity building, training, export incentives) to cushion the adverse impact of globalization.

Evidence suggests that the benefits of liberalization and globalization outweigh the costs. This explains why there are still some 3O countries waiting to get in the WTO after China.

But the WTO will only serve Philippine interests well if it knows how to assert its rights while adhering to its obligations. The Philippines should participate actively in the WTO process to ensure that its concerns are taken into consideration and the rules are interpreted and implemented accordingly.

Given that the Doha Round is already happening, the Philippines should work with the rest of the WTO membership to ensure that it truly becomes a development round. This means actively negotiating to open markets of developed countries through the progressive reduction of tariffs and elimination of non-tariff barriers, accompanied by the strengthening of rules and disciplines as well as technical assistance and capacity building for developing countries.

The WTO brings together developed and developing countries in addressing the trade and investment dimension of the globalization process. The onus is on both sides of the North- South divide to manage this process so that it benefits their citizens fully.

For the North, not to pander to narrow interests to gain political capital and to recognize the development needs of the South and therefore of rules that recognize this. For the South, not to forever rely on special and different treatment in the WTO as a substitute for genuine efforts -- which means accepting that it will entail pain -- to make their economies efficient and competitive and to provide safety nets to those requiring adjustment to prosper in such an environment. And for both, to do a better job of making a case for free and fair trade.