PGMA's Speech during the 59th ASEAN-CCI Council Meeting and the 15th CCI Conference

PGMA's Speech during the 59th ASEAN-CCI Council Meeting and the 15th CCI Conference

Ceremonial Hall, Malacanang (05 July 2002)

THANK YOU VERY MUCH SECRETARY DANTE CANLAS. AND LET ME TAKE THIS OPPORTUNITY TO CONGRATULATE YOU AND THE OTHER MEMBERS OF THE ECONOMIC TEAM BECAUSE I'M VERY PROUD TO LET MY COUNTRYMEN KNOW THAT OUR INFLATION RATE TODAY IS DOWN TO THREE PERCENT. AND FURTHER, THAT THIS INFLATION RATE CAME DOWN FROM 3.6 PERCENT TO THREE PERCENT BECAUSE OF THE 19 PERCENT DECREASE IN THE PRICE OF ELECTRICITY. THIS 19 PERCENT IS A REDUCTION YEAR-ON-YEAR, WHEREAS THE MONTH-ON-MONTH REDUCTION WAS NINE PERCENT.

AND SO WITH THIS I WOULD LIKE TO GREET EVERYONE ELSE, SECRETARY CONCEPCION, THE PRESIDENT OF THE ASEAN CHAMBER OF COMMERCE AND INDUSTRY AND MY FORMER BOSS IN THE DEPARTMENT OF TRADE AND INDUSTRY; THE OTHER HEADS AND REPRESENTATIVES OF THE CHAMBERS OF COMMERCE AND INDUSTRY OF THE ASEAN COUNTRIES, THEIR RESPECTIVE AMBASSADORS AND HEADS OF MISSION; HONORABLE CHAIRMAN OF OUR CONFERENCE TODAY AND THE INCOMING PRESIDENT OF ASEAN-CCI, MR. UTIN YUN; AND OUR PRESIDENT OF THE PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY, MR. MIKE VARELA; LADIES AND GENTLEMEN:

WELCOME TO THE PHILIPPINES.

ON THIS DAY OF THE ANNOUNCEMENT OF OUR LOWER INFLATION RATE AND LOWER ELECTRICITY RATE, I AM ESPECIALLY HAPPY TO BE WITH YOU TODAY, BUT ALSO I AM HAPPY TO BE WITH YOU AT A TIME WHEN I HAVE JUST ANNOUNCED THAT COMMENCING THE 15th OF THIS MONTH, I SHALL CONCURRENTLY ASSUME THE POST OF SECRETARY OF FOREIGN AFFAIRS.

YESTERDAY, BEFORE TWO AUDIENCES, I REITERATED THE EIGHT REALITIES IN THE REGIONAL AND INTERNATIONAL ENVIRONMENT OF THE PHILIPPINES THAT DRIVES MY FOREIGN POLICY. TODAY I'D JUST LIKE TO TALK ABOUT FOUR OF THEM THAT ARE DIRECTLY RELEVANT TO THE CONFERENCE OF THE ASEAN-CCI.

THE FIRST OF THE EIGHT REALITIES THAT IS MOST RELEVANT OF COURSE TO THIS CONFERENCE IS THAT MORE AND MORE PHILIPPINE FOREIGN POLICY DECISIONS HAVE TO BE MADE IN THE CONTEXT OF ASEAN.

THE COMMITMENT TO ASEAN IS A CORNERSTONE OF PHILIPPINE FOREIGN POLICY. IN THIS REGARD, I AM GLAD THAT ASEAN-CCI IS PUSHING FOR THE CAUSES AND CONCERNS OF THE DEVELOPING WORLD. I PLACED GREAT IMPORTANCE TO REGIONAL TRADING ARRANGEMENTS. I HAVE FAITH IN THE VIABILITY OF THE ASEAN FREE TRADE AREA. WE CANNOT GENERATE ADEQUATE INVESTMENTS UNLESS WE BECOME PART OF A LARGER, INTEGRATED REGIONAL MARKET. THIS IS THE ONLY WAY WE CAN COMPETE FOR MARKETS AND INVESTMENTS WITH THE GIANTS ELSEWHERE IN THE WORLD.

