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RP-Japan trade deal nears OK

Businessworld (Manila) | Wednesday, September 3, 2008

RP-Japan trade deal nears OK

Proponents see October approval following new exchange of notes

SENATE PROPONENTS of the Japan-Philippines Economic Partnership Agreement (JPEPA) expect the country’s first bilateral free trade deal to finally pass scrutiny in October after a second side pact was sealed to respect Filipino-only provisions in the Constitution.

Senator Miriam Defensor-Santiago, head of the Senate foreign relations committee, yesterday distributed to fellow senators copies of the side deal, a diplomatic "exchange of notes" which she had requested from the Foreign Affairs department as a remedy to some JPEPA provisions which legal experts claim are unconstitutional.

The deal, concluded by Foreign Affairs Secretary Alberto G. Romulo and Japanese Foreign Minister Masahiko Koumoura, followed an exchange of notes last year where Japan pledged not to ship toxic waste to the Philippines even if tariffs on waste products were scrapped under the trade deal.

It has been two years since the JPEPA was signed by President Gloria Macapagal-Arroyo and then Japanese premier Junichiro Koizumi in Helsinki, Finland, but the Senate has yet to concur with the treaty amid a flurry of opposition over toxic wastes as well as provisions that would allow Japanese nationals to own businesses reserved to Filipinos.

Senator Manuel A. Roxas II, chairman of the trade and commerce committee and co-sponsor of a report that had recommended Senate concurrence with the JPEPA, said the signing of the new exchange of notes should encourage more senators to vote for the deal.

But he admitted that debates could still last for "several weeks."

As a result, deliberations could take up to before legislative sessions end in October instead of the initial target of approval this month, Ms. Santiago said.

She said the side deal meant that specific sectors like public utilities would remain under the control of Filipinos.

"In effect, [the exchange of notes] is an agreement that Japan promises, explicitly and specifically, that it will respect each and every one of the nationalistic provisions of the Constitution," she told reporters.

The JPEPA provisions also being contested involve "national treatment," where Japanese businesses would be treated as Filipino entities; "most-favored nation treatment" where Japan would be treated equally with other countries with regard to other international treaties and concessions; and the lack performance requirements mandating Japanese firms to transfer technology to the Philippines.

The 1987 Constitution restricts foreign equity to 40% in sectors like utilities, schools and even the ownership of land, and totally bans foreign ownership in mass media and the practice of professions.

The August 28 exchange of notes detailed, among others, adherence to constitutional provisions such as the promotion of the right to health of Filipinos, protection of Filipino enterprises against unfair foreign competition, ownership and transfer of lands of public domain and utilization of natural resources, preferential rights, privileges and concessions granted to Filipinos covering the national economy and patrimony, and regulation of foreign investments.

Ms. Santiago said the new side deal would form an "integral" part of the JPEPA under the 1969 Vienna Convention on the Law of Treaties which treats the exchange of notes as a treaty when the parties agree.

Asked if the Senate would approve the treaty this month, she said: "We have no timetable to ratify because we cannot prevent the senators from interpellating. We cannot have the voting this September. I am hoping that this October we can finally approve the JPEPA."

The treaty needs concurrence of two-thirds of the 23-member Senate to take effect. The Japanese Diet approved the trade deal just three months after its signing in 2006.

Senators Santiago and Roxas, who had initially opposed the JPEPA, have since shifted positions, but many of their colleagues have yet to make up their minds.

Senate Majority Leader Francis N. Pangilinan said he had not seen the side agreement and would wait for his period to debate to ask "several questions."

"There are a lot of issues that need to be clarified. [Senate concurrence] is not gonna be quick," he told BusinessWorld.

Senate President Manuel B. Villar, Jr. has also yet to make a stand and said he would consider the debates in making a decision.

Deliberations on the JPEPA were suspended in early August as senators awaited the second side deal.

Once the JPEPA takes effect, tariffs on 95% of Philippine exports to Japan will be eliminated while import duties on industrial goods such as electronics and cars will be phased out within a ten-year period.

As a sweetener, a limited number of Filipino nurses and caregivers will be allowed to work in Japan.

Sectors such as farming, fishing, and food processing are expected to benefit immediately from zero duties.

JPEPA advocates have warned that the Philippines risked losing out to other trading nations as Japan already has "economic partnership agreements" with 11 other countries and the 10-member Association of Southeast Asian Nations as a group. - Bernard U. Allauigan

 source: Businessworld