Japan-RP Economic Pact
Brings Dubious Gain
The agreement is
biased towards the more powerful Japanese economic interests, so how can
JPEPA be positive for the Philippines in terms of trade and investment?
BY SONNY AFRICA
After negotiating away from public
scrutiny for four years, the Japan-Philippines Economic Partnership
Agreement (JPEPA) was signed at the Asia-Europe Meeting in Helsinki,
Finland on Sept. 10, 2006.
Officials provide few details but it is
reported that the agreement will cut import tariffs on industrial goods by
90 percent within 10 years and provide concessions for Japanese direct
investment in the domestic automobile and electronics industries.
The Philippines will abolish tariffs on at
least 60 percent of its steel imports from Japan. Tariffs on Japan-made
cars will also be fully eliminated in 2010. In exchange, Japan will lower
tariffs on Philippine bananas and pineapples, while the Philippines
removes tariffs on Japanese grapes and pears. Japan will also supposedly
allow a year-on-year quota of an unspecified number of Filipino nurses and
caregivers. It had also been reported that the
JPEPA would remove mutual restrictions on Japanese and Philippine
investors, as well as prohibit performance requirements.
Both governments have already said that
the agreement will be positive for both the Philippines and Japan in terms
of trade and investment. But the pact is biased for the more powerful
Japanese economic interests. Being an unequal agreement between unequal
parties, the JPEPA will bring dubious gain to the local economy while
severely limiting government's policy options to develop domestic
Compromising economic protection
The biggest gainers of the JPEPA are
Japanese investors who will keep setting up export enclaves in the
Philippines that are not integrated with the domestic economy. They will
continue to import most of their inputs and components, exploit fiscal
incentives, stifle workers' rights to organize, and hire labor as cheap as
they can get. The Philippines will also be foregoing millions in dollars
in tariff revenues from Japanese imports.
Japan and the Philippines are such grossly
unequal economies that nominally equal terms can never mean a "level
playing field". The Japanese economy (US$4.4-trillion gross national
income in 2004) is 50 times larger than the Philippines' and its gross
domestic product per capita is 35 times larger. Japan accounts for some
one-third of foreign investments (with a cumulative US$3.5 billion in
Japanese investments 2003) in the Philippines and one-fifth of its
external trade (with US$14.2 billion in total Japan-Philippines trade in
2004). And yet, for instance, the country's domestic industrial base has
continued to deteriorate despite the majority of Japanese investments
being in the manufacturing sector.
The Philippine government is compromising
policy tools under the JPEPA that, ironically, Japan itself used heavily.
The Japanese government greatly protected its domestic industries from the
late 19th century until the early 1980s. Japan's industrial
might in cars, trucks, shipbuilding, computers and consumer electronics
was built up in through almost a century of sustained intervention and
protection, especially in their early stages. Average weighted industrial
tariffs reached as high as 30-40 percent. The Japanese government required
technology transfers from U.S., French and UK investors, or brazenly
pirated technology through so-called "reverse engineering." Government
agencies were obliged to procure goods and services strictly from Japanese
firms. Japanese technological and productive capacity would not have
developed if not for these many decades of active state support.
In contrast, the Philippines does not even
have a national industrial program that it can use to negotiate over its
industrial trade policy. Like the past administrations, the Arroyo
government cannot expect to achieve a level playing field with only a
foreign investments-driven medium term plan that targets tourism and
business process outsourcing projects as sources of "economic growth."
The far-reaching JPEPA is also the
dangerous first step towards complete government renunciation of
developing the Philippine economy. What little public information there is
about JPEPA indicates about a dozen areas for liberalization that
collectively go far beyond anything proposed even in the currently dormant
World Trade Organization (WTO). These include: the elimination or
reduction of tariffs on industrial products and
agriculture, forestry and fishery products; liberalization of services
sectors such as construction, outsourcing, air transport, health-related
and social services, tourism and travel-related services, maritime
transport services, telecommunications and banking; national treatment,
Most Favored Nation treatment and performance requirement prohibitions;
and supposedly easier entry of qualified Filipino nurses and certified
The JPEPA also includes
various provisions on: Government Procurement, Competition Policy,
Intellectual Property, Dispute Avoidance and Settlement, Improvement of
the Business Environment, Mutual Recognition and Bilateral Cooperation.
As the country's first full-fledged
bilateral free trade agreement (FTA), the benchmark it sets for
liberalization will determine the shape of all FTAs to come, including the
continuation of the stalled WTO talks. If the Philippine government sets
high trade and investment liberalization standards in JPEPA then it will
be obliged to also give these to partners in subsequent FTAs lest it be
accused of discrimination. The country's negotiating position in all
subsequent trade and investment agreements will be gravely undermined. The
end result of the JPEPA and other such agreements will be to shut the door
to real domestic industrial growth and economic progress.
The government is also treating our health
professionals and caregivers as mere commodities when it touts the
"quotas" supposedly being given by Japan for these jobs as a good thing.
The reality is that these mostly women health workers and caregivers will
bear the burden of overcoming formidable language, certification and even
racist and patriarchal barriers-- considering that Japan's young
population have already expressed concerns over their government's offer
to open up sectors for foreign employment. Because of its desperation for
quick sources of foreign exchange, the Philippine government is placing
the burden on the cheap export of skilled Filipinos. It should instead
focus on creating the strong domestic economy that will create
opportunities for Filipinos at home.
The Philippine government affirms its
commitment to the destructive policies of neoliberal globalization.
Instead of using the collapse of the WTO Doha Round talks as an
opportunity to rethink its commitment to neoliberal globalization, it is
giving up its sovereignty piecemeal on a country-by-country basis through
bilateral and regional economic agreements.
Japan, on the other hand, makes further
headway in consolidating Southeast Asia as a source of cheap agricultural,
mineral and other raw materials for Japan as well as a captive market for
Japanese industrial goods. Aside from the Philippines, Japan has already
signed or is negotiating FTAs with Singapore, Malaysia, Indonesia, Brunei
and Vietnam. IBON Features / Posted by Bulatlat
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© 2006 Bulatlat
Alipato Media Center
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