Strengthening the Philippine Fair Trade Forum as a Quasi-Government Commission on Fair Trade (A Policy Brief)

Zuraida Mae D. Cabilo

This policy brief was prepared as part of the United Nations Research Institute for Social Development's (UNRISD) study entitled "Global Civil Society Movements: Dynamics in International Campaigns and National Implementation." The Philippine country study examined five contemporary civil society movements that deals with debt, international trade rules and barriers, global taxation, corruption, and fair trade.

Introduction

Small and medium enterprises (SMEs) play a significant role in propelling not only local economies but the national economy as well. According to the Department of Trade and Industry (DTI), SMEs constitute 99 percent of the all business entities in the Philippines and contributes 32 percent to the economy. Almost 70 percent of the total labor force is employed in these firms (Department of Trade and Industry [DTI] website; IBON 2005). With such enormous potential of SMEs to contribute to both rural and urban productivity, the government, through the Small and Medium Enterprise Development Council, came up with a blueprint that charts programs to propel SMEs at the forefront of economic development. Alongside the efforts of government to alleviate poverty particularly in the countryside, nongovernment organizations (NGOs) engaged in development work were independently experimenting with providing alternative sustainable livelihoods to marginalized producers and artisans. Among these NGOs are those identified as fair trade[1] organizations, which have silently inched their way in various villages. Fair trade advocates and practitioners have explicit partiality for low-income producers and artificers, providing them with otherwise elusive markets in more affluent countries for their produce and handcrafts. In the Philippines, three decades into the fair trade enterprise and having created a number of enclaves of self-reliant communities, the Philippine Fair Trade Forum (PFTF)[2] was established in 2002. The forum’s mandate was to facilitate access to domestic and international markets of fair trade products[3], function as a hub of information exchange among fair trade organizations in the Philippines, undertake campaigns to raise consumer consciousness regarding fair trade practices and principles, and engage in policy advocacy. To date, fair trade advocates and practitioners continue to grapple with the manner to maximize policy spaces to push forward the fair trade agenda (Cabilo 2006). Preference has been placed on the forum’s consumer awareness campaign to enable member producer-organizations’ goods to advance in the local market. This, however, does not deter members of the PFTF to pursue its policy advocacy commission.

A study examining the PFTF as a representation of the Philippine fair trade movement[4] indicates that some member organizations place equal emphasis on the necessity of engaging in pursuing policy advocacy work. In this way, policies that impinge on the welfare not only of consumers, but also more importantly of small producers and crafts people, especially in this age of increasing economic globalization are addressed from the perspective of adherents of fair trade principles and practices (Cabilo 2006). This, thus, necessitates that the PFTF strike a balance in performing its mandate of engaging in both consumer awareness and policy advocacy. This brief intends to explore possible ways wherewith the PFTF can navigate around the existing policy environment and corresponding institutional structures in carrying out its mission to engage in policy advocacy to advance the fair trade agenda in the Philippines.

Existing Institutional Structure Relevant to Fair Trade

At present, the Fair Trade Division of the DTI’s Bureau of Trade Regulation and Consumer Protection (BTRCP) serves as the lead agency mandated to take charge of matters relating to fair trade. As such, it is tasked as the policy-making body charged with the general administration of trade and consumer protection laws.[5] Specifically, it is mandated to perform the following functions[6]:

1. Oversee the effective implementation of fair trade laws;
2. Provide field officers with operating guidelines on the implementation of laws on trade malpractices;
3. Train field staff on enforcement of fair trade laws;
4. Formulate programs and policies on fair trade laws and other related provisions;
5. Monitor congressional bills and resolutions which directly affect consumers;
6. Conduct regional consultancy on enforcement; and,
7. Prepare position papers on domestic and fair trade related bills and resolutions.

These functions of the BTRCP makes participation of the PFTF in the policymaking process becomes more imperative to influence the direction that the government takes with regard to fair trade. It is pertinent for advocates and practitioners of fair trade to be able to present a more inclusive definition of fair trade, which is particularly significant in forging policies and legislations pertaining to fair trade.

Creating the Philippine Fair Trade Commission

Based on official government statements, fair trade is understood as pertaining to consumer protection[7] and “fair” competition[8] among firms. This, however, capture only half of the picture of how the fair trade movement defines “fair trade” as fair trade includes producers, SMEs, and other stakeholders in the trading process as well. This variance in how fair trade is articulated is reflected through the various propositions to establish a Philippine Fair Trade Commission.

