The Philippine State, Society
& Economy, 1992-1998

Nov 14, 97
The APEC, the MAI and Corporate Rule: Speech for Forum Populaire, Montreal
By Antonio Tujan, Jr., Executive Director, IBON Philippines & Member, Philippine Organizing Committee of the 1996 People's Campaign Against Imperialist Globalization


When the APEC or the Asia Pacific Economic Cooperation was held in the Philippines last year, it brought about a great national debate on the issue of globalization and the path to development for poor countries like ours. It also did not help that the Ramos government demolished slum communities in order to beautify Manila and Subic, arrested Filipino activists, denied the entry of foreign activists and militarized Central Luzon. These events were a prelude to the gargantuan protest movement that emerged and virtually eclipsed the official Manila APEC activities.

The APEC will again soon hold its meeting of all the leaders of its member "economies" in Vancouver. Such a meeting, along with other developments such as the Multilateral Agreement on Investment (MAI) of the OECD and the World Trade Organization (WTO) process, underscores how the process of globalization is hastening the liberalization of economies and the expansion of operations of transnational corporations (TNCs) in Canada and all over the world.

Will this really solve the economic crisis? Does this really mean prosperity and development as we are being made to believe? Or is this the result of a global crisis and the mad scramble for dwindling profits, forcing open economies and sectors previously protected and removing social control, social services and protection for the public good.

The APEC itself is a peculiar being, in structure and process, as many of you may have already been told. But instead of dwelling on that, I will outline a few key points regarding the process and role of APEC.

An effective instrument for free trade

The compelling purpose of the APEC is to realize free trade, underscore the word realize. This is an agreement and a process that not only commits countries to the principles and goals of liberalization, but actually pays attention to realizing these goals on a step by step process of so-called "doables" to achieve not only liberalization but also facilitation of business for transnational corporations.

How is this done? Unlike other agreements which set goals and rules, the APEC utilizes its alter-ego of economic and technical cooperation, which is its original purpose until the US changed all that. The result is a more powerful body that masks liberalization with cooperation and ensures and facilitates business through seemingly innocent cooperative ventures. For example, the action program on marine conservation not only insists that environment protection should not undermine liberalization, but also identifies specific corporations in transportation or tourism which shall be assisted in investing in APEC member countries. Another example is the action programme on Small- and Medium-Scale Enterprises which purportedly shall assist SMEs technically, but at the same time prescribes franchising and supplying/subcontracting to transnationals as the viable option under free trade. How true.

Second, the APEC utilizes and implements the WTO principles of standstill, comparability, simultaneous start, and the like to ensure a more effective implementation of WTO rules on tariff reduction, reducing non-tariff measures, reducing restrictions on trade and investments in services and achieving free and open investment. This is achieved quite effectively by requiring each country to come up with its "deliverables", a set of country commitments where each one is encouraged to outdo the other, fools like the Philippine officials proudly proclaim being ahead and laggards like China are pulled into the fold.

Third, APEC is a maze of working groups, ministerial meetings and the like that have resulted in action plans in fifteen key areas in trade liberalization and facilitation, and thirteen key areas in technical and economic cooperation, -- areas which have been identified by businessmen as most crucial towards actually promoting business. These specific action plans complement the national action plans in hastening the process of liberalization and providing transnational business a haven in the Asia-Pacific.

Global competition

While the crisis of overproduction and the resulting intensifying competition for markets has resulted in the opening up of countries and economic sectors under the aegis of free trade, this competition and over-all liberalization under the WTO process has also brought about the mad scramble between the three centers of imperialist power -- Japan, US and Europe -- for their own enclaves. Thus the formation of NAFTA, MERCOSUR, AFTA, ANZERTA and the developments in the EU.

The APEC is a peculiar product of that conflict as the US tries to dominate the Asia Pacific before a Japanese-dominated Greater East Asia grouping could be formed, while it already has its NAFTA and now tries to consolidate the whole of the Americas into a new formation.

