Wednesday, July 20, 2005

Cha-cha ni Gloria

CHARTER CHANGE, GATS, AND PRESIDENTIAL SURVIVAL

The Arroyo administration is banking on Charter change for its political survival, but amid the hulabaloo on the political aspects of Cha-cha, it should be remembered that its proponents also want to change vital economic provisions in the Charter.

By Joseph Yu

IBON Features-- As President Gloria Macapagal-Arroyo struggles to hold on to the presidency, it seems her only hope lies in amending the Constitution. Charter change and the false hopes it offers are Arroyo's last chance to avert not just another popular uprising that would sweep her from power, but a more extreme political scenario such as a military junta.

The Arroyo administration is also urgently pursuing Charter change due to the current economic and financial crisis resulting from its adherence to globalization policies. The government is in dire economic straits as liberalization of trade and investment has substantially eroded domestic sources of industrial and agrarian growth, and resulted in a brewing balance of payments crisis.

Public debate on Charter change has so far revolved around the manner of changing the Constitution and the political "reforms" involved. Hence: a constituent assembly or a constitutional convention. A presidential vs. a parliamentary system.

But in the midst of all the hulabaloo about the political aspects of Charter change, some people seem to have forgotten that proponents of Constitutional reform also want to change vital economic provisions in the Charter. These changes would ease the entry of foreign investments in sectors that were previously restricted to Filipinos. Although Charter change would result in a short-term economic boost as a result of an influx of foreign direct investments (FDI), it would be at the cost of further long-term damage to the local economy.

Undermining Economic Sovereignty

The 1987 Constitution has not successfully regulated the country's trade and investment relations with other countries towards developing national industries and domestic agriculture. The most that can be said is that the Constitution has partially contained the full implementation of globalization policies and forced monopoly capitalists-- with the cooperation of the government-- to find ways to bypass, subvert or totally disregard it.

The concept of economic sovereignty is in fact enshrined in the Constitution's Declaration of Principles, which says that the State shall: develop a self-reliant and independent national economy effectively controlled by Filipinos; and pursue an independent foreign policy whose paramount consideration shall be national sovereignty, territorial integrity, national interest and the right to self-determination.

Specific Charter provisions on economic sovereignty include:


  • Restricting foreign ownership, the degree of foreigners' involvement in decision-making and the grounds of expropriation;

  • Regulating the exploration, development and use of the national patrimony and defining corresponding rights, privileges and concessions;

  • Giving preference to Filipinos and stating the responsibility to protect, encourage and promote Filipino economic activity;

  • Giving the state various powers with which to assert national sovereignty, specifically in terms of: regulating trade, monopolies and other economic activity in the public interest and in favor of Filipinos; defining the State's treaty making powers; and giving the Supreme Court the power to assert the Constitution's nationalist provisions.



In principle, these provisions could be used to assert the Philippines' economic sovereignty at least in a limited way. In practice however, administrations from Ramos to Arroyo have seen these as barriers to foreign direct investments that should be removed. It has even undermined these provisions by ratifying the General Agreement on Tariffs and Trade and becoming a member of the World Trade Organization (WTO), and by passing laws such as the Foreign Investment Act of 1991 and the Philippine Mining Act of 1995.

Foreign chambers of commerce and other big business interests have also not been shy about revealing their preferences for Charter change. The US, in particular, has been very vocal in criticizing restrictions on foreign ownership of land and other nationality requirements in public utilities (i.e. electricity, water, telecommunications, public transport) and other sectors such as banking and advertising.

Foreign Domination of Services

Charter change is also in line with government's commitments to open the economy under the WTO. This would lead to transnational corporations gaining control of vital sectors of the domestic economy.

Recently, the government announced that it would open six service sectors to foreign investors under the General Agreement on Trade in Services (GATS). The offer covers information technology (IT), construction, distribution, energy, and environmental and tourism services. Constitutional "reform" would ease the process of opening these sectors to foreign investors.

For example, investing in the environmental services sector (which includes water and sewerage) would be more attractive to outside investors if total foreign control would be allowed. Although water services have been privatized, full foreign ownership is still prohibited under the Constitution.

The offer to liberalize the construction and energy sectors covers services incidental to the mining industry. After the Supreme Court recently upheld the 1995 Mining Act, government is hell-bent on liberalizing the industry, in violation of the Constitution and at the expense of indigenous peoples and small communities who oppose mining on their lands. Removing economic sovereignty provisions in the Charter would preclude later legal challenges to foreign control of these sectors.

Adherence to GATS itself should be prohibited under the Constitution because of its requirement for WTO members to extend most-favored-nation (MFN) treatment to trading partners. MFN treatment means that if a country allows foreign presence in a sector, it must allow equal opportunities in that sector to service providers from all other WTO member-nations.

But it can also be interpreted to mean that a government cannot provide incentives to domestic providers of a service without providing the same incentives to foreign providers. This sharply restricts government's powers to develop the local economy by protecting it against competition from foreign providers. This goes against Article XII Sec. 1 of the Constitution, which says that the State shall "protect Filipino enterprises against unfair foreign competition and trade practices."

It should also be noted that MFN treatment applies even if a country has made no specific commitments to provide foreign companies access to its markets under the WTO.

Presidential Survival Tactics

The Arroyo administration is banking on Charter change for its political survival. In a recent speech before 500 Philippine consuls and honorary consuls to the US and Filipino-American investors, Arroyo once again pledged that she would speed up constitutional amendments.

But it is clear that the real motive behind Charter change is to remove Constitutional provisions on economic sovereignty that hamper transnational corporations' full exploitation of the country's natural resources and labor.

Charter change advocates also aim to tighten their control over the political system by diluting the Charter's provisions on civil liberties and human rights. This would allow them to stifle dissent over their iniquitous economic policies. Moves towards the intensification of state repression are already evident with the rash of killings of activists.

Admittedly, the 1987 Constitution is not perfect. But for all its weaknesses, it must be prevented from becoming worse through Charter change. It is not the Constitution itself that is the root of the people's social and economic problems. The basic problems of the country are foreign domination, factionalism of elite politics, bad governance and feudal bondage-- and any Charter emerging amidst these problems can only be worse.

Meaningful constitutional change can only take place when it is driven by the people's true economic and political interests rather than in response to the demands of foreign interests.

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