Existing Treaties and Agreements with Japan include:
- Reparations Agreement (1956)
- Exchange of Notes Constituting a Provisional Agreement Concerning the Simplification of the Entry and Sojourn Procedures (1958)
- Agreement for the Exchange of International Money Orders (1969)
- Air Services Agreement (1970)
- Treaty of Amity, Commerce, and Navigation (1980)
- Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (1980)
- Parcel Post Agreement (1980)
HIGHLIGHTS OF JPEPA
1. IMPROVEMENT OF BUSINESS OPPORTUNITIES FOR BOTH COUNTRIES.
More Japanese investments and trade opportunities are expected to pour into the country following a recent visit from one of Japan’s biggest trade groups - the Kansai Economic Federation (Kankeiren), Trade and Industry Secretary Juan B. Santos said yesterday.
According to Santos, the Kankeiren mission proved that Japanese businessmen are very interested to do business in the Philippines and that the country is a profitable site for economic ventures.
"The recent mission is an endorsement to other foreign firms that are considering locating or expanding their business in the country," Santos said.
Aside from acknowledging the advantages of the Philippines as an investment destination, the Kankeiren delegation also stressed the importance of the forthcoming realization of the Japan-Philippines Economic Partnership Agreement (JPEPA) which would greatly increase the incentive for Japanese investments and pave the way for more bilateral trade.
The planned free trade accord would affect mainly industrial and agricultural products but would also include services as well as proposals to allow more Filipino nurses and caregivers to work in Japan to minister to its ageing population.
Santos agreed that the JPEPA would help efforts to make the Philippines the ASEAN business partner of choice for Japan.
2. OPENING OF EMPLOYMENT OPPORTUNITIES IN JAPAN FOR FILIPINO HEALTHCARE AND TECHNICAL WORKERS.
Japan will allow Filipino nurses and care workers to work in Japan on the condition that they pass Japans examination requirements along with IT workers and other professionals. This is important not only because of the expected increase in remittances from overseas Filipino workers but also because it provides a venue for technology transfer and cooperation, which could facilitate improvements in the competitiveness of our workers. To realize these, JPEPA has set HRD cooperation programs covering language proficiency training, technical assistance in skills upgrading, mutual personnel exchange and fellowship programs, and research and development in S&T.
3. MUTUAL REDUCTION OF TARIFF RATES.
The JPEPA apparently commits both countries to comprehensively eliminate or reduce agricultural and industrial tariffs within 10 years. Most tariffs are removed once the JPEPA takes effect with the others staggered over the coming years. The agreement identifies products for exclusion from any immediate or future commitments to reduce tariffs.
Products with preferential 0% tariff:
- “(i) articles collected in the Party which can no longer perform their original purpose in the Party nor are capable of being restored or repaired and which are fit only for disposal or for the recovery of parts or raw materials;
- “(j) scrap and waste derived from manufacturing or processing operations or from consumption in the Party and fit only for disposal or for the recovery of raw materials;
- “(k) parts or raw materials recovered in the Party from articles which can no longer perform their original purpose nor are capable of being restored or repaired; and
- “(l) goods obtained or produced in the Party exclusively from the goods referred to in subparagraphs (a) through (k) above.”
BUSINESS IMPLICATIONS (Pros)
- Our country will take advantage of better trade and investment opportunities with Japan, the world’s 2nd largest economy and the Philippines largest source of investments.
- Japan is the 2nd largest market for our agricultural products (next to the US) and with JPEPA almost 95% of our exports to Japan will face zero duties.
- Stabilize the supply if vital manufacturing inputs by tariff eliminations/reductions in iron & steel products, auto parts, and textiles.
- Increase our access to Japan’s services industries such as those related to healthcare, air/maritime transport, outsourcing, tourism, etc.
- Open employment opportunities in Japan for our nurses and caregivers.
- The Philippine Institute for Development Studies estimates growth in output by 0.52% due to the tariff elimination/reductions alone.
- The Japanese Research Institute of Economy estimates our real GDP to increase by 1.73% to 3.03% due to the benefits in the JPEPA.
