Playing by the rules
There is a special ring to the title “Most Favored Nation” (MFN). And it does. Being an MFN confers special benefits to a country. It is able to enjoy the best trade terms given by its trading partner, i.e. zero if not the lowest tariff rate for its imports. The costs of exportation are minimized due to the elimination of trade barriers, e.g. complicated rules and regulations. These privileges enhance competitiveness, and give exporters access to more markets. The ultimate result is economic growth for the MFN country as more and more people are employed.
The Philippine government started negotiating with the EU for a trade and investment agreement in December 2015. The partnership was formed after nearly two and a half years and the EU-Philippines Framework Agreement on Partnership and Cooperation took effect in 2018. The EU is the Philippines’ fourth largest trading partner, accounting for almost 9% of the country’s total trade in 2018 (after China, Japan and the US). The EU’s foreign direct investment stock in the Philippines reached €13.8 billion (US$16.2 billion) in 2018.
The Free Trade Agreement (FTA) with the EU is not just about economics. It is equally concerned with the effects of free trade on human and labor rights. The trading partner, in this case, the Philippines is expected to “ensure effective implementation of all the core international conventions relating to human rights, the environment, and good governance.” An extensive process, a “Sustainability Impact Assessment” (SIA) is put in place to monitor the country’s s compliance to the term of the agreement.
The SIA is conducted with extensive participation by government, the private sector and non-governmental organizations.
The 2018 SIA interim report cited that the FTA would result to mutual benefits to the EU and the Philippines. Both partners would benefit from an increase in exports, increase in GDP, and an expansion in industrial output. The effects in the Philippines are most notable in the wearing apparel, textile and electronics sectors. These effects however come with poor working conditions and gender-discrimination in wages. The report calls the attention of government to a more effective implementation of the ILO International Convention on Decent Work Agenda. However, the extensive report of SIA on the social and human rights impact is not available online.
More recently, the European Union noted the deterioration in the state of human rights and press freedom in the Philippines. The thousands of alleged extrajudicial killings as a result of the anti-drug war were noted with concern. The resolution of the EU Parliament that was passed with 626 votes in favor, seven against, and 52 abstentions, noted the serious violations of human rights especially the rights of women and children. The European Parliament “calls on the European Commission, in the absence of any substantial improvement and willingness to cooperate on the part of the Philippine authorities, to immediately initiate the procedure which could lead to the temporary withdrawal of GSP+ preferences.”
In response, officials of the administration ranted and raged. They decried the political interference, the misinformation, and described the move as history repeating itself. They sounded as if daring the EU to go ahead with the withdrawal of the FTA since the country would not mind. They are not correct of course, as such irresponsible statement would lead to lost economic opportunities not only for exporters but for the hundreds of Filipinos they employ.
Instead of fuming mad, government should take heed of the expression of concerns about the absence of the rule of law in the Philippines. We are cited as one of the worst countries with respect to the rule of law by the World Justice Project. In addition, the ranking of the Philippines dropped significantly in the Human Freedom Index.
The European Union is not a lone voice in the wilderness. Many are part of this voice, especially the poor, and the voiceless. We join them in praying for government to listen and change its ways.