Briefing paper on the JPEPA: Focus on labor perspectives 7 August 2007

LEARN Alliance of Progressive Labor (APL)

The commitments made by the Philippines in the JPEPA would endanger the country’s domestic agricultural and industrial products. The free entry of lower-costing products from Japan will further result in the dependence of our agricultural and industrial sectors to import goods. This may in turn discourage the development and growth of the country’s domestic economic sectors. Tariffs are forms of protection a nation-state impose to protect its domestic products and its local industries. The elimination of tariffs on almost all of our agricultural and industrial products puts the domestic industries at risk of closures that will eventually incur massive job losses.
In terms of market access, the agreement was clearly lopsided in favor of Japanese products both in the agricultural and industrial sectors.

The country’s domestic industries in garments, electric appliances, and automobile and auto parts sectors stand to lose if JPEPA enters into force. The Philippines committed to eliminate all tariffs on agricultural and industrial goods except for rice and few rice products (5 tariff lines) and salt. On the other hand, Japan negotiated more than half of their agricultural products with tariff schedules (Aquino, 2007). Specifically, Japan exempted 202 agricultural products from tariff elimination and declared sensitive products some of the remaining goods that were assigned with tariff rate quotas (TRQs) or under renegotiation. In industrial goods, Japan was able to exempt 32 of its industrial products from tariff elimination and many were given gradual tariff schedule. Compare this to Philippines’ 6 tariff lines for exemption and the result is somewhat lopsided. Furthermore, the Philippines’ tariff schedule follows the Agreement to eliminate tariffs within the span of 10 years while Japan negotiated some of their products with a schedule from 3-15 years. The Philippine government also committed to open sensitive sectors in the economy for Japanese investments except for a few areas such as cooperatives, military supplies and ownership of public and CARP lands.

The chapter on Investments is particularly sensitive because one of the reasons the issue of investments was not accepted in the WTO is the potential for corporations to bring states into legal disputes once an agreement on investments is reached. The Investments chapter also provides for National Treatment to Japanese investments not mentioned in the reservations list and prohibition of performance requirements. The Article on performance requirements provides for that the two countries shall not impose or enforce performance requirements as a condition for the entry of investments in the country such as technology transfer, use of domestic materials or local content, or to hire local labor.

The chapter also included provisions for the environment and labor which seemed out of place and insufficient. More like an afterthought, Article 103 on Investments and Labor just reiterated the four internationally accepted core labor standards and mentioned the “acceptable” conditions for labor on minimum wages, hours of work and health and safety. The term “acceptable” remains vague and do not imply in any way to the labor rights of Filipino workers under the Labor Code of the Philippines. Presently, any form of labor clause would be highly suspect if integrated in a free trade agreement or in an investments agreement. Labor rights are diminished as well as the crucial role of the working people in the economy if their rights are merely integrated as clauses in trade agreements. Likewise, the framework of today’s trade agreements run counter to labor’s aims to regulate the market under social control.

On the whole, the JPEPA reflects a lopsided agreement between an industrialized country and a developing one. The agreement likewise reflects Japan’s clever protection of their sensitive products and vital industries. No such direction was seen from the commitments of the Philippines. More so, the Philippine commitments to the JPEPA reflect a lack of industrial policy and economic direction for development.

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