here guys, listen to the music i placed above (just click the play button) as you read my Philippine Independence Day - 110 years of independence essay.

I am fully convinced that certain forms of

modern imperialism, which appear to be inspired by economic or politics, are in fact real forms of idolatry: the worchip of money, ideology, class or technology.
- Pope John Paul II, Imperialism Blamed for Havenot's Plight, Philippine Journal, June 9, 1989

I have to say that though the Filipino people have to be celebrating what Rizal, Bonifacio and what out other national heroes fought and died for, I couldn't help but think that Pope John Paul's speech way back is still evident and illustrative by Philippine example.

And so I celebrate Independence day, rumbling about modern imperialism and the history of the struggle for Philippine industrialization, to show contempt to those who have no respect for freedom and to those who gladly take part in a slave society. I offer this gift to my beloved country, not the negativity and inability to see the little progress that Philippines made since the end of WW2, but the acknowledgment that Philippines is suffering and that it needs help. Let this be my show of loyalty to every thinker who did and who continue to strive and advocate for REAL independence. To Jose Rizal, Andres Bonifacio, Miguel Malvar, Ricarte, Elpidio Quirino, Renato Constantino and Fernando Poe Jr. To Gen Danilo Lim, Atty Tiu, and Alejandro Lichauco. To my college history instructor who introduced the spirit of nationalism by encouraging me to read more accurate and detailed events of our history (including certain passages from American history books, Time magazine, and a variety of journals) which lead to the scenario Philippines finds itself in today; to him who saved me a bunch by not merely requiring to memorize birth and death dates of popular people in Philippine History. I then start the main topic of my essay by educating the dumb populace the name and the meaning of the true evil that plagues our nation. That is - Neocolonialism or Modern Imperialism.

How is Neocolonialism and Modern Imperialism defined?

Modern Imperialism is the policy and method by which strong powers acquire colonies and dependencies by means other than outright conquest and physical annexation.

It is the policy of a strong nation seeking political and economic leadership over an independent nation, or extended geographical area, without necessarily reducing the subordinate nation or or area to the legal status of a colony.
it is the use of economic, political or other means to retain influence over former colonies.

Neocolony: the nation reduced to dependency by the dominant power. It is a nation, independent in legal status, but which in fact is the effective colony of another.

Examples of Neocolonialism and Neocolonies:

U.S is to Latin America
U.S and Great Britain is to Egypt before Nasser, Iran during the time of the Shah, China before the communists took over and Libya before Khadaffy

Purpose and Objective of Neocolonialism:
It's primary purpose is the plunder and pillage of nations and people. Imperialism destroys the jobs and livelihood in underdeveloped countries.

How?
It plunders primarily by forcing the economies of its victims to foreign goods and foreign investors.

EFFECT: Markets of third world countries compelled to open to unlimited imports and become dumping ground of foreign goods.

EFFECT: Local industries and domestic sources of income and employment are undermined.

EFFECT: third world countries are kept in a state of dependence because they are unable to support industries of their own.

The Foreign Investors, Transnational Corporations and their Role in keeping a Neocolony Poor:
Remember: the primary objective of foreign investors is not to develop the the productive powers of the country where they operate. Their responsibility is primarily to themselves, to make profit for themselves as quickly and as much as they can, in whatever way they can, even if they destroy local competitors in the process. They can go to the factory, mining pit, forest, or country where they can do the most for the least money and do so quickly and do so on a scale that makes it very difficult for smaller companies to compete.

How exactly? Step 1. Foreign investors, like a parasite, enter host country.

Step 2. Remember that money in the bank doesn't have eternal supply. And you know what foreign investors do to exhaust the measly resources of their host country? Foreign investors don't bring in money in their host countries, they merely borrow from the local banks and the money market. Now how bad is that? Money that is supposed to be lent to local industries to start their own businesses go instead to these big foreign capitalists. Bankers naturally would gladly lend money to the foreigners because they have higher capability of paying the money back. What happens to local businessmen? No capital because capital all wound out to foreign shores.

Step 3. Foreign investors - through transnational corporations - engage in a wide variety of exploitative practices that drain the host of resources. Capital, whether it be natural capital in the form of resources, or human capital, in the form of low-wage workers, or local capital in the form of functional and healthy local economies, is being extracted. That is why our countrymen do not have access to our vast resources because it is these foreign investors who are in control of them.

Step 4. Foreign investors then set up plants that actually function as conduits through which overseas factories export goods. They don't use the plants in the production of their goods. They use the host country's laborers in the production of raw materials (i.e sugar) necessary for the production of industrial items (i.e. candy). When raw materials are produced, they send these to their countries so that they can use their advance machineries to produce an industrial product. The industrial product is then exported to the host country in surplus. Now what is essentially wrong with that? Foreign Investors have no plans of transferring their technology in their host countries. What they want is to keep the local laborers good at planting but dumb at modern technology necessary for mass production. Why? So that consumers, or people, will depend on what the foreigners produce. And so as to ensure that no local competitor will emerge, they keep the knowledge of technology all to themselves.

Step 5. Foreign investors, knowing that the host country is dependent on what they produce, sell their goods at severely overpriced levels. In that case, they get back the money they spent at the fastest possible rate.

Step 6. Foreign Investors send 100 percent of their gains back to their country so that they could borrow capital money at the host country's local bank once again. And so the cycle goes on.

Step 7. Foreign Investors then become the richer people amongst in the host country's population. What do they do next? They use their power to keep the people poor, dumb, and acquiescent to their suggestions. They use religion to influence people to go forth and multiply (more people, more buyers of their product). They sponsor the candidacy of the politicians who will ratify laws that will prioritize their rights over the host country's people's rights. They will dictate how education should be carried out so that the children of the host country's people will remain dumb to their motives just like their parents. They force the brightest and smartest minds to get out of the country just so they would live a decent life resulting in a massive brain drain in the host country. They will keep the host country's militia men poor and laughable. They will support crimes. They will support corruption so that they can put the blame of mass poverty on it instead of themselves. They will ensue the creation of rebel groups and label them as terrorists that need banishing so that they can justify bringing in the host country foreign military bases that claims to function as a help to the local militia men in protecting the nation but actually functions to show off their power and scare the leaders of the host country who dare go against their rule. In addition, since most of the money in the host country are held by the foreign investors, the host country, with no funds to support it's people, then borrows money from international banks. These international banks will lend money, yes. But not only that, they will also support the vicious actions of the foreign investors. Oh yes, cause you see, my dear readers, the poorer the country is, the less power it will have. And that's exactly how they make one easy to rule.

If you're a Filipino, I then ask you, Doesn't the situation above seem familiar?

Well my dear countrymen, It should. Because Philippines is the perfect example of a true to life host country running under the rule of none other than the powerful hands of the greatest Imperialist in the world, which is UNITED STATES OF AMERICA.

Need proof? I would be more than glad to discuss.

