The Americans, like the Europeans, have an inventory of what they call “barriers” in the Philippine Constitution that they want the Arroyo regime to remove through constitutional amendments. Meanwhile, the Constitution will have to conform with the Jpepa, the Philippine-Japan agreement, not the other way around.
By ARNOLD PADILLA
(Second of two parts, read the first part)
MANILA — The United States remains a major source of foreign pressure to implement constitutional amendments in the Philippines and liberalize the economy. Among the foreign powers, the US continues to be the country’s most important trading partner, directly accounting for nearly 32 percent of our international trade (the figures are actually much higher if trade flows that pass through a third party such as the East Asian countries are taken into account) and 23 percent of net foreign direct investment flows.
While a list of the US’s official request to the Philippines under the General Agreement on Trade in Services (GATS) similar to the European Union request was never leaked to the public, a review of other official documents from the US government will give us an idea of which economic sectors the Americans want the country to liberalize through charter change.
Annually, the Office of the US Trade Representative (USTR) publishes the National Trade Estimate Report on Foreign Trade Barriers or the NTE. This document aims to provide an “inventory of the most important foreign barriers affecting US exports of goods and services, foreign direct investment by US persons, and protection of intellectual property rights.” Such an inventory is not simply an enumeration of impediments to US commodities and capital but will be used to facilitate “negotiations aimed at reducing or eliminating these barriers.” For the current Obama administration, opening up markets for American goods and services including through trade negotiations is a top priority and the NTE is an “important tool for identifying such trade barriers.”
The 2009 NTE report on the Philippines identified economic sectors or activities where there are significant barriers to US investments because of restrictions set by the 1987 Constitution. The following passages were directly lifted from the 2009 NTE chapter on the Philippines:
- The Philippine Constitution of 1987 limits the operation of certain utilities to firms with at least 60 percent ownership by Philippine citizens.
- The Philippine Constitution limits foreign ownership of advertising agencies to 30 percent. All executive and managing officers of advertising agencies must be Philippine citizens.
- The Philippine Constitution limits investment in certain sectors deemed to be utilities (including water and sewage treatment, electricity transmission and distribution, telecommunications, and transport) to firms with at least 60 percent ownership by Philippine citizens. All executive and managing officers of such enterprises must be Philippine citizens.
- The Philippine Constitution generally reserves the practice of licensed professions (e.g., law, medicine, nursing, accountancy, and engineering, architecture, and customs brokerage services) to Philippine citizens.
- The 1991 Foreign Investment Act contains two “negative lists” (List A and List B) enumerating the areas in which foreign investment is restricted. List A reflects foreign investment restrictions mandated by the Constitution or specific laws. The list includes sectors in which investment is reserved for Philippine nationals (e.g., mass media, small-scale mining) and sectors in which foreign equity participation is limited to a certain maximum share (e.g., natural resource extraction, where foreign equity is limited to 40 percent).
- The 1987 Philippine Constitution bans foreigners from owning land in the Philippines.