Bell Trade Act

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The Bell Trade Act of 1946, also known as the Philippine Trade Act was an act passed by the United States Congress specifying the economic conditions governing the independence of the Philippines from the United States.

The U.S. Congress offered $800 million for post-World War II rebuilding funds if the Bell Trade Act was ratified by Philippine legislature, which duly approved the measure on July 2, two days before independence from the United States of America.

Provisions

According to Filipino nationalists, the Bell Trade Act had provisions that tied the Philippine economy to the U.S. economy:

  • The Philippine currency, the peso, was to be pegged to the US dollar.
  • The Philippine constitution would be revised to grant U.S. citizens and corporations equal access to Philippine minerals, forests and other natural resources.
  • Free trade would be continued until 1954; thereafter, tariffs would be increased 5 percent annually until full amounts were reached in 1974.
  • The U.S. could import whatever products/goods it wanted with no import duties.

The parity clause required an amendment relating to the 1935 Philippine Constitution's thirteenth article, which reserved the use of natural resources for Filipinos.

From 1952 to 1961, the United States gave the Philippines 87% of its total economic development assistance, to prop up the commercial and agricultural economy and to alleviate the pressing cash-flow and financial problems facing the country.[1]

In the late 1950s, the industrial economy began to grow, while the agricultural sector was a big negative on total export performance, complicated by corruption among governmental and business elites. At the same time, the country faced both financial and agricultural challenges. As one analyst observed: "the Philippines experienced the failure of the 'miracle rice' crop, devastation from floods, the shrinking of foreign exchange reserves, and the growing burden of foreign debt." [2]

Filipino nationalists denounced the Bell Trade Act. Even the reliably pro-American Philippine President Sergio Osmena called it a "curtailment of Philippine sovereignty, virtual nullification of Philippine independence."

Laurel-Langley Agreement

Since the Bell Trade Act was unpopular among Filipino nationalists, a revised United States-Philippine Trade Agreement (the Laurel-Langley Agreement) was negotiated to replace Bell Act. This treaty abolished the U.S. authority over the exchange rate of the peso, made parity privileges reciprocal, extended the sugar quota, and extended the time period for the reduction of other quotas and for the progressive application of tariffs on Philippine goods exported to the United States.

The Magsaysay administration agreed to the 1954 Laurel-Langley Agreement, which opened the floodgates for individual Americans and firms to invest in the development of the Philippine economy since corrupt Filipino elites were not doing so. However, American investments started to slow down gradually as response to Filipino nationalism and politics.

The building of an independent industrial sector and agricultural sector capable of competing regionally and globally did not occur because of import substitution programs started by President Carlos P. Garcia. Additionally, the corruption among Filipino business and political elites lead to a stagnant economy. The country's emerging agro-merchandising economy became totally dependent on the United States and other large industrial countries like Japan, as Filipino elites dominated the economy at the expense of masses.


References

Original Source

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