IMF (International Monetary Fund) and WB (World Bank) are the Prime Agents of Neocolonialism.
(Remember guys that IMF are controlled by the powerful nations, led by the U.S., the U.K., Japan, Germany, France, Canada, and Italy. These are all rich countries where most foreign investors in third world nation comes from.)
The IMF and WB are based on a mortal combination of 5 deadly policies:
a.) constant devaluation of the currency. (pagbagsak ng halaga ng piso)
-- devaluation means inflation, a rise in the cost of production and the cost of living as well as social services. It also translates into an increase in peso cost of the nations huge foreign debt.

b.) import liberalization. (kawalan ng limit sa pag-import)
--undermines domestic industries, both manufacturing and agricultural, squanders our limited foreign exchange reserves and leads to an over rising trade deficit and foreign debt.

c.) fiscal and monetary austerity.
--restricted money supply and high interest rates. These in turn constrict economic activity. Any effort on the part of the government to meet social demands for public works and services translates into an IMF - WB requirement for higher taxes.

d.) minimal role for government in the economy.
--withdrawal of programs, subsidy for farmers, price control of basic commodities, and subsidized rates for water and electricity, intended to assist those sections of the population whoa re unable to defend themselves against the impoverishing consequences of inflation and constricted economic activity.

e.) maximum role of foreign investments in the economy.
--tolerance of exploitative practices, including political intervention to secure laws and policies favorable to foreign investors.

Must know: Philippines was first submitted to the IMF-WB supervision in 1962 through the Decontrol Programme of Diosdado Macapagal Administration.

The Real Root of Philippine Poverty Explained

A pre-industrial economy
where wealth is concentrated

The immediate explanation for mass poverty is to be found in the inherent limitations of a pre-industrial economy. This condition is made worse by the concentration of wealth. These two factors acoount for the co-existence of massive unemployment in one hand, on the other, of monopolies whose unchecked market power enables them to exploit the underprivileged mass of consumers.

Deprived of a solid and extensive manufacturing base similar to those of industrialized societies, sources of employment and income in the Philippines are largely confined to the land and the commercial and service sectors where ownership concentration prevails.

An economy without an extensive manufacturing base is an economy with an extremely limited capacity to produce goods and services. Which means, in turn, an extremely limited capacity to generate jobs.

Since jobs are the primary, if not the only, source of income for those who have no business or capital of their own, you can see why a job is all-important to the very survival of the greater number of our people. They have no capital and so they rely on their muscle and skills to earn and survive. But since the opportunity to make use of their muscle and skills is extremely limited in a non-industrial society, they must seek life abroad, as many increasingly do, or suffer in poverty at home.

To grasp the magnitude of the poverty problem in this country, consider that Taiwan, which has to provide for a population of only 20 million people, and Singapore, which has to provide for only 3 million, are already fully industrialized states. The Philippines, on the other hand, which has to provide for 80 million, still remains in the pre-industrial age. This explains the desolation of our rural areas and the filth and squalor in our cities, and why millions of our countrymen have been forced to abandon home and country to seek employment abroad.

That is the tragedy of a people whose economy has yet to undergo an industrial revolution.

The severe and acute absence of job opportunities in a non-industrial society is sharpened by the monopoly power which the few who posses capital and own the means of production are able to exercise power over the mass of the population. You can see that power displayed and held arbitrarily in such cartelized industries as rice trading, food processing, banking, cement, public utilities (telephone, power, transportation), construction, insurance, and the like. Monopoly and oligopoly power automatically flows from a situation where wealth is held by a few.

The one central message conveyed by the Asian Newly Industrialized Countries is that the only way out of backwardness and poverty is through an Industrial Revolution. Poverty cannot be rolled back by agriculture and commerce. It can only be rolled back by the force of industry and power of machines.

What sets off rich nations from poor nations, developed from underdeveloped, is industrialization. The former are powered by industrialized economics; the latter remain in the pre-industrial age.

Why has the Philippines Fail to Industrialize: Because of U.S Colonialism and Neocolonialism.

To understand how American colonialism and, subsequently, neocolonialism suppressed the industrialization of the Philippines, we must recall the motives which impelled the U.S government to annex the Philippines at the turn of the century. Those motives stemmed from the rise of the U.S as an industrial power and its need for markets abroad on which American industries can dump their surplus production. A small but powerful circle in America, driven by imperialist ambitions, had long coveted the huge market of China, and they saw in the Philippines a piece of territory which serve not only as a market for the surpluses of American industries but, even more important than that, as a launching pad of the mainland China.

And so that circle maneuvered the US senate into passing a resolution which committed the US government to a policy of imperialism in the Philippines. Their spokesman in the senate into passing a resolution which committed the US government to a policy of imperialism in the Philippines. Their spokesman in the senate was Albert J. Beveridge, a senator from the state of Indiana, who sponsored the resolution of annexation.

In his speech sponsoring the joint congressional resolution authorizing the annexation of the Philipines, Beverage argued:

The Philippines are ours forever... And just beyond the Philippines are China's illimitable markets. We will not retreat from either. We will not repudiate our duty in the archipelago. We will not abandon our opportunity in the Orient.

Our largest trade henceforth must be with Asia. The Pacific is our ocean. More and more Europe will manufacture the most it needs, secure from its colonies the most it consumes. Where shall me turn consumers of our surplus? Geography answers the question. China is our natural customer... the Philippines give us a base at the door of all the East.

Prior to that resolution, Beveridge delivered a famous speech on September 16, 1898, titled March of the Flag which extensively laid the rationale for annexation and was intended to move American public opinion into supporting the position of the imperialists. Annexation faced considerable opposition from the enlightened sections of the American public who saw it a policy which squarely defied the American democratic tradition.

But Beveridge argued:

The Riches of the Philippines have heavily been touched by the fingertips of modern methods. And they produce what we consume, and consume what we produce... They sell hemp, sugar, coconuts, fruits of the tropics, timber or price like mahogany; they buy flour, clothing, tools, implements, machinery, and all that we raise and make. Their trade will be ours in time... The Philippines is larger than all New England, New York, New Jersey and Delaware combined. Together they are larger than the British isles, larger isles, larger than France, larger than Germany, larger than Japan.

Today, more than a hundred years after that historic resolution on annexation, America policy in Asia remains as obsessed with the market of China, the Philippines, Iraq, Vietnam, and all of Asia.

Going back to the story, Manuel Luis Quezon, then, and the law-making body in the Philippine Assembly strenuously objected to the free trade between an agricultural country and an industrial country on the ground that an industrial country would inhibit the economic diversification and industrialization of the agricultural country. But since we were but a colony, we were powerless to enforce our arguments. The pleas of Philippine assembly and Manuel Luis Quezon were simply ignored.

In 1909, the US government enacted a law which compelled the Philippines to accept American exports to it without limit and duty-free. In exchange, our products were allowed entry into the American market also duty-free, although certain items were subjected to quotas.

That arrangement lead us to concentrate on production of agricultural items which had a market in the US, such as sugar, copra, coconut and mineral products, and to become completely dependent on the US for our supply of both industrial and finished goods.

The free free trade automatically resulted in a flood of imports from US which our government was powerless to restrain, either directly through import quotas and outright bans, or even indirectly through tariffs. That situation ensured that our economy never flourished to a more advanced state. America kept our nation an agriculture country.

