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HOME > Selected Writings > Youngblood > From GATT to OGRE (30 Sept 1995)

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Why there should be a rollback instead6 July 95
From GATT to OGRE30 Sept 95
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Danilo Ara�a Arao
Philippine Daily Inquirer (Youngblood), 30 September 1995, p. 9

GATT is supposed to stand for the General Agreement on Tariffs and Trade. But given the rice crisis we are going through, I prefer to call it the Grand Alliance of Tricksters and Traitors.

The administration has tried to come up with various explanations to ease the growing social unrest, but they cannot hide the truth. Eventually, the people will realize that the GATT, which government proclaimed as the Almighty Economic Savior, is actually the Omniscient Grim Reaper (OGRE).

In explaining the rice crisis, for example, the government tried to trick us into thinking that there is a shortage in the rice supply. Officials blamed unscrupulous farmers whom they accused of hoarding their produce and selfish homemakers who bought more than what their family could consume. This left majority of honest Filipinos (including rich members of the rice cartel) with nothing to eat, they seemed to imply. And consequently, the government had no choice but to import rice from Thailand and India.

As a teacher, I would give officials of the Department of Agriculture and the National Food Authority three grades: an "A" for the effort, an "F" for failing to put the rice crisis in the proper context, and another "F" for unworthy behavior.

It seems that government officials conveniently forgot to mention that under GATT, we have a commitment to import 59,000 metric tons of rice this year. The volume of importation will gradually increase to 239,000 metric tons by 2005. (We must not be intimidated by fancy economic jargon like "minimum access volume." In the context of rice products, this simply means that there will be lower tariffs or import duties for the first 59,000 metric tons which would enter the country in a given year and anything in excess of the minimum will be slapped higher duties.)

While government officials can argue that no one is pointing a gun at us to force us to import, it must be stressed that GATT aims to eliminate quantitative restrictions (QRs) like quotas and import licenses. Simply put, even private traders can directly import rice, a transaction that used to be the monopoly of the NFA. They can also buy as much as they want, without worrying about so many restrictions. Therefore a flood of imports becomes inevitable, leaving poor Filipino farmers out of the business.

The government's claim of a rice shortage only served to justify its decision to import rice without taking the trouble of explaining our adherence to GATT. But isn't it ironic that the government can afford to import rice while it claims it doesn't have the funds to buy palay directly from our poor farmers? This speaks about government priorities and its view on food security.

As if this isn't enough, there are now moves to privatize the NFA. In fact, its warehouses are now reportedly being leased to traders and farm cooperatives. This is also in accordance with GATT, since the "Almighty Savior" believes in minimal government intervention in the economy. As basic Economics taught us, one way to limit a government's economic activity is to give up the agencies that directly compete with the private sector.

Privatization, believe it or not, also has a hand in the current water crisis. Unlike the rice crisis, the government claims that the water shortage is due to forces beyond our control --- specifically, the long drought las summer (caused by the El Ni�o phenomenon) and leaking pipes and faucets.

If we look at the statistics from the MWSS, we would find out that 51 percent of the water it generates can't be accounted for. (In contrast, Singapore only loses eight percent annually.) It is no surprise, therefore, that out of the 3.5 million cubic meters of water which Metro Manilans consume everyday, the government can only provide 2.7 million cubic meters.

Based on the 1995 national budget, it would appear that the MWSS and the Local Water Utilities Administration (LWUA) cannot fully repair the leaks and improve water supply. The two water agencies have a combined budget of only P400 million. (Do I have to mention here the relation between lower allocation for projects and the fact that our water management officials are among the highest paid in Asia?)

Anyway, the low budget for water projects is obviously in line with the impending privatization of water services. But the government should remember the experiences of other countries as regards putting water services in the hands of the private sector. Macau's was privatized as early as the 1920s but the private water firm hasn't proved more efficient than those owned by the neighboring government. Malaysia privatized theirs and this resulted in higher water rates.

The conclusion is clear: GATT has pushed us into the economic quicksand, and the government is keeping its mouth shut. But the truth will come out eventually, and the people will recognize the "OGRE" for what it really is.

Danilo Ara�a Arao, 27, is currently doing a study on the impact of economic liberalization on the poor majority.

HOME > Selected Writings > Youngblood > From GATT to OGRE (30 Sept 1995)

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