A number of Filipino netizens felt strongly offended over a reported “racist” plan of a marginalized, little known political party in Hong Kong to pass a bill that seeks to ban Filipino domestic helpers from working there, in order to compel Philippine President B.S. Aquino to sincerely apologize for the 2010 Manila hostage crisis that exposed the incompetence of our national police and public officials.
Some of these passionate pinoy social network users, who didn’t even bother to get the whole facts of the story, called Hong Kong “racist” and angrily demanded that we also ban Hong Kong and Chinese nationals in the Philippines.
One Filipino Facebook user even posted the following emotional comment on this Facebook group: “Should we start rounding up illegal Chinese at Divisoria and Binondo? Ang dami nla dun nagtitinda di naman marunong mag tagalog at sila pa mainit ang mga ulo (A lot of them sell goods there and they can’t even speak Tagalog and are ill-tempered).”
Another Facebook user said: “Dapat lang ipatupad ang batas. Huliin ang mga illegal Chinese at ipa-deport. Sila ang nakikinabang hindi ang mga tunay nating kababayan (We should implement the law. Illegal Chinese should be arrested and deported. They’re the ones who get benefits, not our fellow citizens).”
I think someone should inform these misguided people that Hong Kong is also fighting for its independence from Mainland China, and not to confuse Hong Kong nationals with Chinese mainlanders.
The thing is, if these Filipino netizens were patient and keen enough to read and know the content of the news report, they would have known that majority of Hong Kong citizens did not support– and even ridiculed– the plan. In fact, Hong Kong’s The Standard reported that “no political party is willing to second (the) motion to ban Filipinos from Hong Kong – and even relatives of the Manila hostage victims have rejected the idea.”
I say, kudos to the civilized, active-minded people of Hong Kong for being rational and for embodying the ‘free market principles’ of their own government. Educated and intelligent Filipinos should find it ironic that this “discrimination” issue rather exposed a collective or group that is actually guilty of “racism” and ethnocentrism. It’s none other than the Filipino people.
This reminds me of a proud Filipino “lawyer” named Severo Brillantes who strongly advocates protectionism and who probably thinks we’re as economically free and open as Hong Kong or Singapore.
In our heated online discussion, Brillantes argued (emphasis mine):
“The Philippines failed to industrialize precisely because we have not adopted protectionist policies which would have allowed our industries to grow and to develop. Your parity rights precisely and decontrol policies imposed by the US have kept us agricultural; kept us the dumping ground of foreign made finished products while we merely export raw materials. That precisely explains why our balance of trade is always a deficit. By reason of our failure to industrialize, we do not have enough jobs for our citizens. Our economy save for a few constitutional provisions is not protectionist and out and out free market.”
I believe this man is one of the biggest proof why majority of Filipinos are economically, and even legally, ignorant. It’s either this so-called “lawyer” wants the Philippines to be the next North Korea in Asia, or he simply doesn’t know what he’s talking about. By the way, the US-RP parity rights agreement expired in 1974, which indeed proves he doesn’t know the law.
Unknown to millions or even majority of Filipinos, the country’s laws and economic policies are some of the most “racist”, ethnocentric, jinguist and close-minded in Asia. Also, there’s no need for the Philippines to punish Hong Kong for trying to exercise its right to sovereignty and self-determination, because we’ve banned foreign professionals and strictly limited foreign investors and businesses here a long, long time ago.
In 1986, the Cory Aquino regime renewed our system of government by enacting the 1987 Constitution that retains the country’s 60-40 protectionist laws and continues to increase the size of our bloated Welfare State. Some of our retained protectionist policies include:
- the ban on foreigners from owning lands
- the 60-40 ownership arrangement favoring Filipinos
- the ban on foreign professionals from practicing their respective professions in the country
- the ban on foreign investors to join our media industry
- Other restrictions (negative list) in our foreign investment laws
Filipinos need to know that Hong Kong is the most open-minded and the freest economy on this planet. In terms of economic freedom, Hong Kong has been ranked No. 1 this year by the Heritage Foundation. This international economic think tank defines economic freedom as “the condition in which individuals can act with autonomy while in the pursuit of their economic livelihood and greater prosperity.”