Proof of the backwardness that America kept us is was when World War II broke out in 1941. In that year, 32 years after free trade, the Philippines was invaded by an Asian country, Japan. Japan, who didn't have to suffer the presence of United States control in their economy, could produce the vast range of industrial products needed to support a conquering army, from boots to guns, from tanks and ships to bombs and airplanes.

While the Philippines, which was an extensive producer of sugar, could not even produce a toy gun. You see guys, even though we had vast sugar plantations, we, then, only dependent to final products, didn't even know how a cotton candy machine looked like. We had iron mines all over the Philippines, but we could not produce a single nail.

Restoration of Philippine independence in 1946.

On the eve of our independence, the US Congress enacted two related laws which reflected American post-war policy objectives in the Philippines. One was the Philippine Rehabilitation Act of 1946, which stipulated for much needed war damage compensation and financial assistance for the Philippines. That law explicitly conditioned the promised compensation and assistance on the condition that we accept the Bell Trade Act.

Briefly, the Bell Trade Act states the following:
a.) extension of the free trade relation beyond independence

b.) an amendment to the Philippine Constitution which would place American Nationals on a parity with Filipino citizens insofar as the right to exploit the nation's natural resources and operate public utilities were concerned (otherwise known as the Parity Amendment)

c.) the asking for a consent of the U.S president before the Philippine government can take any action on subjecting transactions involving the use of foreign currency (such as imports, foreign travel, remittance of profits by American corporations) to government control, or what is known as foreign exchange controls.

Senator Millard Tydings, author of the Philippine Independence Law in the 1930's, strongly opposed the Bell Trade Act. These was his words to the people lobbying for the Bell bill:

I have no right to quote the Governor but I think that fundamentally he is opposed to Philippine Independence, and if you would ask him he would tell you so. The truth of the matter is that most of the people who favor this bill are fundamentally opposed to Philippine Independence. I don not like to mention names but their whole philosophy is to keep the Philippines economically even though we lost them politically. (see Jenkins, American Economic Policy Towards the Philippines, p.56, citing hearings before the Committee on Ways and Means, U.S House of Representatives, 79th Congress, First Session).

Considering the Philippine experience with free trade, the national reaction to Bell Trade Act was extremely bitter. The Nacionalista Party, the ruling party then, denounced the Bell Act, and charged that it would condemn the Filipino people to slavery. Among the organizations that opposed the Bell Act were the Democratic Alliance, the Civil Liberties Union, the Philippine Lawyer's League, the Commission of Labor Organizations, the Philippine Student Union, the National Peasant Unions and the Philippine Newspaper Guild (Jenkins, op.cit. 87-88).

On the free trade provision of the Act, it was the voice of Salvador Araneta, the foremost political economist of his time, which towered above all others in warning the nation of the provision's dire consequences: "Accept the Bell Act," he warned, "and all efforts to industrialize our country are bound to fail, as they failed in the past."

As he argued:

Diosdado Macapagal and the Decontrol Programme of 1962

Macapagal, prodded by a $300 million dollar stabilization loan from Washington, dismantled FOREX controls overnight upon being seated President. Within 24 hours of the lifting of controls, everyone was free to buy dollars from the Central Bank for just about any purpose whatsoever, and send dollars out of the country. Exception was made for certain agricultural items whose importation remained banned.

Impact of the Decontrol Programme on the Economy:

First, it returned us essentially to free trade.

Second, devaluation automatically doubled the cost of industrialization, and led to indefinite deferment of the integrated steel mills. Peso was devaluated to Php4:$1.

Third, local industries went bankrupt.

Fourth, steep rise in the cost of living, which eventually led to social unrest.

Sixth, extensive capital flight which amounted to the decapitalization of the Philippines.

Seventh, areas of investment from which foreign capital was discouraged by the FOREX control program suddenly opened up to foreign investors.

Eight, most fatal of all, debt trap.
-- The Macapagal Administration had an arrangement with the IMF-WB: The government would continue receiving loans from the IMF-WB to cover budget deficits brought about by the Decontrol Programme, while Macaagal ensures that the Decontrol Programme stays and that FOREX controls remain dismantled.

--Decontrol Programme borrowed to finance capital flight, unnecessary imports and overseas investments which could otherwise be prevented.

In the Decontrol programme and how it was induced, one seas a basic strategy of neocolonialism: prod and pressure its victims into profligate spending into opening its economy through the bait of foreign loans. As profligate spending sinks the victim deeper into debt, it is necessarilly driven deeper into the embrace of the neocolonialist forces. The victim becomes addicted to loans as the drug addict gets addicted to drugs. That is how loan purchasers eventually capture the body and soul of their victims. That was what happened to us.

In 1962, the deal between the Philippines and the IMF was fairly simple. The IMF extends loans in exchange for which we devalue the peso and pledge to do away with FOREX controls.

Today, as you know, conditions imposed by the IMF-WB cover virtually every area of policy and national life. Our debt has soared to unrepayable trillions. That is a cheap price to pay for the control and domination of a country situated in a strategic geographical location, still comparatively rich in natural resources, and representing a sizable market of approximately 85 million people oriented to foreign goods. Any more we make of economic significance must have approval of the IMF-WB.

Accomplishments of Diosdado Macapagal as President:

The Decontrol Programme of 1962 established the basic pattern of future economic behavior. From that programme was shaped the development strategy that all administrators pursued after Macapagal: Marcos, Aquino, Ramos, Estrada, Arroyo. It was the Decontrol Programme that brought the IMF-WB into the management of our economic affairs. And that involvement became deeper with time as we got deeper into debt. By the end of Macapagal's term, the foreign debt had risen from $150 million in 1961, to $600 million in 1965. By the end of the Marcos's first term, in 1969, the foreign debt stood close to $1 Billion. When he declared Martial Law in 1972, the debt stood at nearly $2 Billion. When Marcos was put to flight in 1986, the debt stood at $26 Billion. When Aquino stepped down from office, it was $27 Billion. By the end of Ramos term it was more than $30 billion. And today, Gloria Arroyo added 2.44 Trillion to the previous lone. Gloria Arroyo also borrowed money not only in IMF-WB but in powerful Asian countries such as China and Japan in exchange of control over Philippine claims in Spratlys and more.
Main elements of the neocolonial strategy for suppressing economic nationalism and industrialization in the Philippines was established byDiosdado Macapagal.
The Rise of the Technocrats was also his brainchild. The technocrats are the people who share the ideology of IMF-WB and the American Chamber of Commerce. They are captives of the free market thinking and took a hostile view of government involvement in the economy. These are the people more committed to free trade than Macapagal himself. These technocrats was recruited and placed in high public offices. They eventually came to hold high and sensitive policy positions and in time came to influence strongly, if not dominate policy formation. Prominent among these are Virata, Sicat, Paterno, Ople, and Melchor.
Macapagal became the progenitor of the greatest evil, more evil than him, that struck Philippines: Gloria Macapagal Arroyo.

The Rise of Anti-Americanism in 1960's.

