The Grey Chronicles

2008.December.11

December 11: Watch out for JPEPA!


Today, the controversial Japan-Philippines Economic Partnership Agreement (JPEPA) takes effect with simple ceremonies in Tokyo. This was announced by Philippine labor attaché to Japan Danilo Cruz yesterday (Uy, 2008). Foreign Affairs Secretary Alberto Romulo and Japanese Ambassador to Manila Makoto Katsura exchanged diplomatic notes Novemeber after the Philippine Senate concurred its ratification.

JPEPA was initiated during President Gloria Macapagal-Arroyo’s visit to Japan in December 2002. The formal negotiations between the Philippines and Japan started in February 2004. President Arroyo and then-Japanese Prime Minister Junichiro Koizumi agreed on major elements of JPEPA in November 2004 that would lead to the immediate removal of tariffs on certain fruits, vehicles, steel products, electronic appliances, and garments. The JPEPA was signed in Helsinki, Finland on 9 September 2006. (SEPO, 2007, p. 1)

Anti-JPEPA advocates, led by the Magkaisa Junk JPEPA Coalition questioned last 13 October the constitutionality of treaty and implored the high tribunal to halt its implementation. The coalition’s lead counsel, Golda Benjamin pointed out that the treaty is "potentially more devastating than Philippine membership in the World Trade Organization and is blatantly unconstitutional." The coalition which icludes Alliance of Progressive Labor, Concerned Citizens Against Pollution, EcoWaste Coalition, Initiatives for Dialogue and Empowerment through Alternative Legal Services Inc., Kilusan Para sa Pagpapaunlad ng Industriya ng Pangisdaan, Mother Earth Foundation, NGOs for Fisheries Reform, Philippine Metal Workers Alliance, and Akbayan had campaigned for the Senate rejection of JPEPA on economic, environmental, constitutional, legal, and ethical grounds.

In September 2006, the Department of Trade and Industry published a Briefing Document on the JPEPA. The opening paragraph of this document states:

“The Japan-Philippines Economic Partnership Agreement (JPEPA) represents an unparalleled opportunity for the Filipino people. It cultivates significant trade and investment opportunities with the world’s second largest economy. The JPEPA also raises awareness of the Filipino’s innovative capabilities and encourages a view of the Philippines as an important and growing economy.”

The JPEPA’s 16 chapters cover trade in goods, services, investment, movement of natural persons, among other things. Just to give an example: Japan will push their grapes, apples, pears,
and other fruits to Filipinos. In return, we sell them bananas, pineapples, shrimps and crabs, cane molasses and muscovado sugar.

Both sides will eliminate the tariffs on almost all industrial goods within 10 years from the day of entry into force of the JPEPA. Thus:

“On iron and steel, the Philippines will introduce a Tariff Rate Quota (TRQ)—ensuring sufficient volume for local producers; more importantly, however, immediate elimination of tariffs on certain steel products will ensure Philippine industries’ access to Japan’s highly competitive specialty steel as production inputs.”

The Senate Economic Planning Office (SEPO, 2007) further explained:

“Tariffs on flat-rolled products or iron or non-alloy steel, of a width 600mm or more plated or coated with zinc or with aluminum-zinc alloys will be eliminated in 6 equal annual installments from 7% base rate to zero.”

Aside from steel, tariff elimination would be applied on auto and auto parts, electrical and electronic appliances and their parts, and textiles and apparels.

On services, the Philippines will have access to the Japanese market in the areas of outsourcing, air transport, health-related and social services (e.g., nurses), tourism and travel-related services, maritime transport services, banking and telecommunications.

Meanwhile, the SEPO (2007) states the following, among others, disadvantages of JPEPA:

“FTA is a two-edged sword. While free trade enhances competition, uncompetitive industries languish and eventually close shop unless it can make a turn around and face competition. While free trade benefits consumers in general, it is disadvantageous to sectors that cannot cope up with the competition.”

“In theory, investment agreements such as JPEPA are expected to increase investment since it provides greater certainty and confidence for foreign investors. But the record has been so far spotty. . . It clearly shows that where the FDI goes depends on more fundamental factors such as low cost of production, large market size and access to natural resources.”

For Global Steel, is this the dreaded ‘writing on the wall’?


Notes:

Uy, Veronica (2008), “JPEPA takes effect Thursday;500 caregivers, nurses to Japan by April”. Manila: INQUIRER.net, 10 December 2008. back to text

International Trade Group, 2006. Briefing Document on the JPEPA. Manila: Department of Trade and Industry, 12 September 2006. pp. 1-6.back to text

Senate Economic Planning Office, 2007. Japan-Philippines Economic Partnership Agreement (JPEPA): An Assessment, Policy Brief, PB-07-01. Manila: Senate of the Philippines, 12 September 2007. pp. 1-16. back to text

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