Free market intellectual Friedrich A. Hayek defines it as “the prerequisite of any other freedom cannot be the freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and of the power of choice: it must be the freedom of economic activity which, with the right of choice, inevitably also carries the risk and the responsibility of that right.”
In terms of ease of doing business, Hong Kong has been ranked No. 2 behind Singapore, which means that starting a business in this tiny sub-state that became Asia’s economic Tiger despite lacking rich natural resource, is just a piece of cake. Depending on the type of business, any entrepreneurial foreigner can put up his own business in just a matter of days. Because of less business regulations imposed on entrepreneurs, Hong Kong is one of the least corrupt nations in the world. Less bureaucratic gridlock and intervention in the economy means less red tape, less bribery, and less cases of corruption.
In the Philippines, cases and incidents of bribery, extortion and corruption are rampant because multinational companies seeking to do business and create jobs for Filipinos are required to go through bureaucratic regulations, to partner with the government or Filipino cronies, and to deal with some bureaucrats if they want to expedite the process. This interventionist-protectionist economic climate in the country is one of the main reasons why a CEO of a Czech railway firm Inekon Group is accusing MRT officials and certain public personalities of bribery or extortion. In other words, our protectionist, red-tape-riddled system creates opportunities for our corrupt politicians, bureaucrats and their family members or relatives to make “easy money”.
Now the question is not whether Hong Kong should ban or restrict Filipinos for B.S. Aquino’s alleged failure or refusal to sincerely apologize, but whether Hong Kong should impose the same protectionist policies against the Philippines in the name of reciprocity and fairness.
But first, what is this principle of reciprocity in international relations?
In global politics, the concept of reciprocity is widely recognized and applied in international trade, the laws of war, the laws regulating the practice of professions, diplomatic relations, among others. It serves as a powerful mechanism to compel nations to cooperate and to observe fairness in diplomatic and trade relations.
One of the international organizations that explicitly adopted this principle is the World Trade Organization (WTO). In fact, reciprocity, according to WTO, is one of the fundamental principles in global trade. Other WTO’s basic principles include non-discrimination and enforcement/dispute settlement, transparency, and safety valves.
Although this principle is not clearly and explicitly defined in GATT/WTO literature, scholars like Bagwell and Steiger (1999) offer the following definition: Reciprocity “refers broadly to the ideal of mutual changes in trade policy which brings about changes in the volume of each country’s imports that are of equal value to changes in the volume of its exports.” Obviously, Bagwell and Steiger’s definition focuses on nations’ export-import reciprocal relations.
Reciprocity is defined also as “a fundamental rule by which plural parties maintain the balance of treatment by means of granting the same or equivalent rights and benefits and/or undertaking obligations to each other.”
There is reciprocal engagement between two states when there exists a balanced treatment or condition in which one state gives the other certain rights and privileges, whereas the other returns the the same rights and privileges. In global trade, a number of nations fully allow foreigners to trade and to conduct economic activities. These economic activities include the rights to own 100% equity of a business, to own lands and property, to lease, to practice a profession, to fully invest in major industries (e.g., media, power, transportation, telecommunications), among others.
Since the goal of the WTO is to eliminate “discriminatory treatment in international trade relations”, its rules demand that its signatory or member states, the Philippines included (since 1979), implement non-discriminatory trade policies and reciprocal concessions. Reciprocity, therefore, attaches duties or responsibilities and obligations to nations, particularly those that entered certain bilateral or multilateral agreements.
However, based on its laws and protectionist policies, the Philippine is one of the biggest “free-riders” that do not observe reciprocal concessions in global trade, and one of the guiltiest violators of the reciprocity principle.
But let me clarify that Hong Kong, China, the U.S., or even the WTO, cannot legally compel the Philippines to change its economic laws and policies in order to comply with its reciprocal obligation in global trade. Like any other country, the Philippines, which is a sovereign nation, is entitled to its right to self government or self-determination.