The rise of Anti-americanism due to the hardship caused by the Decontrol, which everyone knew had been instigated by the US government and IMF.

Another was due to the rise of people in high places which blatantly fought against US government.

By the latter part of the Macapagal administration, in 1964-65, a fundamental contradiction between two vital economic agencies developed and surfaced in the open. These were Presidential Economic Staff, then headed by Armando Fabella and Alejandro Melchor, Macapagal's principal technocrats, and the National Economic Council, then headed by the nationalist Hilarion M. Honares Jr. NEC is a long standing government agency whose composition included members of the Senate, the House and the Private sector. It was the citadel of economic nationalism. While PES is the personal economic arm of Macapagal and U.S.

The Issue of Vested Rights.
The American community, knowing that Macapagal had been elected to a large extent because of Washington's support, behaved arrogantly and insisted on infuriating demands. Anticipating the end of the Parity Amendment by early 1970's, American started agitating for an indefinite extension of Parity, and to have the parity extended not only to Americans but to all foreign nations as well. They also pressed that all rights and privileges acquired under parity become permanent on the grounds that those rights have become "vested", fixed, settled, absolute. This had been known as the theory of vested rights. The PES supported the theory of vested rights.

While NEC opposed it. That demand was considered by the nationalists as the height of arrogance and revived all the bitter memories associated with the Bell Act of 1946. Nationalists argued that the moment Parity expired, all American corporations would have to comply with the citizenship requirement of the Constitution if they were to retain the interests and rights they had acquired under the Parity amendment. That means that, by the end of the Parity ammendment, a 100% Amrican - owned corporation would have to divest and transfer a 60% of its capital stock to Filipinos. The Americans didn't want that.

Issue on Retail Trade Nationalization Law.
PES, acting on the demand of foreign nationals, was demanding to dilute the provisions of the Retail Trade Nationalization Law by excluding from it certain transactions considered retail in character by the Department of Justice. PES drafted a bill that would have given foreign investors more incentives than Filipino investors. The PES attempted to have congress remove a long standing preference enjoyable by the Filipino contractors over foreign competitors in bidding for government projects. The NEC opposed all that.

Series of even more stupid acts by Diosdado Macapagal
During the latter part of the Macapagal governemnt, it's economic staff approved a lease of invaluable and extensive public land to United Fruit, an American corporation. The lease covered more than the permissible area by the Constitution and was so generous in its terms that it was tantamount to a give away. This act naturally increased the anti-americanism of the people.

It was also during the latter part of Macapagal term when the U.S government was exerting pressure on Macapagal to dispatch Filipino combat troops to Vietnam. Macapagal committed his administration to Vietnam war, a very unpopular decision that led to a series of demonstrations before the U.S embassy.

1965 Presidential Elections.

Marcos made an issue of Vietnam. He pledged that if elected he wouldn;t send Filipino soldiers to Vietnam. Then he pledged to follow nationalistic policies, with insinuations that he would restore FOREX controls. This led him to a landslide victory.

However, within 24 hours following election, he held a press conference announcing that he was changing his mind on Vietnam. To his credit however, he resisted U.S pressure for combat troops. The troops he dispatched confined themselves to civic action and humanitarian work. Wshington asked for ten combat batallions. Marcos dispatched two non-combat batallions and pressed Washington for a substantial sum of money in return.

Second, he announced that he wouldn't resort to FOREX controls and that he would continue free enterprise, meaning the Decontrol Programme. As he intoned in his first state of the nation message:

Let this message go forth to businessmen: our faith in free enterprise demands that we accept the consequences of this bold adventure.

First term of Marcos: 1966 - 1969
Within 3 years, the country found itself in a crisis far deeper than the crisis which had brought Marcos in power in 1965.

The business sector, led by the Philippine Chamber of Industries, started agitating for the reinstitution of the FOREX control system.

Economic Crisis and the Rebellion of Congress Against the IMF-WB: the Magna Carta of Social Justice and Economic Freedom (Magna Carta)

The crisis was so pervasive that congress was jolted into action. Under the initiative of the House Speaker, Jose B. Laurel Jr., both chambers convened in session formulated Congress' own blueprint of policies for the nation. That blueprint
a.) explicitly repudiated theIMF based program of government.

b.) called for the reinstitution of FOREX controls

c.) directed the Executive to implement programme of heavy industrialization

d.) called for the Filipinization of credit (which would bar the foreign investments from borrowing their capital here in the Philippines) as well as vital areas of the economy.

The congressional blueprint was passed as House Resolution No.2, otherwise known as the Magna Carta of Social Justice and Economic Freedom.

Because of the outburst of popular support for the Magna Carta, which was unanimously approved by the Congress, Marcos was compelled to sign it into law. That was just about the time when he was getting ready for the 1969 elections. Prior to the elections, Marcos pledged that he would implement the Magna Carta and that he would never devaluate the peso. He even hinted at seceding the IMF if that agency hinted on devaluation.

Marcos was then re-elected President.

Marcos second term: Devaluation and the Floating Rate

Immediately after re-election, he adopted what is known as the floating rate, which immediately devalued the peso by 50%.

Through a floating rate government allows the dollar value to be determined by market forces; that is to say, by the demand for and supply of dollars. Before Marcos put the country in the floating rate, the peso had been pegged to a peso dollar exchange rate of Php3.90:$1. Meaning to say, the government purchased dollars and sold dllars at a fixed, official rate, no more and no less. The floating rate changed that. The peso dollar rate was allowed to fluctuate on the basis of supply and demand for dollars.

What is the reason for adopting the floating rate and abandoning the fixed exchange rate system?

The floating rate was a way of avoiding the re-institution of FOREX controls, as directed by the Magna Carta of Congress, and of continuing with the free-wheeling import policy that came with decontrol in 1962.

That was the IMF demanded as a condition to further loans. By the end of Marcos' first term in 1969, the country was again bankrupt in spite of the loans Marcos had obtained from the IMF in obvious agreement he made in 1966 to continue with free enterprise through Macapagal's decontrol programme.

Evaluation by the Congressional Economic Planning Office (CEPO)

In 1971, one year after the peso had been floated and devalued, the economic staff of Congress made an independent evaluation of the event, and it found as follows:

The floating rate system is replete with weakness, principal among which is its inherent uncertainty. An admittedly high inflationary situation prior to the upegging of the peso should not have been combined with basically laissez-faire approach in determining the exchange rate. Combination of these elements had made unavoidable the adoption of anti-inflationary meaures which, however, have not averted the dislocation of many manufacturing industries. Hence, the approach taken by the government has been to achieve external balance at the expense of internal stability, production and employment.

Since the start of the floating rate system, the local manufacturing sector has not been able to prosecute plans for expansion. In not a few cases, industries could not even maintain their old production levels.

That the floating rate system is inconsistent with effective industrial planning is demonstrated in the current Four - Year Development Program. Capital requirements have been projected under the assumption that no further deterioration in the exchange rate shall take place during the period of implementation of the program.