AT THE BEGINNING OF THIS YEAR, THE AFTA PROCESS REACHED A SIGNIFICANT MILESTONE WHEN THE FIRST SIGNATORIES OF THE AFTA AGREEMENT -- BRUNEI DARUSSALAM, INDONESIA, MALAYSIA, THE PHILIPPINES, SINGAPORE, AND THAILAND -- ACHIEVED TARIFF LEVELS OF ZERO TO FIVE PERCENT ON ALMOST ALL GOODS TRADED AMONG US.

THE PHILIPPINES WILL REMAIN FIRM IN IMPLEMENTING ITS COMMITMENTS TO ASEAN AS A STRATEGY TO ACHIEVE GLOBAL COMPETITIVENESS TOWARDS ATTAINING SUSTAINABLE GROWTH AND DEVELOPMENT.

BUT AFTA HAS A LONG WAY TO GO BEFORE BECOMING AN EFFECTIVE MEANS FOR STRENGTHENING THE REGION'S COMPETITIVE POSITION IN THE GLOBAL MARKET.

THIS IS WHY I SUPPORT ASEAN'S RESOLVE TO GO BEYOND TARIFF-CUTTING. THE LEADERS OF ASEAN ARE NOW MEETING AND WORKING ON THE ELIMINATION OF NON-TARIFF TRADE BARRIERS. WE ARE HARMONIZING OUR PRODUCT STANDARDS AND DEVELOPING MUTUAL RECOGNITION ARRANGEMENTS. WE ARE NEGOTIATING THE LIBERALIZATION OF TRADE IN SUCH IMPORTANT AREAS AS FINANCIAL SERVICES, TELECOMMUNICATIONS, CONSTRUCTION, AIR AND MARITIME TRANSPORT, AND TOURISM. WE ARE BINDING THE REGION TOGETHER BY EXPANDING OUR TRANSPORTATION AND ENERGY NETWORKS AND EASING THE FLOW OF GOODS, PEOPLE AND POWER THROUGHOUT THE REGION. WE ARE DRAFTING AN AGREEMENT TO MAKE IT EASIER AND LESS EXPENSIVE FOR TOURISTS TO COME TO, AND TRAVEL WITHIN, ASEAN.

CLOSER INTEGRATION IS NECESSARY FOR THE LONG-TERM SURVIVAL AND PROSPERITY OF EACH OF THE ASEAN COUNTRIES.

THUS IT IS GOOD THAT YOU HAVE SUCCESSFULLY BROUGHT TOGETHER THE LEADERS OF THE VARIOUS CHAMBERS OF COMMERCE AND INDUSTRY OF ASEAN. AND I CONGRATULATE YOU ON THIS MOMENTOUS OCCASION WHEN ALL TEN ASEAN COUNTRIES ARE NOW PART OF THE ASEAN CHAMBER OF COMMERCE AND INDUSTRY.

BUT WE ARE ALSO LOOKING BEYOND OUR IMMEDIATE BORDERS TO EXTEND THE BENEFITS OF REGIONAL INTEGRATION TO OUR MAJOR TRADING PARTNERS IN THE REGION, THE SO-CALLED ASEAN+3 WITH CHINA, JAPAN, AND SOUTH KOREA.

THIS BRINGS ME TO A SECOND AND PRIMARY REALITY OF THE REGIONAL AND INTERNATIONAL ENVIRONMENT THAT DRIVES MY FOREIGN POLICY, THAT CHINA, JAPAN AND THE UNITED STATES AND THEIR RELATIONSHIPS WILL BE THE DETERMINING INFLUENCE IN THE SECURITY SITUATION AND, THEREFORE, THE ECONOMIC EVOLUTION OF EAST ASIA.

WITH CHINA'S ENTRY INTO THE WTO, THE NATIONS OF ASEAN, AND ASEAN AS A REGION, MUST REFLECT ON OUR OWN ECONOMIES TO DETERMINE HOW WE CAN BEST POSITION OURSELVES TO ENSURE THE CONTINUED COMPETITIVENESS OF OUR EXPORTS AND CAPITALIZE ON THE OPPORTUNITIES PRESENTED BY A MORE OPEN CHINA.

