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Arroyo’s Northeast Asian diplomacy

Updated On: Nov 07, 2006

The Japan Philippines Economic Partnership Agreements (JPEPA) took the region by surprise in September 2006 when it was signed by President Gloria Macapagal-Arroyo and former Japanese Prime Minister Junichiro Koizumi. But was the process hasty on the Filipino side?

The strongest opposition to the JPEPA are militant leftwing groups like PAMbansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) who argue that the JPEPA allows Japan to fish for tuna in the Philippines and dump its surplus cars equal in number to the units its companies produce in the country. Gerry Albert Corpuz, Pamalakaya spokesman, argues that Japan would be sending its sophisticated fishing fleets to Philippines with a quest for yellow fin and skipjack tuna bypassing Filipino fisherman.

However, the truly pressing issue of the JPEPA that ultimately baffles even the critics and unifies Filipino’s opposition to the pact is Malacanang’s accession to Japan’s disposal of toxic wastes in the Philippines, prompting the new nickname for the Philippines as the "waste basket case" of Asia. Critics of JPEPA argue that it runs counter to both domestic and international environmental laws. Domestically, the JPEPA contravenes Sections 15 and 16 of Article II that seeks to promote the people’s right to health and a balanced ecology and RA 6969 which prohibits the entry of hazardous wastes into the country. Internationally, critics have chargedJapan for violating the 1989 Basel Convention on the Transboundary Movement of Toxic and Hazardous Wastes.

Implementation wise, there are several problems with Philippines’ FTA with Japan. First, administrative issues. Critics argue that identifying the rules of origin of tradeable items under the Japan-Philippines Economic Partnership Agreement (JPEPA) is a bureaucratic and complex procedure, in turn pushing up costs for implementation. To simplify the red-tape and new trade laws and matters into their own hands, Filipino traders may just resort to smuggling. In addition, International law expert Jeremy I. Gatdula of the Trade Advisory Services asserted that the complicated rules of origin under JPEPA would hinder the Bureau of Customs in identifying smuggling activities disguising as transshipment. Japan’s side is not doing all that well with other ASEAN free trade pacts as well. In fact, Philippines’ trade pact with Japan is not the only one to be in trouble. The Thai government has ordered a full review of the free-trade agreement with Japan that was nearly concluded under the Thaksin era.

While this leg of Arroyo’s Northeast Asian economic diplomacy is problematic, her other trip up North seems to have bag some goodies for her country. Coming from a five-day visit to China and Hong Kong where she signed five agreements in mining, energy and infrastructure, Arroyo is beaming with pride. For years, thePhilippines has been the target of Yen diplomacy. Now the Yuan is making a strong entry. This week has had the extraordinary sight of all ASEAN statesmen making the pilgrimage to what many now consider the new and rising economic center of the world.

China’s economic strength is eyeing resources in Southeast Asia for its development. Shanghai Baosteel Group Corp., China's top steel firm, plans to invest US$1 billion in the Nonoc nickel mine in Surigao together with the China Development Bank. Even the Hong Kong government has gotten into the fray with Cathay Pacific officials studying the use of the former US Clark airbase as a cargo-handling hub. Cathay Pacific is also eyeing the Philippines’ cheap food products. "[T]hey want to look more at what they can buy from the Philippines," Mrs. Arroyo said. With a thriving primary products food industry, the Philippines is world famous for its banana exports.

Chinese economic power is not only state-based, private investors are also involved. Shangri-la hotel chain owner and "sugar king" Robert Kwok is eyeing the 30 000 hectares of the Philippines’ sugar industry. The Filipino President gleefully complied: "We will look for the 30,000 hectares for him, including the possibility of having the present planters consolidate their land and enter into a management contract with him." Whatever it takes seems to be the message.

Sources:

Militants to Take Fight Vs Trade Pact to Japan (Philippines Daily Inquirer, 5 November)

Opposition Nixes Treaty Allowing Toxic Waste in RP (Manila Bulletin, 4 November)

Japan FTA to be delayed, scrutinized (Bangkok Post, 3 November 2006)

Arroyo Hopeful of More China Investments (BusinessWorld, 3 November)

Trade Regulation Might Become More Complicated Under JEPA (BusinessWorld, 2 November)