Arroyo Gov’t Unleashes APEC-Driven Third Privatization Wave

As it readied itself to join the Asia Pacific Economic Cooperation (APEC) Leaders' Summit in Bangkok on Oct. 18-21, the administration of Philippine President Macapagal-Arroyo pledged to APEC the impending sale of government schools, hospitals and health-services and pension funds to foreign and local private interests.

By Ricco Alejandro M. Santos
Bulatlat.com                 

Are you ready for the third wave?  Futurist Alvin Toffler's computer-driven change?  No, the APEC-driven third wave or tsunami set to crash on Philippine education, health care and social security.

As it readied itself to join the Asia Pacific Economic Cooperation (APEC) Leaders' Summit in Bangkok on Oct. 18-21, the administration of Philippine President Macapagal-Arroyo pledged to APEC the impending string of sales of government schools, hospitals and health-services and pension funds to foreign and local private interests.  This commitment is expressed in the section entitled "The Philippines' Approach to Deregulation/Regulatory Review in 2002" of its Individual Action Plan (IAP) for APEC in 2002 as "The third wave [of privatization] covers social sectors such as health services and education and pension funds."

According to the IAP, the Philippines is still in the first and second waves of privatization, and therefore not yet in the third wave of privatization.  The IAP describes the first and second waves:

The Philippines has successfully privatized a number of government-owned or -controlled corporations and returned to private sector hands certain acquired assets.  These include hotels, banks, an airline, steel firm, mining companies, petroleum      refinery, copper smelting and refinery company, among others.  Scheduled for privatization are, among others, a fertilizer plant, and a power-generating and transmission corporation.  This comprises the first wave of privatization.       

The Philippines is now in the second and third waves of its privatization efforts.  The second wave has been done through the BOT [build-operate-transfer] scheme and its variants primarily for the provision of energy, construction of roads and other infrastructure facilities.  

Globalization

This commitment to unleash the third wave is among the globalization measures that the Macapagal-Arroyo government has promised to deliver and that will be reviewed in the Bangkok summit.   Under this new wave falls moves as the current scheme to revise the charter of the University of the Philippines (UP) and plans to privatize the Government Social Insurance System and the services of various government hospitals. The UP charter change, it is feared, will fully commercialize the country’s prime state university.

APEC is comprised of 21 economies.  These are led by the richest industrial countries such as U.S., Canada and Japan, and the lesser industrial countries, such as Australia, New Zealand, Korea, Russia, Taiwan, Singapore and the rising China.  The rest are poor or pre-industrial countries that include aside from the Philippines, Brunei, China, Indonesia, Malaysia, Mexico, Papua New Guinea, Thailand and Vietnam.  From 42 to 50 per cent of world trade is conducted among APEC countries.

Formed in 1989, APEC's thrust was to create a regional bloc to push for increasing globalization in the form of trade liberalization and privatization. The agreement among heads of APEC governments in Bogor, Indonesia in 1994 calls for what is now called the Bogor Goals:  "free trade and investment" by 2010 for the APEC industrial countries and 2020 for the APEC third-world countries.

In 1996, under the Manila Action Plan, APEC established a system of individual  and collective action plans to put teeth into the process of ensuring that member countries move steadily toward the Bogor Goals.   Under the Arroyo government's IAP for 2002, it promises to stick to its Tariff Reform Program, which targets a uniform tariff rate of 5 per cent by 2004.   Also, it pledges to continue to bind all tariffs--not raise them beyond ceilings set by the WTO.

U.S. agenda

In the coming Bangkok summit, it is expected that Bush in keeping with APEC's pro-WTO role will press for revival of the U.S.-led agenda in the WTO talks that collapsed in Cancun, Mexico last Sept. 14. The agenda included, among others, the push for investment liberalization.

Since 2001, however, APEC has increasingly focused as well as bolstering the agenda of the Bush administration for the "war against global terrorism" and "the axis of evil."   Led by U.S. President Bush, APEC heads of state issued a joint statement call on the Democratic Republic of Korea to "visibly honor its commitment to give up nuclear weapons programs".  In both Leaders' Summits in Shanghai in 2001 and Los Cabos, Mexico in 2002, much of the effort of Leaders' Summit was spent in promoting the "counter-terrorist" agenda.

APEC has played a multi-dimensional role in the world politics of globalization. 

First, It is programmed to support, flesh out and even surpass the "free trade and investment" policies imposed by the World Trade Organization.  The close ties between APEC and WTO and the U.S. are partly highlighted by the fact that Robert Zoellick, the U.S. Trade Negotiator in the WTO, was a key player in the formation and early growth of APEC.

Second, it was designed to complement other regional "free trade" blocs such as the Association of Southeast Asian Nations (ASEAN).  Meeting with other APEC heads of state in the APEC Los Cabos Leaders' Meeting in 2002, Bush managed to finalize and announce the launch of the Enterprise for ASEAN Initiative, a network of bilateral "free trade agreements" (FTAs) between the U.S. and ASEAN countries, and "Trade and Investment Framework Agreements"--commonly agreed guidelines for working out FTAs. Already, the U.S. has TIFAs with the Philippines, Indonesia and Thailand. 

Third, it has served as a forum for crafting bilateral "free trade" and investment agreements.

Though non-binding, APEC agreements greatly influence third-world governments by promoting "liberalization competition".  Individual regimes are cajoled into raising the globalization ante by offering tariff-reducing commitments even more drastic than promised in the WTO and at a pace faster than most other third-world governments are willing to agree to.  The Philippine government for instance accelerated by two years -- from January 2000 to January 1998 --its implementation of the provisions concerning patents, trademarks, geographical indications and copyrights under the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS).   

As President Macapagal-Arroyo brings to Bangkok her bag of old promises kept and new promises to APEC, more of the old and new waves of globalization are in store for the Philippines.  Bulatlat.com        

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