November 8, 2007
No Deal! Movement Against Unequal Economic Agreements
QUESTIONABLE EMPLOYMENT BENEFITS OF JPEPA
Despite the growing popular outcry against the Japan-Philippines Economic Partnership Agreement (JPEPA), the Arroyo government continues to launch a heavily-funded campaign to hype the so-called benefits of the inequitable treaty and force its ratification at the Senate.
Its latest propaganda involves a study by the Department of Trade and Industry (DTI) alleging that the implementation of the JPEPA would result in some P222 billion (US$4.9 billion at P45.50:US$1) in Japanese foreign direct investment (FDI) inflows over a period of three years (2007-2010).
The DTI further claims that such investments would generate some 330,000 jobs, which would in turn result in approximately P32 billion in tax revenues.
But such claims are spurious at best, even if we accept these figures at face value. For example, IBON estimates that one job is created for every US$39,110 of FDI. Hence, even if the projected Japanese FDI are achieved, only some 124,700 jobs would be created for the period or some 41,500 a year. This would still not be enough to address the record-high jobs crisis under the Arroyo administration, wherein the number of unemployed Filipinos averaged almost 4 million from 2001-2006. If government relies only on FDI to generate employment then it would take US$156 billion a year to give jobs to all the four million unemployed.
As for the claims that these jobs will generate P32 billion in tax revenues, or P96,970 per job, this could happen only if the majority of these jobs were high-paying professional positions. If, as is more likely, the majority of these jobs are minimum wage earners, then the jobs would only generate some P7.5 billion a year in income taxes, assuming an average income tax rate of 20 percent.
Moreover, the job generation hype does not even take into account the possible job losses as domestic industries fold up once Japanese investments come in. The automotive industry, for example, has estimated that some 77,000 workers will lose their jobs once the JPEPA is implemented.
In exchange for all these questionable benefits, the government would lose the right to implement protectionist policies in support of nationalist industrialization. Note that under Article 93 of the JPEPA there are restrictions on imposing performance requirement, meaning that the Philippines can no longer impose or enforce as a condition for investment requirements such as research and development requirements and technology transfer, measures that Japan itself used when it was building up its own domestic economy.
If the Senate accepts the JPEPA merely for the questionable promise of several hundred thousand jobs, it should realize that it is giving up much more: the country’s sovereignty and right to set policies that would ensure its future economic development. (end)
No Deal! Movement Against Unequal Economic Agreements is a multi-sectoral alliance of organizations and individuals opposed to unequal bilateral free trade agreements (FTAs) entered into by the Philippine government with other countries. Its convenors include former Vice President Teofisto Guingona, former Senator Wigberto Tañada, Toyota Workes Union president Ed Cubelo, Bayan president Dr. Carol Pagaduan-Araullo, IBON research head Sonny Africa, among others.