THE CHINA-ASEAN FREE TRADE AGREEMENT WILL CREATE A MARKET OF 1.8 BILLION PEOPLE AND A COMBINED GDP OF TWO TRILLION DOLLARS. IT IS PROJECTED THAT THIS WOULD BOOST ASEAN EXPORTS TO CHINA BY 48 PERCENT AND INCREASE ASEAN'S GDP BY NINE-TENTH OF ONE PERCENT. THE PHILIPPINES WILL BENEFIT FROM EXPANDING EXPORTS TO THE RAPIDLY GROWING CHINESE MARKET AND DEVELOPING MANUFACTURING AND SERVICE FACILITIES IN ASEAN, THAT CAN FEED THE EXPANDING MAINLAND OPERATIONS OF CHINESE AND MULTINATIONAL COMPANIES. THIS IS AN EXCELLENT OPPORTUNITY FOR OUR LOGISTICS SERVICE, MANUFACTURING AND COMMODITY FIRMS TO DEVELOP STRONG BUSINESS LINKS WITH POST-WTO CHINA.

JAPAN'S TRADE WITH ASEAN TOTALED MORE THAN A 120 BILLION DOLLARS LAST YEAR. THE OUTLINE OF AN ASEAN-JAPAN ECONOMIC PARTNERSHIP IS BEING WORKED OUT. MEANTIME, A SO-CALLED NEW-AGE PARTNERSHIP ARRANGEMENT WITH THE PHILIPPINES IS UNDER STUDY. THIS HAS BECOME MORE SIGNIFICANT NOW THAT JAPAN IS OUT OF RECESSION.

THE RAPID PACE, DEPTH AND BREADTH OF GLOBAL INTEGRATION IS THE FOREMOST REALITY WE FACE. THIS INVOLVES NOT JUST THE FLOW OF GOODS BUT ALSO OF SERVICES, PEOPLE, IDEAS, BEST PRACTICES OF GOVERNANCE, DOING BUSINESS, INVESTING.

AGAIN, THIS IS LINKED WITH A THIRD REALITY IN THE REGIONAL AND INTERNATIONAL ENVIRONMENT THAT GUIDES MY FOREIGN POLICY: THAT THE COUNTRY'S ECONOMIC GROWTH WILL CONTINUE TO HEAVILY INVOLVE DIRECT FOREIGN INVESTMENT.

EACH OF OUR NATIONS IS TAKING AN ENLIGHTENED AND BALANCED APPROACH TO THIS REALITY. FOR THE PHILIPPINES, THIS STARTS WITH OUR VISION OF WINNING THE BATTLE AGAINST POVERTY WITHIN THE DECADE WHICH IS MAINLY BY CREATING JOBS. AND THAT IS MAINLY BY HAVING INVESTMENTS.

AS JOBLESSNESS LIES AT THE CORE OF OUR POVERTY PROBLEM, JOB CREATION IS THE TOP PRIORITY OF OUR NATIONAL AGENDA. LAST YEAR, WE GENERATED MORE THAN TWO MILLION JOBS, BUT THAT'S LITTLE COMFORT. THE LATEST STATISTICS SHOW THAT WE HAVE ALMOST FIVE MILLION JOBLESS THAT'S WHY THIS IS OUR PRIMARY FOCUS.

IN OUR QUEST FOR MORE JOBS, WE HAVE IMPROVED THE COMPETITIVENESS OF INDUSTRY AND SERVICES IN A NUMBER OF WAYS. WE HAVE ADDRESSED THE COSTS OF PRODUCTION AND OF DOING BUSINESS. THE PESO HAS BEEN STABLE. INFLATION WAS A TWO-YEAR LOW WITH A 3.6 PERCENT. NOW AT THREE PERCENT WE HAVE TO LOOK EVEN FURTHER BACK FOR THE LAST TIME IT WAS THREE PERCENT. INTEREST RATES ARE AT THEIR LOWEST DURING MY ADMINISTRATION IN THE LAST 15 YEARS.

WE HAVE LOWERED THE COST OF CAPITAL THEN BY DEVELOPING AND STRENGTHENING OUR FINANCIAL MARKETS AND ALSO BY MAINTAINING A BUDGET DEFICIT CEILING WHICH WE WERE ABLE TO ACHIEVE LAST YEAR AND WE BELIEVE WE WILL BE ABLE TO ACHIEVE THIS YEAR BECAUSE OUR FIVE MONTH DEFICIT SO FAR IS SMALLER THAN THE FIVE MONTH DEFICIT THAT WE HAD LAST YEAR AT THIS TIME. AND IF WE MADE OUR DEFICIT CEILING THEN, WE'LL MAKE OUR DEFICIT CEILING AGAIN. PROOF IS THAT OUR BONDS ARE OVERSUBSCRIBED.