First among these proposals is that of fair trade practitioners and advocates that has been circulated informally in gatherings of the PFTF. In the course of forging the policy agenda of the PFTF, establishing a Fair Trade Commission was proposed by some PFTF member organizations.[9] The proposed fair trade body is envisioned, first, to document the existing policies and legislations that concern low-income producers and artisans and consumers. Second, the commission is seen to coordinate with various national and local government agencies, as well as NGOs to synergize efforts to implement programs and projects directed to enhance organizational and business development capacities of producers and crafters that will enable them to play a more significant role in bringing about a more equitable global trading regime. In so doing, the proposed Fair Trade Commission will undertake information campaigns on fair trade practices and principles as an alternative way of conducting business that puts more emphasis not only on profit bottom lines but also on environmental and social objectives.

The second proposal is enunciated by the Tariff Commission, which is to create a government body–Philippine Competition Commission (PCC)–to facilitate the review, formulation, and enforcement of the proposed comprehensive Philippine competition and anti-trust policy.[10] This proposal was a result of a two-phase study conducted by the Tariff Commission in 1999 (first phase) and 2001 (second phase). The Office for Policy Analysis and Advice (OPAA) and Competition and Consumers Welfare Administration (CCWA) will be created to undertake the two major functions of the PCC respectively.[11] The Tariff Commission envisions the PCC to “build up a fund of economic and social policy expertise, which… will prove to be an effective knowledge base for policy advice and administration to ensure the development of the Philippine economy as a dynamic and internationally competitive market.” This seeks to integrate industry-specific systems and consolidate all efforts to monitor and enforcement a competition policy in the country. Enforcement of policies is currently performed by four key government offices–the Securities and Exchange Commission, Bureau of Import Services, Bureau of Trade Regulation and Consumer Protection, and the Tariff Commission.

The Tariff Commission proposal finds resonance with the one proposition put forward by Representative Joey Sarte Salceda under House Bill (HB) 116[12]. The Commission’s mandate will center on “facilitating the implementation of the Philippine Competition Act, administering the provisions of the Philippine Competition Act, and generating, providing, and making available to the public information concerning fair trade practices.” A salient function of the proposed commission pertains to protection of both business enterprises and consumers, specifically in the context of engaging in fair trade practices. The bill also details that the proposed body be composed of experts in business, marketing and consumer behavior, economics, and public administration. The apparent lack of representation from other stakeholders in the fair trade movement, specifically producer sectors, is a gap that the PFTF can fill.

The PFTF as a Quasi-government Agency on Fair Trade

With the abovementioned proposals on establishing a Philippine Fair Trade Commission operating under different yet related philosophies, the creation of a quasi-government agency specifically tasked to integrate fair trade (as the fair trade movement defines it) in state policies is seen to be the most appropriate response. A quasi-government body, which may opt to receive direct support from government, has the capacity to operate freely from government bureaucracies that tend to slow down the implementation of programs and projects. It also has the advantage of being able to attract in its ranks the best in the field of both business development and community organizing (in the case of doing fair trade work). These quasi-government agencies also have the flexibility to implement systems and mechanisms that are not impeded by bureaucratic processes, which may facilitate a more efficient monitoring.

In the current context where there is no existing mechanism for fair trade to be integrated in trade policies of the state, the PFTF as the collective representation of the fair trade movement, may fill this void. PFTF member organizations’ experience in implementing alternative livelihood programs–projects that are typically performed by government agencies–complements the government’s efforts in undertaking poverty alleviation programs and projects that benefit SMEs in the countryside. This gives the network an advantage of being familiar with the workings of the state without necessarily being a part of it. Another strength of the PFTF through its membership is its knowledge in introducing the concept and praxis of fair trade coupled with the unique combination of expertise on business development and community organizing. Formed as the policy advocacy arm of the Philippine fair trade movement, the PFTF enjoys a considerable wealth of resources–expertise, finances, a broad network of organizations within and outside the Philippines–by virtue of its long history of engaging in development work and trading. The PFTF was seen as a locus where fair trade organizations can articulate issues and concerns of Philippine-based fair trade advocates and practitioners and consolidate these into a coherent agenda not only within the country but also in regional and international fair trade formations. By virtue of its organizational network, it has the capacity to traverse the local, national, regional, and international arenas. In the local front, it has established links not only with producer and people’s organizations but also with local government agencies and national government line agencies through its member organizations in performing its development and entrepreneurial initiatives. In the national level, it has worked with both government and private sectors in promoting the tenets and practice of fair trade. In the international front, the PFTF’s current membership in the regional fair trade organization–the Asia Fair Trade Forum–and the International Fair Trade Association (IFAT) –the lone international fair trade body with a membership of fair trade organizations from both developed and developing countries–provides the link to the international level where Philippine concerns on fair trade may be lodged.

