The better trading partner

When Rodrigo R. Duterte first flew off the han­dle with his un­mitigating tempestuous and temperamental tirades against the United States, these had all began in the public’s eye during the presidential cam­paign where he accused the Americans of undue interfer­ence in a sovereign political exercise, commenting as they did on a statement spawned in at least two rallies. Claim­ing entitlement as a mayor, onstage and in public, he de­clared that in raping a female missionary, one mercilessly killed thereafter, he should have been first in line.

It is a testament to Filipi­no depravity that a number in the audience found such fun­ny enough to not only laugh out loud and applaud but to also compel a repetition on other occasions.

While the comment had to do with basic decency upon which anyone is entitled, even duty-bound to question when violated, as the commentary was occasioned by a campaign speech, the candidate at the time found it convenient to simplistically found his sub­sequent retort on the grounds of foreign intervention.

Central to the issue was the brutal gang rape and hei­nous murder of an innocent and defenseless female mis­sionary and the depravity of what to some Filipinos was a laughing matter. Calling at­tention to the issue and the attendant righteousness it carries was, however, spun as foreign interference. Such tact is a stretch and a definitive distortion of decency. Only to the myopic and the paro­chially inclined might it make sense.

On a much larger glob­al scale, the relationship with the United States seemed to have slid a slippery slope from then onward. The cussing and cursing seemed to have gotten more frequent, less civil, and more degrading.

Some businessmen sug­gest an intelligent audit and inventory of our existing and prospective trade agreements are in order. Management science provides intelligent protocols. One is called a business plan from which the political bureaucracy might learn. A business plan forces managers to do an inventory of resources and arrays assets against liabilities. It also forces managers to consider model­ing, scenario building on the impact and consequences of actions. The art of accoun­tancy alone provides excellent tools so that we might have less talkbacks and policy re­versals, less embarrassment, and more important, less vol­atility.

Allow us to apply these disciplines against undisci­plined instances that have un­necessarily increased volatility and uncertainties in the world of trade, economics and busi­ness.

Recently, as if there should be diametric choices and the world is divided into black and white hues, our government, through reckless and unnecessary statements, declared we were severing ties with the United States in fa­vor of Russia and China, cov­ering both the economic and the military spheres.

While, indeed, such reck­lessness and brinkmanship had elicited the usual back­tracking clarificatory state­ments from the official army of apologists at the Palace, the original declarations had had riled markets in degrees enough to cost a good num­ber of people substantial money lost to marginal trades.

The basic equation set forth by such declarations pit­ted economic and trade rela­tionships with China against those we have with the United States. If those are the postu­lates where we’ve chosen one over the other, separating the two, then allow us to analyze the diametric choices and determine which would be the better trading partner by using the toolkits of manage­ment accountancy.

In terms of balance of trade, what we have with the United States is an on-going trade surplus.

A trade surplus with the United States means that their economy effectively pur­chases more goods and ser­vices from our economy than we do from them thus, in the resulting imbalance, funds ef­fectively flow from the Amer­ican economy toward our shores more than ours flow to theirs.

Still on the subject of bal­ance of trade, analyzing what we have with China, given historicity as well as the for­ward-looking prospects of increased trade with their economy following the re­alignments that were recently proposed and, in the imme­diate horizon, might actually be pursued under the Duterte administration, the imbalance is skewed in favor of China.

What does that mean?

Currently, the Philippines is afflicted with a trade deficit with China. This means we owe their economy more than they owe us due to a lopsid­ed trade imbalance where we continuously purchase from them and they, both as a per­centage of their total global trade and as a percentage of bilateral trade with us, actually buy very little from our econ­omy.

These are reality checks. Should we simplistically paste these against a profit-and-loss statement in order to analyze where we stand, here is what is readily evident. The United States is a source of revenues while the Chinese economy is a cost. Do the math and see just how reckless our recent choices of trading partners have been.