The European Union, dominated by imperialist Germany and France, tries belatedly to secure its interests in lucrative East and Southeast Asia through its own formation which it started in a meeting last year in Thailand.

Effective corporate control towards globalization

The APEC is a good case study of how corporations exercise political control for the ultimate goal of corporate profit. From the Osaka meeting, the key policies of the APEC were prepared following the design of the pivotal neo-liberal think tank Institute for International Economics headed by Fred Bergsten and the recommendations of the Pacific Business Forum. This has been superseded by the APEC Business Advisory Council which meets parallel to the APEC Leaders' Meeting, to assess the performance of the body and point out directions and areas for the APEC to proceed.

The three policies of trade and investment liberalization, deregulation and privatization form the core of the process of globalization which provides immense opportunities for business expansion and profiteering for global conglomerates. These policies provide them with added advantage and access to exercise monopoly control and realize superprofits, higher profits achieved through global control and advantage.

Through trade and investment liberalization in the APEC, global corporations mostly from the US and Japan are able to enter protected areas in weak economies, to sell cheaper, subsized exports to the detriment of the local economy. Transnational corporations are able to gain access to cheap natural resources in countries where environment protection is weak or unenforced or where this protection is set aside as anti-liberalization.

Deregulation removes social protection and control mechanisms against corporate profiteering on the pretext that these regulations are a disincentive to investment. Of course, foreign investment has become glorified as the saviour of countries from economic crisis. The removal of price controls in favor of suppossedly superior market mechanisms does not result in lower prices because TNCs operate as cartels to fix prices and ensure greater profits. Meant to attract finicky investors, financial deregulation has opened countries wide for speculative portfolio investments that have wrought havoc to currencies and financial markets in Asia and resulted in billions of dollars of financial loot flowing into the coffers of the global financial oligarchy.

Privatization programs imposed through the IMF-World Bank and promoted by the APEC fulfills the purpose of expanding TNC profiteering in various ways. Utilities, social services and parastatals are sold at great loss to these conglomerates and secure for them windfall profits, not to mention surrendering decisive economic, social and political control to these companies. Sale of parastatals assure control and exploitation of natural resources. Even infrastructure and economic development is privatized through build-operate-transfer (BOT) and similar schemes. Privatization of social services explodes the myth of the welfare state and marginalizes the majority of the population, especially those in the Third World, from social services like education and health care.

And now the MAI

The WTO, the APEC and the host of free trade agreements constitute a prelude to the final blow of neo-liberal globalization: investment liberalization which shall open all economies to complete direct control by transnational corporations and provide the final frontier for imperialist competition for domination. This was originally proposed in the WTO through the Multilaterial Investment Agreement but which was eventually shelved due to opposition at the Ministerial Meeting in Singapore last year.

This has now resurrected in an even more rabid form in the Multilateral Agreement on Investment that was negotiated in the OECD and will be due for signing in April 1998. The MAI is a clean agreement of the highest order, which means that it does not have many limiting or countervailing measures. While being negotiated among the 28 OECD member countries, it will be brought to other countries who have not even been part of the negotiation process for signing.

The MAI shall provide national treatment or parity rights to foreign investors. This allows the unhampered entry of all foreign investments and removes any form of protection or support for local enterprises. By providing national treatment to foreign-owned enterprises, the MAI will eventually result in the marginalization of weaker national enterprises and the erosion of national economies.

The MAI also provides for most favored nation treatment to foreign investment and prevents countries from developing special ties or treatment with certain neighboring countries or in promotion of South-South investment links. National and MFN treatment shall apply to all kinds of privatization, thus removing all efforts to maintain some vestige of national influence in privatized social services and national corporations.