It cannot be overemphasized that an exchange rate which subject to day-to-day fluctuation does not augur well for industrial advancement. In order to have a concrete basis for future planning, the exchange rate must be fixed. Then and only then can our industries embark on well-planned operations. (Laurel, Report on the National Economy. pp. 29-30)

CEPO was the technical staff that drafted the Magna Carta. It was organized by Dr. Emanuel Q. Yap. Shortly after passage of that document, Speaker Laurel was toppled from his post as Speaker, and Yap was removed from CEPO.

1972 Constitutional Convention
The devaluation of the peso by almost 50% led to social turmoil because of the inflation that came with it.For example, in two months, the price of imported essentials soared by approximately 150%. The social restiveness that began with economic crisis of 1964-65, and which had provoked Congress into an extraordinary session in 1969 to produce the Magna Carta, was brought to raging point, and by early 1970 public clamor mounted for a new constitution as the only possible way of accomplishing urgently needed changes of a fundamental nature.

Popular sentiment had lost faith in the political system, and wanted to create a new one through a new constitution.

Congress could not resist the popular clamor for a new constitution and so it enacted a law calling for a constitutional convention and for the election of delagtes to that body, which convened in 1972.

But the more important point was this: To make sure that delegates elected to the convention were not stained by the political system, the law outlawed the involvement of political parties in the election of delegates. Political parties were prohibited from fielding their candidates, or even endorsing candidates. This showed that as far back as 1970, even Congress was compelled to acknowledge that the political system was so discredited that something as historic as a new constitution should be written by delegates who were not part of the system.

The election of delegates, which was held in 1971, was unprecedented in the nation's political history. It was only electoral exercise where political parties were explicitly barred from participating.

Carlos P. Garcia, whose name and administration were identified with industrialization, economic nationalism and Filipino First Policy, became the leader of the said convention.

Under his leadership, recommendations made surpassed the Magna Carta of Congress in the strength of economic nationalism. Industrialization, protectionism, economic nationalism as vital areas of the economy. It even struck at imperialism openly.

On the portion establishing the "Directive Principles of State Policy", the following section, mandating not only industrialization, but rapid industrialization, appears:

The state shall undertake to achieve maximum economic growth... through an integrated and socially oriented economic plan that shall efficiently promote rapid industrialization... and ensure that Filipinos control the national economy. (Sec.6)

Section 11 of the proposed Directive Principles took the issue of colonialism and imperialism head-on and proposed that:

The Philippines opposes colonialism and imperialism in any form of their manifestations, upholds the right of every nation to self-government, and the principle of non-interference in the affairs of another state.

Section 12 followed up with the following:

The defense of the State is the prime duty of government and of the people. It shall also be part of such duty to repel any form of imperialism from whatever source.

Then, on the role of the state in industrialization, a proposal mandated that:

The state shall undertake the development of basic industries. It shall:

a.) assume direct pioneering role in areas of priority promulgated by the Central Economic Planning Authority;

b.) acquire control of existing private enterprises in basic industries.

In the case of the Committee on the National Economy a provision explicitly directing the development of the capital goods (machine) industry, appears in its reports as follows:

The state shall promote... the establishment of capital goods industries. (General Economic Policies, Sec 1.)

The same committee report increased the citizenship requirement for the natural resource industry from 60 - 70%.

A separate subsection in the report of that committee specifically dealing with industrialization directed government not only to accelerate industrialization but also to "contro; the use of the country's international reserves to assure that the same is not diverted to uses inconsistent with the country's program of basic industrialization.

This meant the constitutionalization of FOREX controls. It read as follows:

Sec 1. It shall be the prime duty of the government to directly promote the accelerated and integrated industrialization of the economy as a means of providing full employment, amximum national self-reliance and productivity.

Sec 2. The accelerated industrialization of the economy shall be undertaken within the framework of a nationalistic and socially oriented economic plan.. The government shall at all times...control the use of the country's international reserves to assure that the same is not diverted to uses inconsistent with the country's program of basis industrialization.

In a subsequent dealing with commerce and industry, the Committee on National Economy recommended that:

Sec 2. The state shall fully Filipinize the retail, indent, whole sale and import business and shall promote Filipinization of banking, financing and insure industries.

These proposals deeply unsettled the foreign community and its most prestigious lobby group, the Philippine Association attacked the trend in the convention as "ultranationalistic" and "socialist". The attack caused public furor because it was deemed an act of undue intervention on the part of foreign community.

The Asian News, in an article written by its correspondent, described the trend as follows:

A strong wave of nationalism - definitely extremist in many cases - is sweeping the Constitutional Convention and the foreigners may just find themselves outside looking in, their noses hard pressed against the glasses (Issue of 7-13 May 1972).

The Supreme Court: the Quasha case
Two months before martial law was declared, in the famous Quasha Case, the High Court, through the pen of former Justice J.B.L. Reyes, ruled that theory of vested rights was unacceptable constitutionally and that, therefore, American corporations had acquired properties and privileges on the strength of Parity amendment (such as mining concessions and franchise to operate public utilities) would have to comply with the citizenship requirement of the constitution if they were to retain those rights and privileges.

But the more lethal blow was the ruling that parity did not go so far as to confer rights on American nationals to acquire real estate.

Since 1946, on the strength of a Department of Justice opinion that the Parity Amendment empowered American nationals to acquire real estate on the same footing as Filipinos, American individuals as well as corporations had availed of that opinion and amassed real estate holdings both for residential and commercial purposes. The Quasha case in effect meant that those acquisitions were illegal and therefore subject to escheat and confiscation.

To sum it up, by 1972, neocolonialism was under siege from all fronts: from Congress (through the Magna Carta of 1969), from the Constitutional Convention, from the Supreme Court, and from the tidal wave of nationalism sweeping the country.

That situation led to a convergence of interest: the interest of Marcos to remain in power, and the interest of American neocolonialism to be saved from the nationalist onslaught.

The solution?

Martial Law.

Through Martial Law, the nationalist drafts in the 1972 Convention were all aborted, the anti-imperialist movements were all shut down, and the American interests were all protected by the dictator.

As the Far Eastern Economic Review scathingly pointed out in its editorial of October 21, 1972, commenting on Washington's response to martial law, "the U.S condoned the death of democracy in Manila to protect American investments."

The LIEO Strategy: The Economic Strategy During Martial Law
LIEO stands for Labor-Intensive, Export-Oriented strategy engineered by Dr. Gerardo Sicat of the U.P School of Economics. This strategy is based on the premise that:
a.) protectionist of any form is unsound economics
b.) the policy of import substitution, designed to stimulate the economy to produce goods that it was importing is equally unsound.
c.) heavy industrialization is not suited to a country like Philippines
d.) the proper industrialization strategy for the Philippines would be one that avoided heavy industries like steel and petrochemicals, because these required extensive amounts of capital. The appropriate industries would be those that didn't require much capital but absorbed an extensive amount of human labor (labor-intensive), and had an export market like furniture, toys, shoes.

Gustav Ranis, an American economist from Yale University also floated a view that Third Wold nations should be dissuaded from the pursuit of self-reliance and heavy industries, such as steel. He said that developing nations instead concentrate on the type of industrialization that would make use of their abundant labor and natural resources, meaning labor intensive. He also said that they should refrain from protectionism. He also proposed the system of floating rates and suggested that U.S should withhold assistance from Third World countries which did not adopt it.
IMW-WB eventually made it known that their loans would be granted only to those who adopted Ranis strategy.

