News International News Flash Foreign trade
Foreign trade
- Details
- Published on Wednesday, 18 July 2012 00:00
- Written by AMADO P. MACASAET
By A Web design Company
‘There is an increasing reliance on foreign consumption goods chiefly because our competitors can produce them cheaper than we can.’
THE economy continues to try promoting the manufacturing sector to produce goods for local consumption and for exports. Production for domestic consumption is far from adequate. There is an increasing reliance on foreign consumption goods chiefly because our competitors can produce them cheaper than we can.
This is the downside of becoming a member of the World Trade Organization that forced all its members to haul down the tariff walls because they are considered artificial protection that in turn prevents or at least slows down globalization.
We see this in the fact that we import vegetables – even the lowly patola – from Taiwan. The dependence on foreign goods denies our farmers the opportunity to make an income. That is one big reason rural folks troop to the urban centers only to become scavengers and criminals, in some cases.
Our agriculture – as far as the staple cereal is concerned –is nearly hopeless. We will continue importing rice. Our lot is such that, apart from having a small territory compared to the number of people who expect to survive on it – we are visited by natural calamities that prevent the farms from producing more rice.
But even if there were no such calamities, the unchecked growth of population that increases the number of mouths to feed, practically assures the country of an expanding shortage of rice.
We might have neglected our competitive advantage in producing high value crops such as vegetables and fruits. If this had not been the case, why in heaven’s name should we import tamarind, durian, lanzones, among many kinds of fruits from Thailand?
The comfort is in the fact that we have a supply of dollars far bigger than our total foreign debt. This means we will not run out of money to import from Thailand and Vietnam what we can abundantly grow in our own territory.
This may be a result of two things. First, the shift of the economy to the service sector has been so successful policy makers do not seem to pay the necessary attention that agriculture deserves while Vietnam and Thailand are modernizing their farms as a source of foreign exchange.
For as long as the neglect of the farms is not to try and increase manufacturing activity, the economy should well be on the way to growth.
For all intents and purposes, manufacturing for exports is dead or in extremis.
We have no competitive advantage at all. We have not minutely examined the components of our exports but I guess a good bulk of them are imported components.
Foreign trade is historically at the complete mercy of our trading partners. When they go bust, like the European Union which cannot seem to get out of the debt trap, their demand for Philippine manufactured goods necessarily goes down.
Foreign trade ceases to be a reliable source of foreign exchange.
But, being a market driven system, the economy has a self-adjusting mechanism that, like water, seeks its own level.
This country has been trying to develop an integrated iron and steel industry for more than 50 years. We have miserably failed such that we export our own scrap metal, denying our foundries the necessary raw materials.
We would have become one of the biggest exporters of wood products from this part of the world. However, the government allowed the rape of the forests. Now we are importing lumber from as far as Brazil.
The Philippines used to be the world’s top exporter of coconut products. We have been taken over by the Ivory Coast and Indonesia. Vietnam is fast coming close to us.
If these things had not happened, we would be exporting finished wood products. If the Presidential Commission on Good Government had not sequestered the Cocochem Complex, the decline in coconut output would not be felt. On the contrary, the country would have made oodles exporting chemicals extracted from coconut oil.
It is probably the self-adjusting mechanism in a market driven system that saw the economy shifting to the service sector, seeing very little hope for manufactured exports.
Not surprisingly, we are beginning to see the expansion of BPOs, tourism, and lately, gaming cum tourism.
Except for the initial one-time cost of putting up the structures, these businesses do not have much heavy costs but they provide the country with foreign exchange.
This is further boosted by the no-cost big amounts of foreign exchange remitted to the Philippines by overseas workers.
Given this situation, we see no immediate problem of the people becoming poorer.
However, there might be a need to do some deep thinking about foreign trade. We might try to produce our own requirements, especially food and other crops.
Food security as it relates to rice, the staple cereal, is not assured by the small size of territory in the face of expanding population and natural calamities that reduces palay harvest, not to mention deaths.
Land reform made the problem worse.
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