More alarmingly, the MAI gives foreign corporations the right to sue governments and demand compensation for what they think are profits lost from future business due to policies that impinge on their freedom. This agreement is even worse than the APEC which hypocritically calls for environmental protection and social supports and protection for marginalized communities but define such protection within the framework of liberalization. Under the MAI, all forms of control whether for environmental interests, community interests, social protection, national economic interests, people's welfare and the like are set aside as detrimental to the rights of foreign corporations to do business and earn profits. Through the MAI, expanding the field for TNC competition carries with it the certainty of destruction for national enterprises, marginalization of self-reliant communities and impoverishment of peoples.

Destroyed economies, more misery for peoples around the world

These neo-liberal policies of globalization have meant nothing but the destruction of economies that had already been weakened by the global crisis of debt and overproduction; and even greater misery for peoples all over Asia-Pacific. The current financial crisis in Southeast Asia that has spread to HongKong and is threatening even North America itself is a great lesson for us about the myth of growth under globalization, the so-called tiger economies; the rapacity of the global financial oligarchy that has taken the form of high stakes gamblers utilizing portfolio investments in unbridled financial speculation; and the real dangers of surrendering social control and protection to imperialist dictates and profit-taking.

The much-heralded tiger economy of Southeast Asia is a myth that is premised on exports growth in an international market that is actually facing a historical glut, but is funded by speculative capital operating in financial markets, real estate and infrastructure. Such a balloon was bound to burst sooner than later as exports eventually lag behind imports and speculators dive in for gargantuan profit-taking, leaving the economy in shambles. This scenario has been repeated over and over in various degrees from the time it started in Thailand to the other countries in the region before moving on to HongKong. Currencies have been devalued from 30 to 40% in spite of billions of dollars of real money from national coffers that were handed over to the speculators in a bid to save these currencies.

This has increased the national debt as in the case of the Philippines, or put countries like Thailand and Indonesia under new structural adjustment programs. In exchange for an initial $23 billion financial package, Indonesia undertakes to restructure its financial sector, deregulate importation of basic commodities, deregulate cement prices, reduce import tariffs and remove various export controls. The Philippines needed less bailout funds but already has a $41 billion foreign debt and is facing difficulty in implementing its 1997 IMF structural adjustment commitments in spite of its boast of an exit program.

In spite of a $17.2 billion credit line provided by the IMF for Thailand, the financial collapse has caused a recessionary crisis with manufacturing shrinking by 5.1% in August The trade deficit has increased even further from 22 billion baht in August to 22.9 billion in August in spite of the crisis. In the Philippines, manufacturing has actually declined by 5% in the first semester along with a decline in exports, prompting business leaders to call for government intervention. Large, established manufacturers in garments have closed shop as a result of uncompetitive operations while other companies like Moldex (a large PVC pipe manufacturer) is on the brink of bankruptcy and Hammer (a well-established garments company) closed shop due to their failing real estate exposures.

As usual, Fred Bergsten calls for an APEC intervention, not to implement financial regulation in member countries, but for the APEC to pressure member countries to implement IMF prescriptions to the letter and on time, and to support IMF bail-out and restructuring schemes through an APEC supplementary funding which shall enhance such "peer pressure". Typical of imperialist spokesmen, the victim countries have been blamed for supposedly unsound fundamentals (which were really IMF presriptions in the first place), while nothing is said of the corporate speculators and the policies of globalization which laid these countries bare to these vultures in the first place.

Globalization has intensified the misery of people everywhere. Workers have been reeling from high unemployment while wages are kept artificially low in order to attract investments. Labor flexibilization or contractualization schemes keep workers in an employment limbo and without job security. This keeps wages low and undermines union organizing. Worse, in countries such as the Philippines, corporations have embarked on a union busting spree to end militant unionism promoted by genuine unions like the Kilusang Mayo Uno KMU).

Farmers and peasants are at the losing end as cheap agricultural imports flood the market. As a result of this and to avoid land reform, landlords shift to speculative businesses and kick out the peasants and agricultural workers. In many other cases, peasants and farmers are forced to accept contract growing schemes with transnational agribusiness giants that now control agricultural production for export high value crops. Indigenous communities are forced out of their ancestral lands through various schemes that open up forests and mountains to foreign logging and mining companies.