Both theories speak of the same thing but Sicat, being a pro-imperialist theorist for the Philippines, was then seated as the head of NEDA (previously known as NEC).

The technocrats during the martial law:
Sicat, as mentioned above.
Ceasar Virata - proponent of free trade headed Finance
Vicente T. Paterno - assiduous anti-industrialist headed Bureau of Industries
Blas Ople - agressive supporter of the LIEO and Ranis strategy headed the Labor Department.

Membership in GATT: toward absolute free trade.
General Agreement on Tariffs and Trade is an organization of states pledged to eliminate tariffs from their statute books. This in turn would result to flood of import goods. Virata, Paterno and other technocrats pushed the Philippines toward membership in GATT.

After Philippines joined GATT, the technocrats pressed for lowering the tariff rate of the Philippines to a maximum of 50%. That was shit compared to the rates maintained by other countries that are also members of GATT. Australia, for example, was enforcing a tariff rate of as high as 150%.

It was criminal indeed.

The impact of the LIEO strategy on the economy:
Seven years after the declaration of martial law, Marcos woke up to the fact that the Philippines was already lagging behind South Korea and Taiwan. We were absolutely bereft of any heavy industry while S. Korea and Taiwan already had fully functioning steel mills, a budding car industry, a shipbuilding industry, an electronic industry, and virtually all the varieties of capital-intensive industries that went into the making of an NIC. By 1979, in fact, South Korea and Taiwan had all intents and purposes reached NIC status. Taiwan was already producing missiles and sophisticated weaponry.

Marcos' decision to industrialize through major industrial projects
Marcos then immediately ordered the implementation of 11 major industrial projects, or heavy, capital-intensive industries, led by integrated steel, petrochemical complex, manufacture of diesel engines, aluminum smelter, heavy engineering industries, the expansion of cement industry, the industrialization of coconut industry, Alcogas, and integrated pulp and paper mill, copper smelter; and Phosphate fertilizer.

As Asiaweek noted, the projects were designed to become he focal point of the country's industrialization efforts during the decade.

However, the industrialization projects were blocked by the martial law technocrats, the Center for Research and Communication, and IMF-WB. They even coined the catch drama: "You can't eat steel."

Even if Marcos was the dictator at that time, he couldn't dictate upon the forgoing of the projects. IMF-WB withheld funding and insisted on endless feasibility studies.

Marcos, in his frustration, publicly accused his enemies as "all part of a plot to ensure that the country remains under the industrialized countries." ("Marcos Hits Critics of Major Projects", Times Journal, May 24, 1982)

It was an explosive accusation that kept the Philippines talking for a time being. Until Ninoy Aquino, harassed by Washington into returning to the Philippines, was shot on touching Philippine soil.

This eventually led to EDSA revolution, snap elections, and the end of the Marcos regime. Let it be said that NAMFREL is U.S IMF-WB personified.

Today, years after Marcos had announced his plan for industrialization, and more than 30 years after Garcia had announced the project for an integrated steel mill, the Philippines remains without any basic industry, it's economy pinned to the pre-industrial state, lagging behind neighbors who, only a few decades ago, had looked up to us with the same envy with which we now look up to them.

After EDSA: Aquino Government
Aquino, nothing but a housewife too unknowing for the job of a President, placed the economic controls on same the anti-industrialization technocrats who were prominent during the Marcos Regime. Add to that the U.P economists led by Solita Monsod and Cayetano Paderanga, and Center for Research and Communication (CRC) headed by the Makati Business Men, told the President Aquino that the reason why the Marcos government failed in developing the country was because Marcos didn't liberate importations enough.

President Aquino, not knowing anything about economics and all that, then framed and economic programme based on what the U.P economists and CRC suggested. That is, No protectionism, Miimal involvement of the state in the economy, No programme for NIC status, Privatization, More devaluation, All-out support for foreign investments.

You see, under Marcos, imports of agricultural commodities were restricted. Marcos also maintained restrictions over non-essential and even on some essential items. Under the Aquino government, the market was flooded with all sorts of products, agriculture, and even none agriculture items.

Aside from that, she even Constitutionalized the LIEO and the Ranis strategy. How else could you describe anti-Filipinoism? (Yes, Gloria is even worse, but we will come to that).

You see, this is what the Aquino government is about: A tool and play thing of forces representing the drive, and the greed and the interests of Modern Imperialism.

She even pledged to honor all the debts incurred by the dictatorship when United States could have granted all those as null and void. She played to the international gallery at the manifest expense of the Filipino people.

She ended her tenure by marching the streets on behalf of the U.S Bases.

Ramos Government. The Vision of Philippines 2000: Agriculture First Policy
If you think Ramos made a difference, that's just about it - a thought. Ramos' Philippines 200 is the best proof of his government bent on maintaining th Philippines as a free-trading economy, with a strategy hostile to indutrial protectionism, consistent with the line pursued by the Macapagal up to the Aquino terms.

Oh, but why should one even wonder when the authors of the Philippines 2000 are Virata, Sicat, Monsod and Villegas, all IMF-WB personified?

We were importing virtually everything. Toothpicks, basketball players, including grass for agriculture.

By the end of Ramos term, even agriculture was an industry which is too hard to maintain.

Estrada Administration
His economic managers, which happen to be the same technocrats advocating for IMF-WB policies, have the strong determination and professional competence to continue on the path of deregulation, privatization, and liberalization.

In the meeting of economic leaders of the 21 countries belonging to the Asia-Pacific Economic Cooperation (APEC) held in Kuala Lumpur November 15, 1998, Estrada, president elect then, declared in no uncertain terms that he has no intention of following the example of Prime Minister Mahathir of Malaysia who imposed capital controls on his country. The Philippines continues to be strongly committed to WTO, AFTA, and APEC goals toward trade and investment liberalization and facilitation.

Gloria Arroyo, who assumed Presidency when Estrada was toppled, continued with the no back-bone-pro IMF-WB policies that her father started.

Why I prefer the Panday over the pandak:

Such show of help through dole outs hardly compensates for the criminal mistake of free market which GMA is very much committed to. Her supporters question the intellectual capacity of FPJ, but look guys, in the name of plain intelligence and common sense, FPJ took a position against globalization and advocated withdrawal from WTO.

That is the kind of intelligence which GMA should have displayed on the very day that she assumed the presidency. If GMA had done that she would easily have rallied the entire nation behind her. But she didn’t. She stayed on the fatal course to which she and FVR had committed the nation since 1994 and showed no disposition to re-examine the fundamentals of her suicidal philosophy until the crisis started getting deeper and deeper during her watch.

You can mention the many little things which you think she has done right, but that’s what they are -- little things compared to the giant idiocies that she has committed ever since she steered the Senate into a hasty ratification of GATT. And GATT is only one of them. There's JPEPA. We haven’t yet spoken of Mindanao, but of that in subsequent pieces.

