The just-concluded EU-ASEAN foreign ministers meeting in Madrid ended with apparent agreement on economic integration mechanisms and the EU calling the ASEAN countries not to implement protectionist measures. But according to research group IBON, the Philippine government should assert its right to implement the development policies that it needs.
The EU, which is on the brink of a renewed bout of financial and economic turmoil, is seeking open markets, flexibility in its production locations and freedom in its investment decisions in Third World countries. According to IBON, these aim to create profitable opportunities for EU corporations.
Giving such benefits to already advanced European producers means putting relatively underdeveloped Filipino agriculture and industry at a disadvantage, and foregoes real gains being made from allowing foreign investment into the country, said the group. Foreign trade and investment will only give development gains if the country is able to give judicious protection and support to local producers, as well as regulate the operations of foreign capital in the country.
A report commissioned by the European Commission in 2009 for instance noted that the Philippines will see a “decline of the cereals and grains (mainly rice) sectors” and “reduced real income levels in rural areas” from an EU-ASEAN FTA. The same report also observed how “increased trade and growth [have] benefited only parts of society [thus] widening the gap between poor and rich”.
An EU-ASEAN deal also creates another problem where the underdeveloped countries of Southeast Asia are inadvertently put in a self-destructive race-to-the-bottom with each other in a misguided scramble to attract European foreign trade and investment through ever more liberalized policies. Only the EU will benefit from this and, in effect, it will be passing on the burden of adjusting to its persisting crisis to the Philippines and other poor countries of the region.
The post-global crisis period has notably changed the world economy, IBON said. Among others, the export-led growth model is no longer possible– including the debt- and bubble-driven consumption and investment in the EU. The traditional industrial powers can no longer be engines of growth for the world economy and the need for real domestic development is greater than ever.
IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.