Transforming the forum into a quasi-government body will also enable it to formalize its structure to include representatives from government and the private sector, which are the targets of existing fair trade advocacy in the Philippines, apart from the existing Board of Directors consisting of representatives from various fair trade organizations. Such an arrangement also facilitates a more productive engagement between government, the private sector, and fair trade advocates and practitioners without creating another state instrumentality that will constitute not only additional bureaucratic structure that will make the advocacy terrain more difficult to navigate for fair trade organizations and other NGOs. This arrangement also makes it possible for the PFTF to opt to raise its own funds from external sources for its operations and work collaboratively with government in implementing complementary programs and access public funds. As such, the PFTF will be able to participate in government processes in policy formulation on matters relating to trade and consumer welfare.

References

“A National Competition Policy for the Philippines.” Accessed fromhttp://r0.unctad.org/en/subsites/cpolicy/gvaJuly/docs/en9.doc.

Abon, Edgardo. n.d. “State of Play of Competition Policy in the Philippines.” Accessed from http://www.jftc.go.jp/eacpf/06/6_01_02.pdf

Cabilo, Zuraida Mae D. 2006. From North to South: Campaigning for Fair Trade in the Philippines. Unpublished manuscript under the UNRISD research project on Global Civil Society Movements: Dynamics in International Campaigns and National Implementation.

Department of Trade and Industry. 2004. SME Development Plan 2004-2010. Manila: Bureau of Small and Medium Enterprise Development and Japan International Cooperation Agency

“Fair Trade.” Accessed from http://en.wikipedia.org/wiki/Fair_trade

IBON Facts and Figures. 2005. Philippine SMEs Amid Globalization: Going Big Time? Volume28 No.9

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[1] A practice that traces its origins from the North, specifically Europe, fair trade is based on a trading partnership based on transparency and respect that engenders trust between Southern producers and artisans and Northern consumers (IFAT website). This relationship is facilitated by intermediary organizations both from developed and developing countries.

[2] The PFTF was founded by 14 fair trade organizations with the support of the Advocate of Philippine Fair Trade, Incorporated and Oxfam-Great Britain Philippine office.

[3] Fair trade products are those cultivated (food products) and crafted (handicrafts) under non-exploitative circumstances (no children employed as workers, environmentally-sound practices, transparent relations in cases of contracted and sub-contracted work). Among fair trade products produced in the Philippines are handicrafts, organic mangoes, organic muscovado sugar, organic bananas, among many others.

[4] The fair trade movement in the Philippines is composed of producer organizations, intermediate marketing organizations (IMOs), and support organizations. Producer organizations may be farmers or artisans. IMOs, on the other hand, facilitate the export of products and creations of producer organizations while support organizations are nongovernment organizations (NGOs) that provide technical and marketing support and product development services to producer organizations (Cabilo 2006; Redfern and Snedker 2002; APFTI n.d.).

[5] www.dti.gov.ph

[6] http://www.apeccp.org.tw/doc/Philippines/Organization/phorg4.html

[7] Culled from the Department of Trade and Industry’s (DTI) Bureau of Trade Regulation and Consumer Protection-Fair Trade Division webpage.

[8] Tariff Commission’s proposal on crafting a National Competition Policy and HB 116 by Representative Joey Sarte Salceda.

[9] These include the Alter Trade Corporation (ATC), Southern Partners for Fair Trade Corporation (SPFTC), Panay Fair Trade Corporation (PFTC), People’s Global Exchange (PGX), and the Advocate of Philippine Fair Trade, Inc. (APFTI).

[10] http://r0.unctad.org/en/subsites/cpolicy/gvaJuly/docs/en9.doc.

[11] The OPAA will undertake research and analysis on contemporary regulatory/competitiveness issues and advise the PCC while the CCWA will be attending to the administrative functions of the proposed commission.

[12] An Act Creating the Philippine Competition Commission, Regulating and Penalizing Trade Practices that Lessen Competition and Other Anti-Competitive Practices and Conduct, Unlawful Mergers, Acquisitions and Combinations in Restraint of Trade, Unfair Competition, and Appropriating Funds Therefor, and For Other Purposes. This bill was filed during the First Regular Session of the Thirteenth Congress of the Philippine House of Representatives.