Gloria Arroyo's stupidity: inside that small structure is a brain even smaller

1) Arroyo are inviting foreign nationals to exploit are resources more than what the Americans did and are already doing by forcing the hasty ratification of the JPEPA, renewal of membership to GATT, ZTE deals and other treaties and economic policies that not only add up to our loans world wide but also removes our own control in our economy.

1) Arroyo was responsible in the country’s ballooning debt. Gloria Arroyo, in just a period of 4 years (2001-2005), borrowed P2.44 Trillion, which is more than the combined borrowings of the Aquino, Ramos and Estrada administrations. Don't forget, she also borrowed billions from China and is digging the country's grave even deeper by giving away the islands of the Philippines on a measly sum of money. Arroyo in just a short period was able to bury the country in deeper debt!

2) Arroyo was the bright mind behind the introduction of an efficient solution to the country’s classroom shortage. Can you still remember last year, when Gloria was able to lick the problem of classroom shortage in the country? All she did was change the ideal classroom-to-student ratio from 1 classroom for every 50 students to 1 classroom for every 100 students!

4) The strengthening of the peso against the dollar was also the brainchild of Arroyo. By not investing enough in economic services, the government was able to force more Filipinos, including physicians who became nurses, to work abroad. So the more overseas Filipino workers (OFWs), the more dollar and other foreign currency remittances.

These OFW remittances are the reason why our economy is kept afloat. Isn’t that a very clever economic strategy? Push your population to hunger and they will find food somewhere else and even send more food back home.

Thanks to Gloria Arroyo, thousands of Filipinos abroad are selling their bodies and souls just to ensure that their family lives a decent life while Gloria Arroyo continues to strangulate them through her deadly policies.

What she lacked in height, she made up with evil horns:

1.) To make sure she won the previous presidential election, Arroyo utilized hundreds of millions of taxpayers’ money to finance her campaign by distributing (read: bribing) local officials. Also she employed the infamous Joc-joc Bolante to distribute bribes pretending as fertilizers. And let us not forget our all-time favorite, Virgilio “Hello Garci” Garcillano who was tasked to make sure that Arroyo leads by 1 million votes in Mindanao at all cost.

2) Arroyo is swamped with anomalies and scandals which prompted calls for her to be impeached. Impeachment proceeding should be initiated in the Lower House and under the House rules, only one impeachment case can be filed against her within a year. Now, by simply having one of her cohorts file a weak case against her she manages to give herself another year of getting away with mounting crimes against the nation. By abusing technicalities, Arroyo makes a mockery of the constitution and our laws.

3) To appease a section of the opposition and a section of poor Filipinos, Arroyo pardoned Erap after he was found guilty of plunder. Disguised as a humanitarian act, a plunderer who was toppled by the people was freed just to ensure her stay in power.

4) Arroyo employed different tactics to suppress dissent and opposition to her fake and corrupt government. We can still remember the violent Calibrated Preemptive Response or CPR that met street demonstrations last year. Also, E.O. 464 which was issued to block the appearance of government officials and military officers in Congressional hearings that investigate her administration’s anomalies.

Meanwhile activists and journalists are being assassinated in such blatant fashion as the Arroyo government pays lip service to the protection of human rights.

How many more years does Philippines have to endure under the rule of Presidents who serve as puppets to foreign interests? Maybe until I rise to the position. You see, I have this big ambition of wanting to be the President ever since when i was young. But i now realize that it's a stupid ambition. It simply isn't for me. You see, the presidents that Filipinos have been electing are those who have been primarily for the foreigners. They wouldn't say or do anything that would bring on them the displeasure of Washington and international capital. Therefore, that position is not for a person who is for independence and progress such as myself. The people who have been putting leaders such as Macapagal, Marcos, Aquino, Ramos, Estrada and Arroyo are those who never truly scrutinize the policies of the running political leaders before they give those the power to represent their aims as a Filipino. The people who have been putting leaders such as Macapagal, Marcos, Aquino, Ramos, Estrada and Arroyo are not the people who are pro-progress and could then never select one who actually thinks. How could the Filipino people be so mindless as to seat as the head of state a spineless push-over? I could only wonder how and how long will they remain to be that way.

I do not wish to insult the minds of the pro-Arroyo Filipinos.

I wish to offer Alejandro Lichauco much thanks and acknowledgment. Do read his books, as his ideals are very good. I appreciate his ideas very much.

Relevant Articles:

Treason by Ricky Carandang

Allow me to expound a little on a story I did for The Correspondents on February 19th.

Seven countries claim ownership of the disputed Spratly Islands, just off of Palawan. China, Vietnam, Taiwan, Malsysia, Indonesia, Brunei, and the Philippines all claim to own part or all of the Spratlys. These overlapping claims have been a source of tension over the years since the Spratlys (we Filipinos call them the Kalayaan Islands) are believed to contain significant reserves of oil and natural gas. China was the most aggressive in pursuiung its claim. In 1999, the Philippines–under President Joseph Estrada– led an effort to prevent tensions by getting all the claimants to agree not to take actions to provoke other claimants.

But in 2003, the Philippines–now under Gloria Macapagal-Arroyo– rocked the boat that it previously steadied when it signed an agreement with China to jointly undertake seismic studies of the Spratlys and explore for oil and natural gas. Naturally, the other claimants were angry. After getting them to agree not to rock the boat, the Philippines sucker-punched them with the China deal. China’s traditional ally, Vietnam was so angry they it had to be let in to the deal to appease them.

Aside from angering our neighbors and potentially undermining regional stability, Arroyo’s action may also be illegal. Ombudsman Merceditas Gutierrez–who was then acting justice secretary–told former Senator Frank Drilon, who was then allied with the administration, that she believed that the deal violated the constitution, because while it was a deal between the state owned oil firms (PNOC of the Philippines and CNOOC of China) of the two countries, it implicitly gave China access to our oil reserves. Officers of the Foreign Affairs Department were also upset because the deal effectively strengthened China and Vietnam’s claim to the Spratlys.

What would compel Gloria Macapagal-Arroyo to sign a deal that potentially undermines regional stability, possibly grants China parity rights to oil reserves in the Spratlys that we claim to be ours, and likely violates our constitution?

How about $2 billion a year? After the Spratly deal was signed, the Chinese government committed $2 billion in official development assistance a year to the Philippines until 2010, when Arroyo is supposed to step down from office. My sources tell me that the Spratly deal was an explicit precondition to the loans.

A sizable amount to be sure, but for the Arroyo administration the China loans are particularly appealing. Not so much because the interest rates are so low and the repayment terms so lenient, but because Chinese loans do not have the cumbersome requirements that loans from the US, Japan, the EU, and big multilateral lenders have. Requirements for documentation, bidding, transparency and other details that make it very difficult for corrupt public officials to commit graft. In fact, in November of last year, those cumbersome requirements made it impossible for some government officials and private individuals with sticky fingers to avail themselves of the World Bank’s generosity.

