Bulatlat - The Philippines's alternative weekly magazine

The Japan-Philippines Economic Partnership Agreement (JPEPA) is a dangerous first step towards complete government renunciation over policy-setting towards the development of the domestic Philippine economy, said IBON research head Sonny Africa.

As the country’s first bilateral free trade agreement (FTA) with a major economic power, the benchmark it sets for liberalization will determine the shape of all FTAs to come, Africa said.

If the Philippine government sets high trade and investment liberalization standards in the JPEPA then it will be obliged to also give these to partners in subsequent FTAs lest it be accused of discrimination, he said. Accession to such agreements will shut the door to genuine domestic industrial growth and economic progress.

The collapse of the World Trade Organization (WTO) Development Round should have given the Philippine government an opportunity to reconsider its commitment to neoliberal economic policies. Instead, it is giving up its sovereignty piecemeal on a country-by-country basis through bilateral and regional economic agreements such as the JPEPA, Africa said.

He belied government claims that the JPEPA would lead to a mutually beneficial economic partnership between the Philippines and Japan. He pointed out that the Japanese economy (US$4.4 trillion gross national income in 2004) is 50 times larger than the Philippines’ and per capita gross domestic product is 35 times larger. Japan also accounts for some one-third of foreign investments (cumulative US$3.5 billion in 2003) in the Philippines and one-fifth of its external trade (US$14.2 billion in 2004).

The biggest gainers from the agreement will be Japanese corporations who will take advantage of investment incentives and cheap labor costs to set up factories in local export processing zones. Other than producing low-wage, low-skilled jobs, these factories will not substantially benefit the local economy since their production inputs will mainly be sourced from their subsidiaries abroad rather than from local firms, Africa said. He pointed out that the country’s exports to Japan, which consist mostly of electronics, is already low value-added, illustrated by the fact that majority of imports from Japan are also electronic products. (See Table) Posted by Bulatlat

Table. Major Exports and Imports from Japan, 2005 (F.O.B. Value in million US dollars)
Exports			Imports
Commodity	Value	Percent Share	Commodity	Value	Percent Share
Electronic products	4,845.63	67.2	Electronic products	4,982.28	61.7
Ignition wiring sets and other wiring sets used in vehicles	283.98	3.9	Industrial machinery and equipment	676.36	8.4
Bananas (fresh)	172.78	2.4	Transport equipment	478.29	5.9
Other products manufactured from materials imported on consignment basis	112.88	1.6	Iron and steel	273.13	3.4
Woodcraft and furniture	101.31	1.4	Telecommunication equipment and electrical machinery	269.20	3.3
Source: National Statistics Office

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