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Arroyo trade-pact pitch with Japan nixed

Inquirer (Manila) | 1 August 2007

Arroyo trade-pact pitch with Japan nixed

By Delfin Mallari Jr.
Southern Luzon Bureau

LUCENA CITY — Independent think-tank group IBON Foundation scoffed at President Gloria Macapagal-Arroyo’s call for the 10-member Association of Southeast Asian Nations (ASEAN) to conclude a regional free-trade agreement with Japan despite strong protests against the Japan-Philippines Economic Partnership Agreement (JPEPA).

“A regional free-trade agreement with Japan will profit Japanese corporations the most, especially since the ASEAN is Japan’s third largest trading partner. By urging the region to sign a similar pact as JPEPA clearly shows whose interests President Arroyo has in mind,” IBON research head Sonny Africa, said in a statement.

Arroyo and then Japanese Prime Minister Junichiro Koizumi signed the JPEPA on the sidelines of the Asia-Europe Meeting in Finland last year. The ratification of the agreement has been pending in the Senate since Congress went on recess last February.

Environmentalists, cause-oriented groups, and lawmakers have mounted a strong campaign against the ratification of JPEPA on constitutional, economic, environmental, and health grounds.

The opposition has expressed fears that the country would become a dumpsite of Japan’s hazardous industrial wastes once the trade agreement was ratified.

Under the JPEPA, the Philippines will gain greater access not only to the Japanese agricultural and other markets but also on Tokyo’s financial services. Japan will also allow the entry of a greater number of Filipino professionals, including doctors, nurses, and caregivers.

In her speech Monday at the 40th ASEAN Ministerial Meeting, Arroyo asked the delegates to speed up regional cooperation in the areas of political, security, economic, and socio-cultural advancement.

She had particularly pushed for the strengthening of economic ties with ASEAN key partners like China, Japan, and South Korea.

But citing the gross one-sidedness of the JPEPA, Africa noted that under the agreement, the Philippine government excluded only two commodities from tariff reduction while Japan protected 239 of its commodities.

“The Philippines is set to sacrifice billions of pesos in lost revenues if the Senate ratifies the said agreement. If tariffs would be reduced to zero on trade with Japan under the JPEPA, the Philippines stands to lose some P10.7 billion annually,” Africa said.

He added: “Meanwhile, Japan would forego smaller lost tariff revenues of P7 billion.”

IBON said it based its computations on trade levels with Japan in 2005 and the distribution of imports in the various tariff brackets.

Africa argued that JPEPA also threatened the country’s future revenues as the agreement might lay the basis for legal challenges if succeeding governments would eventually decide to take back previously granted tax and duty exemptions.

“With JPEPA’s strict ‘expropriation and compensation’ clause, it is possible that if the government imposes added taxes in the future, Japanese firms can invoke the JPEPA to demand compensation for these taxes on the ground that these were not in place when the investors first came in, and so did not factor in when they drew up their business plans, revenue streams and profit estimates,” he said.

Aside from being a drain on the country’s revenue generation, the IBON official tagged JPEPA as a brazen impingement on the sovereign right of the Philippines to tax economic activity within its jurisdiction.

Japanese officials remain optimistic that the Senate will ratify the agreement.

 source: Inquirer