It had gotten to the point where a corrupt government could no longer make a dishonest buck. That is until China’s generous offer came along. Given China’s laxity with certain conditions, its no wonder why almost every big ticket government project funded by Chinese ODA has been the subject of allegations of graft and corruption. There’s Northrail, Cyber Education, the Fuhua agricultural projects, Southrail, and of course the ZTE National Broadband project.

Until the ZTE National Broadband scandal, the Chinese government has had little official reaction to any of these allegations. Why should they? The $8 billion is a loan, not a grant. It enhances their influence in the region, strengthens their claim to the Spratlys, and expands their influence in the Philippines. The best part is, regardless of what Philippine officials do with the money–whether they put it to good use or steal it–it still has to be paid back. Its no wonder that anytime some midlevel Chinese official comes to the country, congressmen and adminstration officials literally trip over themselves to roll out the red carpet.

For corrupt Adminstration officials and their cronies, $8 billion represents unprecedented opportunities for graft on a scale that would shock ordinary Filipinos.

And at the end of the day, that $8 billion is going to be paid back. Not by the grafters in and out of government; not by the Chinese citizens; but by the millions of ordinary middle class Filipinos who go to work everyday, pay their taxes, struggle and to keep their small and medium businesses afloat. The price will also be paid indirectly by tens of millions of poor Filipinos who will not have access to health care, quality education, and a functioning court system because those resources are not going where they should be going.

There’s a word for that. Its called Treason.

Senate checks legal flaws in Jpepa

By Butch Fernandez

Reporter

SENATE President Manuel Villar indicated on Tuesday that alleged “constitutional infirmities” in the Japan-Philippines Economic Partnership Agreement (Jpepa) will likely derail early ratification of the controversial accord, despite last-minute assurances from Tokyo that the Jpepa would not be misused to dump toxic waste here.

At the same time, an independent think tank asserted that Philippine trade deals with Japan and China, which President Arroyo recently urged members of the Association of Southeast Asian Nations to act on, will weaken the country’s “already damaged domestic economy.”

According to IBON research head Sonny Africa, benefits to the Philippines from a pact with these economies are doubtful, while more liberalization will weaken the local agriculture and industry sectors.

On the Jpepa’s legal flaws, Villar was reacting to a position, aired at a Senate roundtable forum by former dean Merlin Magallona of the University of the Philippines College of Law, that the Jpepa, among others, may represent a constitutional breach in the separation of powers between the executive and legislative branches, as well as in provisions allowing the entry of Japanese investments in supposedly exclusive economic zones and the exploitation of marine resources reserved exclusively for Filipinos.

For instance, Magallona cited Malacañang’s commitments in the Jpepa to eliminate tariff on all imports from Japan, saying this “usurped” congressional authority granted by the Constitution which provides that all tax laws must originate from the House of Representatives.

“This will suffice to show . . . a breach in the separation of powers,” Magallona said, pointing out that “powers of Congress were included in the treaty-making powers of the President.”

Sought for comment, Senate President Villar hinted to reporters that such infirmities could make it easier for members of the treaty-ratifying Senate to come to a decision rejecting ratification of the accord. But he added that Sen. Miriam Santiago, who chairs the foreign relations committee, has already asked Malacañang to resubmit the Jpepa so the Senate could start ratification hearings soon.

“That will give us additional reasons to consider rejecting the Jpepa,” Villar said in Filipino, referring to the constitutional infirmities cited by Magallona. “Of course, [if there are] constitutional infirmities, we cannot approve or ratify that. Or, that could be a gray area. That’s where we’ll have problems,” he said.

At the same time, Sen. Pia Cayetano-Sebastian, who sponsored the roundtable forum, said the country could survive with or without the Jpepa.

She conceded, however, that the Philippines may be hobbled by economic setbacks if the Senate rejects the accord.

In separate interviews, Villar, Santiago and Senate Minority Leader Aquilino Pimentel Jr. agreed that the ratification hearings cannot cure the legal defects in the accord signed by Manila and Tokyo last year and that senators would simply vote to ratify or reject the agreement.

Sen. Joker Arroyo added that there was no way the Senate could ratify the treaty if it suffers from legal infirmities as pointed out by Dean Magallona. “We cannot amend the Jpepa anymore. If it contains provisions contrary to our laws, it could not be enforced here,” Senator Arroyo told BusinessMirror.

Still, Villar said the Senate ratification hearings will review and verify all the legal, as well as environmental, concerns raised about the Jpepa before it is put to a floor vote that will require two-thirds, or 16 senators voting in favor, to ratify.

“Let’s look at it first, but if it’s a violation of the Constitution, how can that be cured?” Villar told Senate reporters, adding, “unless the treaty is amended—but then again, Japan is not willing to do that.”

Villar also noted reports that some Palace officials are now floating the position that the Jpepa is an executive agreement that does not need to be ratified by the Senate, warning that senators will not take this sitting down. “I have been reading newspaper reports of people floating the possibility that the Jpepa won’t be sent to the Senate because [supposedly] it’s just an executive agreement. That’s unacceptable to us.”

Villar said the senators will challenge this if Malacañang insists there is no need to submit the Jpepa for ratification. “Of course, we will consult Sen. Miriam Santiago, but we are ready to go to the Supreme Court on this issue because we see this as a treaty, and not an executive agreement.”

Meanwhile, the private think-tank IBON asserted that Philippine trade deals with Japan and China, which President Arroyo recently urged members of the Association of Southeast Asian Nations to act on, will weaken the country’s already damaged domestic economy.

According to IBON research head Sonny Africa, any benefits the Philippines may gain from a pact with these economies are doubtful while more liberalization will further weaken the local agriculture and industry sectors.

Taking alone the Asean Free Trade Agreement’s Common Effective Preferential Treatment (CEPT) scheme as an example, the Philippines’ average applied preferential tariff rate as of 2001 is only 3.87 percent, lower than the 6.7-percent average applied tariff rate under the World Trade Organization. Roughly 99 percent of the country’s tariff lines are already included in the CEPT scheme.

Tariff reduction under the CEPT scheme allowed cheap imported vegetables from the US, Australia, New Zealand, the Netherlands, Singapore and China to flood the Philippine market, growing from 42,000 metric tons in 1995 to 115,000 MT in 2000. More liberal import policies also resulted in thousands of metric tons more smuggled into the country.

The petrochemical, cement, steel, garments/textile, footwear and ceramics/tiles industries have also felt the adverse effects of liberalization. For example, many footwear manufacturers, overwhelmed by cheap imports from China, have now become mere assemblers of imported shoe parts or shifted to trading. Shoe industry workers have thus been laid off or forced to go on rotation status, IBON said.

Meanwhile, Africa pointed out, the country’s attempts to penetrate the markets of these major economies are uncertain. The government is banking on electronics, considered one of the economy’s “strengths” due to export revenues from this sector. Electronics products are also the country’s top exports to China and Japan, which on the other hand are among the Philippines’ top 10 trading partners.

But, IBON noted, electronics components are also among the country’s top imports from these countries, reflecting the inherent lack of technology to support production and the assembly-type nature of the industry.

According to Africa, China and Japan are pushing for regional free-trade initiatives because of their rivalry for economic leadership in the region.

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