Wide scale displacement of rural communities and the continuing landlordism and rural poverty have resulted in the continued flow of migrant labor to the cities, and even overseas, especially for countries like the Philippines and Bangladesh. There they find no work and fend for themselves through odd jobs and petty trades and live in ever expanding urban slums. It is estimated that one half of Metro Manila residents live in squatter colonies, and the majority live below the poverty line.

Such widespread displacement and marginalization impact severely on families which are uprooted and become dysfunctional. Women bear the brunt of destitution and the loss of social services, and are forced to take on work that are oftentimes dangerous and demeaning to the human person. Women and children become victims to the criminal gangs that feed on poverty.

This situation has been further amplified by the financial collapse in the Southeast Asian countries. In the Philippines, the devaluation of the peso has resulted in the increase of prices of basic commodities led by petroleum products and followed by the price of basic food products, power, and transportation. Bankruptcies have resulted in the increase of the unemployed and the desperate. The bubble has burst in the tiger economies and this has been replaced by a pervading atmosphere of uncertainty and gloom.

Fight-back

But the people have started to fight back in massive numbers in the Philippines. The oil price hike in August was met by a transport strike that was called by the New Patriotic Alliance or Bayan, KMU and Piston, an alliance of drivers and transport operators. For the second time in the history of the Philippines, and for the first time since 1987, Metro Manila, along with other major urban centers all over the country, was paralyzed by a transport strike. The call for a rollback of oil prices on the basis that there was massive profiteering by the oil cartel received popular support with government promising to investigate the oil cartel and legislators apologizing for enacting the law deregulating the oil industry as a commitment to the current IMF structural adjustment program.

Despite the successful nationwide strike, the oil cartel did not roll back oil prices and instead increased it again at the start of October. Another strike called by Bayan, KMU and Piston on October 7 was even more successful. As a result, the Supreme Court, acting on a previous motion to declare the oil deregulation law invalid, ordered a 30-day temporary restraining order against the oil companies' increasing oil prices. This was a clear victory for the people who sustained the struggle through a people's march against poverty demanding the rollback of oil prices along with the KMU demand to increase minimum wages by P100. The peasants also launched a hunger strike in front of the Department of Agrarian Reform to press for their own demands related to land reform. We have received a report last week that the Supreme Court has finally issued judgement that the oil deregulation law is illegal.

Such a victory in the Philippines against the oil cartel of Caltex, Shell and Aramco, against the structural adjustment program of the IMF, and the Philippine elite is because the people have stood up to assert their rights and wield their democratic power to roll back globalization and not because the Philippines has a progressive or a democratic Supreme Court. This struggle is in the same spirit as the teachers' strike in Ontario, the struggle of the Ogone people of Nigeria against Shell or the struggle of the peasantry of Nicaragua against trade liberalization.

In the era of globalization foisted upon us by monopoly capital, the aspirations of social justice, democracy and national freedom take on a new, more urgent and universal meaning. Our national situations in the Philippines, in Canada or the other countries belonging to the APEC are very diverse and our levels of development are indeed very disparate. But the neo-liberal agenda of corporate rule and profit put us in the same predicament, albeit in very disparate degrees, of loss of social welfare, control and protection, loss of national sovereignty and patrimony, and loss of economic justice and democracy.

Globalization intensifies the marginalization, or apartheid, of the broad masses of the people in Canada while a few monopoly corporations whether Canadian or American and their associates in government and other institutions of power exercise naked corporate rule. On the other hand, it intensifies the wholesale domination and marginalization of a country like the Philippines for the benefit of transnational corporations, mainly American and Japanese who rule through local comprador-landlord puppets in order to exploit our people and our natural resources.

As we engage the APEC and, more urgently, the MAI, we must bear in mind that these are instruments of naked corporate rule, totally undemocratic and unjust that must be rejected and defeated at all costs.



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