Global politics, some international experts argue, is inherently anarchic due to the absence of a world government designed or created to legally impose rules and police nations. Yet this does not mean that cooperation between and among sovereign nations is impossible or unreachable. As the WTO and other global organizations and treaties show, cooperation can be made and effected through nations’ willingness to enter into bilateral or multilateral agreements. In this era of digital globalization, cross-border trade and technology play a major role in compelling nations to relax their trade barriers and other restrictions by adopting free market or liberal policies.
For instance, China was forced to join the WTO in 2001 not only to attract outside investments and to improve its then growing economy, but also to protect its economic interests and the intellectual property of Chinese firms. In just ten years since its WTO membership, China became the fastest growing economy. China’s fast-rising economy is the very reason why it was able to expand its military. In fact, China is even more economically free than the Philippines in terms of foreign participation. Foreigners are allowed to own 100% equity in land and business in China. After repossessing Hong Kong in 1997, China, a semi-socialist or “market socialist” middle-power, showed its willingness to respect the authority of Hong Kong politicians to run their own own economy and preserve their free market policies.
This 2008 study shows how China’s 30 years of economic reform and openness brought investments and progress:
“As a result, China’s real GDP was over 13 times higher in 2006 than in 1978. The extent of this growth is highlighted in Figure 1. Furthermore, because of its controlled growth in population, the level of per capita income in China rose steeply.
“Furthermore, China experienced a substantial rise in its Human Development Index (HDI) during this period. Its HDI (one indicator of well-being) rose from 0.530 in 1975 to 0.777 in 2005.”
This happened after China liberalized its economy…
As to the question of whether Hong Kong and other freer economies (e.g., United States, Singapore, China) should impose reciprocal treatment against the Philippines, I think it depends on whether their economies or businesses (HK, U.S., Singaporean, Chinese firms) have been severely or directly affected/victimized by our protectionist policies.
As for the United States, it has every reason to impose reciprocity rule against the Philippines. For instance, international forwarding firm FedEx, an American registered company, was banned from operating in the country for not being a Filipino company and for being detrimental to the interests of local competitors. This despite the fact that FedEx was granted permit to operate in May 2011 by the Civil Aeronautics Board (CAB).
In my humble opinion, instead of appealing its losing case to the Supreme Court, FedEx should have left the country for good and lobby the U.S. government to impose equivalent treatment and restrictions against Filipinos and Filipino-owned companies operating in the United States. If I’m not mistaken, the U.S. government did the same thing against protectionist France in the past.
Now I believe there are Hong Kong and Chinese nationals “illegally” doing business in the Philippines. Any foreigner who failed to comply with the 60-40 ownership arrangement is a criminal or violator under the Philippine protectionist laws. The country’s laws totally ban foreigners from owning 100% of a business unless it is covered by our PEZA laws. However, any HK and Chinese nationals who would like to sell imported goods here or to put up a small business have only two options:
- Marry a Filipina/Filipino
- Hire a dummy. The bigger the business, the more they should be careful in choosing dummies. But there’s an unwritten rule in dummy-hiring: Be sure to get a dummy you can control and easily BLACKMAIL.
Indeed, big corporate Filipino dummies (those who run and manage multinational companies and conglomerates actually owned by foreign billionaires/millionaires) are like pampered, lucky “royal nannies” tasked with looking after corporate “princelings”. They’re allowed to live and enjoy a luxurious life as long as they ‘behave’ and remain quiet about the real status of their “business”. To protect their interests, the ‘real owners’ or dummy-makers hold something against their dummies (e.g., deep secrets, sex tapes, etc.). Which suggests that these Filipino dummies were not chosen because of their unusual skills and business acumen, but because they possess certain weaknesses or negative attributes, e.g., they can be easily controlled, they have shameful secrets (e.g., sexual deviants, crimes, etc.), or they are cowards and unprincipled, etc.
