Senators from the Foreign Relations Committee who are conducting hearings on the Japan-Philippines Economic Partnership Agreement (JPEPA) should consider provisions in the free trade pact that threaten the country’s sovereignty as enough grounds not to ratify the agreement.
BY IBON FOUNDATION
Democratic Space
Posted by Bulatlat
Vol. VII, No. 33, September 23-29, 2007
Senators from the Foreign Relations Committee who are conducting hearings on the Japan-Philippines Economic Partnership Agreement (JPEPA) should consider provisions in the free trade pact that threaten the country’s sovereignty as enough grounds not to ratify the agreement.
IBON Foundation’s Research Head Sonny Africa said that in order to protect Japanese investors, the JPEPA has a strict expropriation and compensation clause, which reads: “Neither party shall expropriate or nationalize investments in its Area of investors of the other Party or take any measure equivalent to expropriation or nationalization (hereinafter referred to in this Chapter as “expropriation”) except: (a) for a public purpose; (b) on a non-discriminatory basis; (c) in accordance with due process of law; and (d) upon payment of prompt, adequate and effective compensation.” (Chapter 8, Article 95)
With this provision, Africa said that the JPEPA lays the basis for Japanese investors to challenge the Philippine government in court if it reneges on previously granted tax and customs duty exemptions. He pointed out the term “non-discriminatory” in the provision remains open to interpretation and does not necessarily permit the Philippine government to raise taxes at will.
He added that in a later provision, the JPEPA explicitly states that taxation measures may be considered tantamount to expropriation: “Article 95 shall apply to taxation measures, to the extent that such taxation measures constitute expropriation as provided for in paragraph 1 of Article 95.” (Chapter 8, Article 104)
Africa said that if, for example, the government imposes new taxes or increases existing ones 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 set up shop, hence their inability to factor these into their business plans and targeted revenue streams and profit estimates.
This provision is a brazen infringement on the sovereign right of the Philippines to tax economic activity within its jurisdiction. Africa said that it is even possible for “expropriation” to be broadly interpreted to mean not just a takeover of property but the virtual takeover or incidental loss of profits by Japanese firms as a result of new regulations being implemented. IBON Foundation/posted by Bulatlat