BUSINESS IMPLICATIONS (Cons)
- Tariff benefits for sugar did not materialize though the JPEPA provides for a re-negotiation in the 4th year.
- Elimination/reduction of tariff rates for Japan’s toxic wastes
- Key Philippine exports to Japan such as bananas, pineapples, tuna, and other fish and fruit products will not immediately benefit because JPEPA provide slow reduction of tariff rates and quotas years from now.
- Restrictions imposed on the employment of Filipino nurses and caregivers
EXPERT’S OPINIONS
Opinion of Justice Florentino Feliciano (Retired Senior Associate Justice)
Justice Florentino Feliciano, a retired Senior Associate Justice, was requested by the Senate Committee on Foreign Relations and Senate Committee on Trade & Commerce to issue a statement regarding the JPEPA.
Justice Feliciano issued the following opinions:
- JPEPA article 89 will require the country to accord “national treatment” to Japanese investors and their investments in the Philippines. What this means is that our government will treat the said investors and their investments as they would a Filipino investor and their investments in the country;
- JPEPA article 90 will require the country to accord “most favored nation treatment” to Japanese investors and their investments in the Philippines. What this means is that our government will treat the said investors and their investments no worse than foreign investors and their investments in the country;
- JPEPA article 93 will restrict the country from obliging Japanese investors and their investments in the Philippines to comply with certain standards in performance as a condition of doing business in the country. These standards include levels of purchasing or selling materials from a certain nation, hiring or appointing employees and management of a certain nationality or to locate the company headquarters in a certain nation.
- JPEPA Article 18 Paragraph 1 provides that the country reduce to zero or near-zero many of the tariff rates for good imported from Japan.
There are several statutes that limit the involvement of foreign nationals in certain business activities such as land ownership, operation of mass media and public utility companies and the practice of professions. The implementation of the JPEPA will be in direct conflict with the country’s constitution and other laws. Though JPEPA article 94 grants us the option to “exempt” some business activities by virtue of existing legal statutes, the list provided in JPEPA (i.e. Philippines’ Schedule to Part 1 of Annex 7) is not a complete and exhaustive list. Business activities excluded from the said list will soon suffer a legal crisis with serious consequences in the international community. The same is true with Philippines’ Schedule to Part 2 of Annex 7, this time, with respect to reservations of enacting future non-conforming measures.
Furthermore, the granting of “national treatment” and non-imposition of performance requirements to the Japanese is direct conflict with Article XII Sections 10 and 13 of the Constitution. To summarize these two statutes – the government shall give preference to the use of Filipino labor, materials and other goods in business activities involving the country’s economy.
With respect to JPEPA Article 18, the imposition of tariff rates is a power reserved to the legislative branch of the government which is both the Senate and Congress. Though the same power was granted to the President, it has its limitations. For the President and the Senate (which is only one of the two Houses of Congress) to ratify this agreement poses a serious constitutional problem.
To address the potential consequences of JPEPA as far as Articles 89, 90 and 93 are concerned, Philippines’ Schedule to Part 1 of Annex 7 should include all existing laws, regulations and agreements with other countries which is not in agreement with JPEPA. Further, to address Article 18, Justice Feliciano recommends that an amendment to Philippine Schedule to Annex1 to state that this agreement should not restrict the country’s right to enact or enforce future constitutional laws.
Opinion of Tito Guingona
- The JPEPA is like a meeting between Mike Tyson and Manny Pacquiao.
- Where would National treatment Apply? Not in Japan where there hardly exists any Filipino businesses.
- The lapses in making proper reservations, we may forego rights and relinquish power to enact future legislation on investments.
- JPEPA Article 4 calls on the parties to consider amending or repealing laws that affect the implementation and operation of said agreement.
- All products are targeted over time for tariff reduction or elimination, all – except those exempted. Japan listed 238 tariff lines involving various agricultural and industrial products such as sardines and slippers for exclusion while the Philippines limited exemptions to only 6 tariff items, 5 for rice and l for salt.
- The implementation of JPEPA will be done by a Joint Committee and sub coommittees composed of representatives of the Government of the parties rather than Congress.
