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Under RP-Japan Economic Partnership Agreement local settlement of disputes agreed on

Manila Bulletin

Under RP-Japan Economic Partnership Agreement Local settlement of disputes agreed on

By Bernie Cahiles-Magkilat

31 August 2006

The Philippines and Japan have agreed to settle all disputes domestically under the proposed Economic Partnership Agreement unless the Secretaries of Trade of both countries agree to bring the dispute to an international arbitration court.

This developed as the proposed bilateral EPA of Japan and Philippines is expected to be signed by President Gloria Macapagal Arroyo and Japanese Prime Minister Junichiro Koizumi in Helsinki next month at the sidelines of the Asia Europe Summit.

An official said this agreement would form part of the Dispute Settlement agreement in the Japan Philippines Economic Partnership Agreement (JPEPA) and a complete departure from the earlier draft agreements wherein disputes can be automatically elevated to the international arbitration courts.

The Office of the Solicitor General and the International Legal Bureau of Japan were involved in the discussion of the framework for the dispute settlement agreement.

According to the local official, this provision was adopted by both parties because the "cost of arbitration is very high and is partial to developed countries."

"Arbitration is very expensive, long drawn and a very tedious process," the official added.

The official noted the case of Argentina, which has pending 14 cases were filed against the government by investors, in the international court.

In the case of the Philippines, it was sued by German investors Fraport in the Philippine International Air Terminals Corp. (PIATCO).

"We want to avoid a repeat of the Fraport case," a source stressed. It could be recalled that the case between the Philippine government and Fraport AG Frankfurt Airport Services Worldwide involving the construction of the Terminal 3 of the Ninoy Aquino International Airport was brought to the international arbitration courts and have already dragged on with no immediate resolution in sight.

"We want an expedient mechanism that is within our resources," the official said as he stressed the importance of the dispute settlement mechanism in any trade deal.

"Unless you settled the rules, you cannot play the game," he said.

The proposed JPEPA seeks to reduce to zero the tariffs on Philippine and Japanese goods within a ten-year period. Once the deal is signed this year, the full effect of the bilateral FTA would be reached by 2016.

Under the proposed agreement, Japan would ease restrictions in its labor market to accommodate more Filipino healthcare professionals, including nurses and caregivers.

Japan is also expected to reduce tariffs on agriculture products to allow the exports of Philippine products such as chicken, pineapples and bananas.

For its part, the Philippines is expected to immediately abolish tariffs on at least 60 percent of its steel exports from Japan and fully scrap tariffs on automobiles and auto parts by 2010.

Leaders of both countries reached a basic political agreement on a bilateral FTA on November 29, 2004 at the ASEAN Summit in Laos.

The JPEPA would be the first FTA to be signed by the Philippines while it is the fourth FTA deal made by Japan after similar deals with Singapore, Mexico and Malaysia.(BCM)