JUST THE OTHER DAY, I SAW AN ADD SELLING BONDS AT 12 PERCENT. AND I CALLED UP SECRETARY CAMACHO, "LITO WE CAN'T SELL BONDS AT 12 PERCENT, THAT'S TOO HIGH. WITHDRAW THOSE BONDS FROM THE MARKET." AND HE SAID, "IT'S TOO LATE. THEY'VE BEEN SOLD AND OVER SOLD." AND SO THAT'S WHY WE ARE QUITE LIQUID; AND EVEN IF WE HAD A DEFICIT RIGHT NOW, THE LIQUIDITY IS THERE TO FINANCE IT. AND THAT'S WHY WE HAVE INTEREST RATES GOING DOWN AGAIN.

WE HAVE TAKEN MEASURES TO REDUCE THE COST OF POWER, TRANSPORTATION, AND COMMUNICATIONS, WHICH ARE THE LIFEBLOOD OF COMMERCE. STARTING THIS MONTH, I MEAN THE LAST MONTH, JUNE, POWER COSTS WENT DOWN, AS I SAID, 19 PERCENT OVER LAST YEAR, NINE PERCENT OVER THE MONTH BEFORE, AND THEY WILL GO DOWN FURTHER THIS MONTH OF JULY -- AND THIS WILL IMPROVE THE RANKING OF THE PHILIPPINES FROM BEING THE NUMBER TWO MOST EXPENSIVE COUNTRY IN ASIA , IN TERMS OF ELECTRICITY RATE TO NUMBER SIX, AND THIS IS JUST FOR THE SHORT-TERM. FOR THE LONGER AND MEDIUM TERM, WE HAVE A COMPREHENSIVE TEN-POINT PROGRAM IN PLACE TO REDUCE POWER COSTS. AND OVER THE MEDIUM TERM, PART OF THEM HAVE ALREADY BORNE FRUIT IN JUNE AND WILL BEAR FRUIT IN JULY. AND THAT'S ITEM NUMBER ONE, WHICH IS TO BRING ABOUT MORE TRANSPARENCY IN THE BILLING THROUGH UNBUNDLING.

ANOTHER ONE OF THE TEN POINTS IS THE REVIEW AND RENEGOTIATION OF LEGAL ACTION IF WARRANTEED OF THE 35 INDEPENDENT POWER PRODUCTION CONTRACTS. LAST WEDNESDAY I RECEIVED THE REPORT OF THE REVIEW OF THE 35 IPP CONTRACTS FROM THE INTERAGENCY COMMITTEE CHAIRED BY THE FINANCE SECRETARY. AND AS A RESULT OF THEIR PRESENTATION, I INSTRUCTED SEVERAL STEPS TO BE UNDERTAKEN CONSISTENT WITH THE MANDATE OF THE POWER REFORM LAW AND OUR GOALS OF RATIONALIZING THE POWER INDUSTRY AND LOWERING THE COST OF ELECTRICITY. WE WILL REDUCE THE BURDEN OF OUR CONSUMERS WHILE AT THE SAME TIME RESPECT VALID COMMERCIAL CONTRACTS AND THE RULE OF LAW.

TO INCREASE PRODUCTIVITY, WE ARE STRENGTHENING LABOR-MANAGEMENT RELATIONS, WORKING TO ELIMINATE CORRUPTION AND RED TAPE, AND EXPANDING RETRAINING PROGRAMS TO PREPARE OUR WORK FORCE FOR THE DEMANDS OF THE NEW GLOBAL ECONOMY. THE GREAT FILIPINO WORKER IS CONTINUALLY BEING PREPPED FOR BROADER HORIZONS.