- The negotiations that led to JPEPA were done in relative obscurity, without the needed information and publicity mandated.
- JPEPA denies tariff reduction for agricultural goods such as sugar, bananas, mangos tuna and other marine products while granting duty free imports to her industrial inventories like electronics.
- Japan exports to us high value finished goods, usually accorded low tariffs. The Philippines on the other hand trades low value added rural products like banana – yet we must pay tariff of ten to twenty percent.
- Reduction of tariffs for waste products, encouraging Japan’s dumping of its wastes in our country.
- Filipino nurses and caregivers are not only required to master spoken and written Nihongo but are required to pass the Japanese board exams. Exams which possess a modest passing rate even among Japanese nationals!
- Japanese professionals, on the other hand, are neither required to master our language nor take any exams in Filipino to conduct business or practice their profession in the Philippines.
- Our government is required by the agreement to guarantee Japanese investors and their investments against future adverse legislation, performance requirements and certain risks such as revolution.
- Trade will benefit Japan since our agricultural workers have no access to it. Similarly, investments will benefit Japan since they will probably invest in developed parts of our country rather than areas in great need of these investments.
- If we approve JPEPA,we relinquish our right to legislation and sovereignty.
Opinion of Atty. Tanya Lat
- The Philippines will gain minimally as far as trade is concerned
- Refusal of Japan to lift quotas on pineapples.
- Denial of market entry to sardines, tuna and other marine products.
- Tariff rates on bananas will be reduced only in ten years.
- Employment opportunities for nurses and caregivers are virtually non-existent
- Encouraging trade in waste products
- Restricted regulations in foreign investments from Japan
Opinion of Alecks P. Pabico
In an Article entitled “JPEPA to encourage Trade in Hazardous and Toxic Waste” posted on October 25, 2006 4:55PM
GMA would like to highlight that the JPEPA will open lucrative employment opportunities for our nurses and caregivers and consequently increase foreign exchange remittances to the country. This agreement, however, also covers a wide range of trade and investment issues. Looking at JPEPA as a whole, it seems what the country stands to benefit from Japan pales in comparison to what Japan expects to benefit from us.
Philippine trade law experts, Justice Florentino Feliciano and Professor Meilou Sereno, warned of the great difficulties in this agreement and that the implications to our country might require the passing of new laws or amendments to current ones. Despite these warnings, the JPEPA was signed anyway with the information made public only after the signing.
Another trade law expert, Atty. Tanya Lat points out that the agreement essentially makes our country a voluntary dumping site for Japanese wastes through the granting of preferential treatment (i.e. 0% tariff) with respect to the trade of toxic wastes products. These products include:
- “(i) articles collected in the Party which can no longer perform their original purpose in the Party nor are capable of being restored or repaired and which are fit only for disposal or for the recovery of parts or raw materials;
- “(j) scrap and waste derived from manufacturing or processing operations or from consumption in the Party and fit only for disposal or for the recovery of raw materials;
- “(k) parts or raw materials recovered in the Party from articles which can no longer perform their original purpose nor are capable of being restored or repaired; and
- “(l) goods obtained or produced in the Party exclusively from the goods referred to in subparagraphs (a) through (k) above.”
GROUP’S POSITION:
- Amend the schedules in the appropriate JPEPA Articles to be consistent with all relevant statutes in the Constitution and other laws and regulations.
- Provide that the agreement should not preclude the country to enact future laws and tariff rates or to modify existing ones.
- Amend the treaty to exclude the provisions for the trade in waste products.
- Approve the Basel Amendment to protect us from illegal waste disposal.
UPDATES
Senator Miriam Defensor-Santiago, Chairman of the Senate Committee on Foreign Relations, believes that currently the JPEPA will be declared as unconstitutional by our Supreme Court. She will be working hand-in hand with the DFA to draft the addendum to the agreement to make it constitutional for the Philippines and diplomatically acceptable to Japan. – Article by Veronica Uy at Inquirer.net (Updated November 16, 2007 3:36PM)
REFERENCES
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- http://www.businessmirror.com.ph/07102007/opinion07.html