Jan 14, 2012
Globalization and the Philippine tuna industry
By Ernesto Ordonez, Inquirer News Service
JOSEPH Stiglitz, a Nobel Laureate in economics, said: “The essence of globalization is that it should bring job security. If the contrary is happening, economic instability and social insecurity leading to violence is likely to happen … The path to economic globalization must be changed in order to avoid undermining job security.”
Initially, the attractiveness of globalization and its accompanying rapid trade liberalization was very appealing to many in the Philippine government. They believed the neo-liberal myth that a rapidly liberalized and globalized market is good for the Filipinos. They would have more choices from the additional imported products. These products would also be cheaper. Thus, more goods could be bought for the same peso.
Risks in globalization
However, no society can subsist on consumption alone. Cheap goods for a person without income is meaningless because there will be no money to buy these goods. In the Philippines, because of very rapid trade liberalization, we have cheaper imported products. But this has come at the great cost of lost jobs and incomes.
Theoretically, the displaced and other jobless people should have found employment in areas where we have “comparative advantage.” But realistically, not enough of these job opportunities exist as of now. The result is that today there are more jobless people than at any time in our history. Globalization, as Stiglitz predicted, has indeed resulted in undermining job security.
The tuna industry
Last March 17 the Tambuyog Development Center (TDC) filed a case at the Quezon City Regional Trial Court to nullify Fisheries Administrative Order No. 195 (FAO 195) because it allegedly violated the Fisheries Code.
This order allows Taiwanese and other foreign fishing vessels to import non-export grade tuna fish daily at the fish port in the southern city of Davao.
According to TDC executive director Arsenio Tanchuling, FAO 195 goes against Section 42 of the Fisheries Code because the code does not allow any fish importation via transshipment. It also contradicts FAO 199, which, in defining transshipment, makes no allowance for the transshipped goods to enter the domestic market, he said. “But despite our three letters of complaint against the said order last year,” Tanchuling said, “department officials continue to ignore the matter.”
Loss of jobs
In the short run, the consumers benefit from this order because of lower tuna prices. Taiwanese tuna is sold at 60 pesos per kilogram in the wet market; local tuna is 120 pesos a kilogram. Emmanuel de la Cruz, a fisherfolk leader and co-petitioner in the court case, says: “The imported tuna is cheaper because the Taiwanese have access to cheaper oil in Indonesia by virtue of a fishery access agreement between Taiwan and Indonesia. This is a subsidy the Taiwanese get that we do not receive from our government. This is unfair competition.”
The TDC’s James Escober Jr. says that aside from the Taiwanese fishers buying diesel fuel at six to seven pesos a liter lower than our local price of 17 pesos, they also enjoy other subsidies that our tuna handliners do not. Though this form of freer trade with Taiwanese fishers is better for our consumers because of lower tuna prices, the Filipino fisherfolk who have lost their jobs complain that this is not fair trade.
The amounts involved are not insignificant. De la Cruz says that as much as 1.2 metric tons of tuna is sold in the local wet markets. These sales are prohibited by an order that mandates all tuna sold through transshipments can be sold only to institutional buyers. Therefore, this quantity does even include the amount sold legitimately to these buyers.
The result is that, in the southern city of General Santos alone, the fishing boats of tuna handliners have decreased from 119 to 48. At the rate of 20 fishers per boat, this means a loss of 1,428 jobs.
More than legality
Though the TDC is taking this case to court on legal grounds, the greater issue is the correctness of government policy toward globalization and trade liberalization. Will we sacrifice people’s jobs to provide possibly only short-term lower prices for our consumers? In many cases, once the domestic competition has been killed, the foreign suppliers of these imported products increase their prices. We are then at their mercy because we have no choice.
And if we import these products, should we do so with tariff rates that would result in an amount much less than the subsidies given to these imported products? While this would be freer trade, it would definitely not be fair trade.
Conclusion
We believe globalization is inevitable, but it would be advantageous to us only if we have the right form of trade liberalization. Importation of subsidized tuna through transshipment with zero tariff is not the right form. It has caused the loss of jobs and threatens the tuna industry’s survival. While there is a legal issue, the bigger issue is government policy toward trade liberalization. The government does not have to wait for the legal case to be settled in court. It can resolve this more effectively by changing its policy and implement the right form of trade liberalization.
The wrong kind of liberalization is not limited to the tuna industry alone. Wherever this occurs, job security is severely threatened and, as predicted by Stiglitz, violence is on the increase. We should reformulate our trade liberalization policy in the tuna industry and in any area where there is no fair trade. In those areas, we should immediately heed the advice of Stiglitz lest we reap the whirlwind of violence: “the path to economic globalization must be changed.”
(Originally published in: Focus on the Philippines No. 12, http://focusweb.org/oldphilippines/content/view/39/6/