Table of contents for Petropolitik, Sapian And China
- Petropolitik, Sapian And China 1
- Petropolitik, Sapian and China 2
- Petropolitik, Sapian and China 3
- Petropolitik, Sapian and China 4
- Petropolitik, Sapian and China 5
- Petropolitik, Sapian and China 6
- Petropolitik, Sapian and China 7
- Petropolitik, Sapian and China 8
- Petropolitik, Sapian and China 9
- Petropolitik, Sapian and China 10
- Petropolitik, Sapian and China 11
- Petropolitik, Sapian and China 12
- Petropolitik, Sapian and China 13th and Final Part
Petropolitik, Sapian and China - Fourth in a Continuing Series
Cory and Ramos Cabinet deliberations on GATT/WTO involved many economic concepts that Ms. Flores laid the foundations for. GATT/WTO was discussed on my first attendance in a Cory Cabinet Meeting, and Jose Concepcion (JoeCon), former Trade and Industry Sectary in Cory Cabinet, owner of Condura, Cosmos Bottling, General Milling, etc., tripped on my right foot and almost crashed on former Defense Secretary Renato De Villa. I was terrified, my first Cabinet and I caused an accident. But people I sat next to assured me that it was not my fault - Lucille Peralta (now Ortille, and Director General of the Cabinet Coordinating Committee on Housing and Urban Planning), also from Roxas City, and Mary Ann Z. Fernandez (now Assistant Commissioner of Civil Service Commission) told me JoeCon was looking up on screen while briskly walking down the hall. Corridor of power is always cramped, so seats around the Cabinet Meetings are always crowded. Seating was arranged in two rings - the inner circle which is the president and cabinet members, and the outer circle composed of lesser bishops and acolytes like myself. State Dining Room is cold and dark when giant Swarovski chandeliers are dimmed for PowerPoints. Only Imelda’s sconces would light the old rose velvet carpet while people seated on the outer circle would obstruct most steps of the way. Talk about cordon sanitaire.
Anyway, this was not the case in the brightly lit and well-appointed National Economic Development Authority (NEDA) Board Room in Pasig, thanks to Toto “Tayho” Guijaro. The president and Cabinet also convene as Joint Cabinet-NEDA Board a few times a year to update the National Development Plan, and they meet in Pasig once in a while. In NEDA sa Pasig, I always see Toto Tayho because he does the electro-systems for NEDA Board Sub-Committee on Human Resources and NEDA Board/Cabinet that I both attend. I’m sure, Toto Tayho, bombarded by economics everyday, would remember the lectures of Ms. Flores. Our batch was the first to graduate under the nationalized high school. Unfortunately, it was the last batch Ms. Flores would teach. That very next school year, she moved to then Panay State Polytechnic College (PSPC). Lucky them.
Further exploration on China’s economic boom needs us to look into just a little bit of GATT and history. Ms. Flores taught us that Industrial Revolution, which started in Britain between late 1700s and early 1800s, was characterized by increased production due to mechanization (e.g., steam engines - factories and railways). Mechanization allowed mass production that created surplus products. Countries needed to sell surplus products to other countries (dumping). But other countries have the same industries and were creating the same products. So, each country tried to protect its domestic industries, and a period called Protectionist Era ensued. Nations established trade barriers, raised import taxes and tariffs, to make it very difficult to import and export outside of national boundaries. Trade wars ensued - dumping of surpluses to, or raising tariffs against unfriendly nations. Countries like Britain, U.S. and France (Allied) were lucky. Their colonies acted both as exclusive markets for their surpluses and source of cheap raw materials. Other industrializing countries like Japan, Italy and Germany (Axis) did not have colonies. Axis powers had to either have colonies or just fade away. Many summed up World War II as an attempt by Axis powers to re-divide the world and gain colonies for themselves. At that time, China was an agrarian economy trying to survive its own Cultural Revolution.
In 1944, GATT, a trade treaty involving many nations, was established. Its purpose was to facilitate free trade by encouraging member-nations to reduce tariffs and remove trade barriers. This would avoid trade wars and the need to maintain colonies (i.e., the Philippines was then allowed to become independent). Under GATT, each one had a list of sectors, industries or specific products they want to open to international competition. Taxes for those specified sectors or products are either lowered significantly or removed altogether. Since then, GATT worked on the sidelines until the emergence of European Community in the late ’80s. At that time, trade blocs, treaties involving many nations, in many regions of the world started to proliferate. By early 90s, there were APEC, Uruguayan Round, NAFTA, AFTA, BIMP/EAGA and dozens others. Trade blocs reminded some economists of Protectionist Era.
Therefore, GATT had to be reinvented. This time, it would have to include China. The world could not wait to sell 1.3 billion more bottles and cans of Coca-Cola and McDonald’s burgers. And China itself, wary of being alone after the downfall of USSR and its Eastern European allies, and tempted by outward forces of its modernizing economy, had to jump into the bandwagon. Western companies, led by American investors, raced their way to China to manufacture everything from slippers to ICs. This proliferated the market with too much China products and created higher demands for petroleum.
Negative implications for Sapian: First, China has drawn in foreign investments that would have otherwise been invested in the Philippines that, directly, either employ some Sapianons, or benefit Sapianon businessmen, or indirectly, bring in money into the domestic economy and trickle down to Sapian in form of taxes or increased buying power/demand for Sapian fishery products. Second, flood the Philippine market with cheaper Chinese goods, competing with our local industries - especially with GATT - losing our fledging manufacturing businesses and jobs. Third, highly industrialized China makes it more influential in geopolitics to the detriment of our security, including losing our claim to the disputed, natural gas rich 200-mile EEZ off Palawan. Fourth, China is developing backbone industries like steel, chemicals, etc., is reckless with environment and could upset South Asian environmental health (e.g., nuclear waste, industrial dust, acid rain, etc.). Fifth and most importantly, China, consuming more oil, offsets supply equilibrium, creating shortage, increasing prices, and causing more instability in volatile Middle East (e.g., giving Saddam rockets, bribing Iran with $70 billion, and possibly, some bits of nuclear technology). Increased prices slow down the Philippine economy, as it pays more power bills, lower Peso value because more dollar is paid for oil imports, less tax collections because of lowered profits, less foreign investments because of less anticipation of profits, and so on.
On the positive side for Sapian: First, abundance of made in China products, as said earlier, makes it easier for us to buy products that used to be difficult and expensive to acquire. Second, China would attempt to expand its political and economic clout among its neighbors and invest in the Philippines, such as in agro-industry. This should be our last opportunity to dove-tail on global trade. Third, since the continued affluence of China’s economy is dependent on its goodwill, it would not do much to offset South Asia security - although the 200-mile EEZ is now irretrievably lost.