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By Ben Arnold O. De Vera Reporter
PRESSURE on the Philippine
government to raise trade barriers mounted, as the World Trade
Organization (WTO) warned of rising protectionism amid the economic
crisis and sharply cut its forecast for trade volumes of developed
and developing economies this year.
The Fair Trade Alliance (FairTrade)
called on the government to raise tariffs for agricultural and
industrial products, except for raw materials used by domestic
industries, up to the country’s maximum binding rates under the
WTO.
The multi-sectoral group joins
calls made earlier by the Federation of Philippine Industries (FPI)
to raise the tariffs on critical products up to their bound rate
limits to provide local industries a “reprieve” amid the global
economic slowdown.
However, Trade Secretary Peter
Favila had said the government would aid the country’s industries
through nontariff barriers, among other WTO-compliant measures.
“While we may reduce tariffs on
products not locally produced or without any local substitutes down
to 1 percent or even zero, products manufactured locally that
compete with imports should have their tariffs increased, not only
as a source for the much-needed revenues for the government but also
as protection for domestic industry and agriculture,” Wigberto Tañada,
FairTrade lead convenor, said in a statement issued on Thursday.
The former senator said the
Philippines can still jack up duty rates under WTO rules, as the
country’s tariff binding rates are twice as much or more than the
current actual most favored nation duties that average about 6
percent.
“There are flexibilities
available in our trade agreements which can be used to arrest the
country’s financial distress and to counter falling receipts from
exports. The upward recalibration of tariffs will help preserve
local jobs in these crisis periods and will also help raise the
utilization of domestic production capacities,” he said.
“We want an upward recalib-ration
because the tariff liberalization program undertaken in the l980s
and l990s was carried out in a unilateral and accelerated manner
without any consultation or coordination with industry and local
agricultural producers. We lowered our tariffs unilaterally without
even negotiating with our trade partners and we lowered them much
lower than the maximum WTO binding rates which were already
unacceptable to many countries in Asia,” he added.
Making its latest assessment of
the global economic situation, the WTO observed that the sharp
contraction of the global economy registered in the first quarter
this year “appears to be slowing down.”
However, citing risks including
rising unemployment and oil prices, the organization lowered its
forecast of global trade contraction to 10.0 percent from its March
forecast of a shrinkage of 9.0 percent.
Trading volumes of developed
economies are now expected to shrink by 14.0 percent instead of 10.0
percent, while those of developing economies would contract 7.0
percent, rather than the earlier forecast 2.0 percent to 3.0
percent.
Amid the economic crisis, the WTO
said in its report to member states that there has been a growing
number of instances of protectionism.
“In the past three months,
there has been further slippage towards more trade restricting and
distorting policies,” it said in the report obtained by Agence
France-Presse.
The WTO added that “resort to
high intensity protectionist measures has been contained overall,
albeit with difficulties.”
It noted that even without taking
into account trade measures put in place due to the swine flu
pandemic, there were more than twice as many new trade barriers
introduced than new trade liberalizing measures.
It said restrictions related to
the A(H1N1) flu pandemic has been “most noticeable,” listing at
least 39 member states which have imposed measures such as import
bans on pork products from swine flu-affected countries.
“A worsening of the A(H1N1) flu
pandemic could also create further downside risk to global economic
recovery,” it said.
The trade organization also
raised renewed concerns over stimulus programs put in place by
governments in a bid to lift economies out of the recession.
It said that there is “very
limited information that is available publicly” on these programs,
therefore, it is difficult to assess how these measures could
distort markets and competition.
In addition, it is unclear when
support or subsidies provided by the state to prop up ailing
industries such as automobile or banking would be withdrawn when the
problems are dealt with.
“An important consideration for
the G20 countries, therefore, is to design and announce as soon as
possible an exit strategy from their crisis measures that will allow
world markets to return to normal again,” it said.
--With AFP
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