CENTRAL TO OUR GLOBAL ENGAGEMENT -- AND HENCE OUR DEVELOPMENT AGENDA -- IS TRADE. TRADE SHOULD NOT BE AN END IN ITSELF, IT MUST BE A MEANS TO SOCIAL AND HUMAN DEVELOPMENT. PROPERLY EMPLOYED, TRADE POLICIES ENHANCE OUR ACCESS TO A WIDER RANGE OF GOODS, SERVICES, TECHNOLOGIES AND KNOWLEDGE. MORE TRADE STIMULATES ENTREPRENEURSHIP, CREATES JOBS, ATTRACTS CAPITAL, INCREASES FOREIGN EARNINGS, AND FOSTERS VITAL LEARNING PROCESSES -- THESE ARE THE TOOLS THAT WILL SUSTAIN DEVELOPMENT AND REDUCE POVERTY.

THIS BRINGS TO MIND THE FOURTH REALITY THAT I'D LIKE TO TALK ABOUT IN THE REGIONAL AND INTERNATIONAL ENVIRONMENT WHICH DRIVES MY FOREIGN POLICY: THAT THE COMING YEARS WILL SEE THE GROWING IMPORTANCE OF MULTILATERAL AND INTER-REGIONAL ORGANIZATIONS TO PROMOTE COMMON INTERESTS.

THUS, WE SUPPORT A RULES-BASED MULTILATERAL TRADING SYSTEM WHICH THE WTO IS SUPPOSED TO BE. OUR SUPPORT IS PRAGMATIC, NOT IDEOLOGICAL. WE WANT WHAT WORKS FOR OUR PEOPLE.

IT IS IMPERATIVE THAT THE RULES UNDERPINNING THE SYSTEM ENSURE ECONOMIC GROWTH, EMPLOYMENT, AND DEVELOPMENT FOR ALL. BECAUSE IF WE DON'T BENEFIT FROM TRADE, WE MAY NOT BE ABLE TO SUSTAIN THE IMPORTS OF CAPITAL EQUIPMENT AND RAW MATERIALS. THE BENEFITS OF TRADE LIBERALIZATION COULD BE PUT IN DOUBT, THE SYSTEM ITSELF COULD LOSE CREDIBILITY. THIS COULD UNDERMINE OUR ABILITY TO MOBILIZE SUPPORT FOR TRADE POLICY REFORMS.

AND IT DOES NOT HELP ANY WHEN DEVELOPED COUNTRIES PERSIST IN MAINTAINING PROTECTIONIST BARRIERS AGAINST PRODUCTS OF INTEREST TO DEVELOPING COUNTRIES LIKE THE PHILIPPINES AND MANY OF THE ASEAN COUNTRIES. THESE INCLUDE TEXTILES AND GARMENTS, AND TROPICAL AGRICULTURAL AND FISHERIES PRODUCTS. WHILE THE DEVELOPED COUNTRIES TAKE EVERY OPPORTUNITY TO LECTURE US ON THE VIRTUES OF A MARKET-DRIVEN ECONOMY, HUNDREDS OF BILLIONS OF DOLLARS SUBSIDIZE THEIR FARM PRODUCTION. THESE ACTIONS PREJUDICE THE CLIMATE FOR -- AND WEAKEN THE GLOBAL COMMITMENT TO -- THE FLOW OF TRADE. THESE EMBOLDEN PROTECTIONISTS AND COMPLICATE THE JOB OF TRADE OFFICIALS OF DEVELOPING COUNTRIES.

TO PROMOTE THE DOHA-WTO ROUND AS TRULY A DEVELOPMENT ROUND, WE SHALL CONTINUE TO FOCUS ON SEVERAL GOALS. AND I HOPE THAT IN YOUR WORKSHOPS, THE PRIVATE SECTOR OF ASEAN CAN ALSO WORK TOWARDS THESE GOALS.

ONE OF THESE GOALS IS TO ELIMINATE TARIFF ESCALATION AND TARIFF PEAKS FOR PRODUCTS OF INTEREST TO DEVELOPING COUNTRIES AND MAKE THIS PART OF THE EARLY HARVEST OF RESULTS.