Now, Hong Kong and Chinese politicians may– or should– study our protectionist laws and analyze how they impact their respective nationals and economies. In dealing with our protectionist policies, Hong Kong and China have at least two options:
- Continue to respect our laws
- Impose reciprocal treatment against the Philippines, the purpose of which is NOT to compel us to change our laws but to protect their nationals, businesses and economic interests.
I find the second option just and fair because some of our laws apply reciprocity rule in the practice of certain professions by foreign nationals. Despite prohibiting foreign professionals from practicing their respective professions here, our laws allow certain exemptions. For instance, foreign physicians, whose country grants reciprocity for Filipino physicians to practice, may be given Special Permits by the Professional Regulation Commission. According to the Department of Health, the Special Permit may only be given to a foreign applicant after complying with certain qualifications and requirements, and that the permit is valid only for one year.
However, there’s a big difference between our Special Permit and the permit to work or to practice allowed in freer economies, like the United States, Canada, Great Britain, Singapore, Japan, and Switzerland. As we all know, there are thousands of Filipino doctors currently working in these freer, progressive economies, an alarming trend that deprives the country of good and experienced doctors.
Whether or not Hong Kong, the United States, Singapore, China and other freer economies should impose equivalent protectionist policies and reciprocity treatment against the Philippines, the fact is that they don’t actually need us, as they can always trade with their economic equals and other poor countries that are willing to adopt reciprocity and non-discriminatory principles.
However, they have the power to stop the Philippines from being a parasitic “free-rider”, a term WTO used to describe a country that is unwilling to “make any trade concessions, profits, nonetheless, from tariff cuts and concessions made by other countries in negotiations under the most-favoured-nation principle.”
In their 2008 economic paper entitled Do Countries Free Ride on MFN, authors Ludema and Maida argue:
“To the extent that non-reciprocating countries benefit from improved market access to liberalizing countries (the so-called MFN externality), two related incentive problems emerge: countries may avoid participating in negotiations in hopes of free riding on the liberalization of others; and countries that do enter negotiations may reach inefficient agreements, as they do not fully internalize the benefits of their liberalization.”
The authors argue that the solution to the free-riding problem is two-fold:
- to provide greater inducement for participation
- to isolate free riders (like the Philippines) from the benefits of trade liberalization.
I find the second solution more practical and results-oriented. The authors believe that strict application of reciprocity principle, including other formulas (principal supplier rule and the use of formula negotiations), can be used to “combat the free-rider problem”.
For decades, non-reciprocating, free-riding Philippines has been benefiting from the continued economic progress in the region as well as from its improved market access to economically freer economies (e.g., Japan, United States, Singapore, China, Taiwan, Hong Kong, Thailand, Saudi Arabia).
The Philippines, truth be told, however bitter it may be, is one of the biggest free-riders in Asia, as it has been free-loading on the improved economic conditions of its Asian neighbors (e.g., Japan, Taiwan, Singapore, China, Hong Kong). While the Philippines stubbornly maintains its protectionist policies (e.g., the ban on foreign professionals to practice and the 60-40 rule imposed on foreign investors), its liberalizing neighbors, which all achieved economic progress due to their economic openness, continue to attract and/or absorb Filipino workers, both domestic helpers and professionals alike.
The country’s OFW phenomenon, which is now depriving our major industries of skilled and experienced workers, is not merely a creation of the government (from the Marcosian policies to the institutionalized OFW programs implemented by TESDA, POEA and other agencies); it was also fueled by growing demand for skilled workers in liberalizing countries. Thus, the Philippines is free-riding and benefiting through OFW remittances and increased trade driven mainly by these liberalizing countries’ demand for agricultural, electronics and semi-conductor products. For example, our main exports (semiconductors and electronic products) are fueled mainly by some industrialized countries’ (Japan and United States) demand for these products.
So, who actually needs who?
These liberalizing countries do not need us, as they have more and better options. We need them because our restrictive, protectionist unstable economy heavily relies on OFW remittances.
So, it’s just the right time for these economically freer nations to dump and isolate us because we’ve been isolating our country for nearly 100 years!