ANOTHER GOAL IS, FOR W.T.O. TO MAKE COROLLARY EFFORTS TO LESSEN THE BURDENSOME REQUIREMENTS FOR DEVELOPING COUNTRIES TO MEET THE STRINGENT STANDARDS IN DEVELOPED COUNTRY MARKETS. COMPLIANCE IN MANY CASES HAS PROVEN TO BE ONEROUS AND EXPENSIVE. FOR EXAMPLE, PHILIPPINE MANGOES AND BANANAS, AND PINEAPPLES HAVE TO UNDERGO EXHAUSTIVE DATA COLLECTION AND CERTIFICATION REQUIREMENTS FOR A YEAR OR MORE IN SOME MARKETS. SAD TO SAY, SANITARY REQUIREMENTS AND TECHNICAL STANDARDS SEEM TO BE THE WEAPON OF CHOICE OF PROTECTIONISTS.

ANOTHER GOAL I WOULD ASK YOU TO WORK FOR IS TO SEEK GREATER LIBERALIZATION OF THE TEMPORARY ENTRY OF SERVICE PROVIDERS IN THE GENERAL AGREEMENT ON TRADE-IN SERVICES WHICH HAS A LOT OF POTENTIAL FOR DEVELOPING COUNTRIES AND WHERE SUPPORT FOR SUCH LIBERALIZATION IS STRONG, SUCH AS IN THE ICT SECTOR.

ANOTHER GOAL SHOULD BE: FOR ANTI-DUMPING ACTIONS TO BE MADE LESS OF A TOOL FOR HARASSMENT BY MAKING THE REQUIREMENTS FOR THE INITIATION OF SUCH ACTIONS STIFFER, AND RATIONALIZING THE STANDARDS FOR DETERMINING INJURY BECAUSE THESE ACTIONS ARE COSTLY. THEY WEIGH DOWN SMALL BUSINESSES IN DEVELOPING COUNTRIES.

ANOTHER GOAL WOULD BE TO MAKE SPECIAL AND DIFFERENTIAL TREATMENT TRULY OPERATIONAL BY PROVIDING MORE FUNDS AND RESOURCES FOR CAPACITY BUILDING TO ENHANCE SUPPLY-SIDE CAPABILITIES, IMPROVE PRIVATE SECTOR COMPETITIVENESS, IMPLEMENT TRADE AGREEMENTS, AND MEET CONTINUING OBLIGATIONS UNDER THOSE AGREEMENTS. I HAVE ASKED OUR NEGOTIATORS TO PROVIDE FOR FURTHER DIFFERENTIATION OF TREATMENT AMONG DEVELOPING COUNTRIES GIVEN THE WIDE RANGE OF LEVELS OF DEVELOPMENT FROM THE CURRENT TWO CATEGORIES OF LEAST DEVELOPED AND DEVELOPING. BECAUSE EVEN IN THE DEVELOPING CATEGORY THERE ARE WIDE VARIATIONS IN CIRCUMSTANCES, FOR EXAMPLE, THERE IS A WIDE VARIATION BETWEEN THE PHILIPPINES ON THE ONE HAND AND THEN SINGAPORE ON THE OTHER WHICH IS VERY, VERY DEVELOPED.

WE WILL CONTINUE TO SUPPORT THE CAIRNS GROUP CONSENSUS THAT EXPORT SUBSIDIES IN THE AGRICULTURAL SECTOR SHOULD BE ELIMINATED BUT WE WILL MAKE A STRONG CASE FOR SPECIAL AND DIFFERENTIAL TREATMENT ON OTHER AGRICULTURAL ISSUES. THIS WILL ENABLE US TO HAVE SUFFICIENT FLEXIBILITY TO PURSUE VITAL DEVELOPMENT GOALS, SUCH AS POVERTY ALLEVIATION.

SO LADIES AND GENTLEMEN OF ASEAN, I WOULD LIKE TO LET YOU KNOW THAT THE PHILIPPINES WILL MAINTAIN ITS ECONOMIC TIES WITH THE REST OF THE WORLD TO THE EXTENT THAT THESE TIES ARE CONSISTENT WITH OUR COMMITMENTS AND THE WELFARE OF OUR PEOPLE. I LOOK FORWARD TO OUR DEEP AND ABIDING PARTNERSHIP IN THIS QUEST BECAUSE I KNOW THIS IS ALSO YOUR GOAL FOR YOUR OWN PEOPLES.

ON THIS NOTE, I NOW DECLARE THE 59th ASEAN-CCI COUNCIL MEETING AND THE 15th CCI CONFERENCE OPEN.

THANK YOU.

[HOME]