Independent research group IBON Foundation expressed dismay over Arroyo’s statement urging the ten-member Association of Southeast Asian Nations (ASEAN) to conclude a regional free trade agreement with Japan .

As it is, different sectors have registered their opposition to the Japan-Philippines Economic Partnership Agreement (JPEPA), which Malacañang signed last year and which will take effect after ratification by the Senate.


Under the agreement, the Philippine government excluded only two commodities from tariff reduction while Japan protected 239 of its commodities, proving how JPEPA is grossly unequal.


IBON research head Sonny Africa added that the Philippines is set to sacrifice billions of pesos in lost revenues if the Senate ratifies the said agreement. If tariffs would be reduced to zero on trade with Japan under the JPEPA, the Philippines stands to lose some P10.7 billion (US$ 214.1 million) annually.


Meanwhile, Japan would forego smaller lost tariff revenues of P 7 billion (US$ 139 billion). IBON based its computations on trade levels with Japan in 2005 and the distribution of imports in the various tariff brackets.


JPEPA also threatens the country’s future revenues as the agreement may lay the basis for legal challenges if succeeding governments would eventually decide to take back previously granted tax and duty exemptions.


With JPEPA’s strict “expropriation and compensation” clause, it is possible that if the government imposes added taxes in the future, Japanese firms can invoke the JPEPA to demand compensation for these taxes on the ground that these were not in place when the investors first came in, and so did not factor in when they drew up their business plans, revenue streams and profit estimates.


Aside from being a drain on the country’s revenue generation, the JPEPA also represents a brazen impingement on the sovereign right of the Philippines to tax economic activity within its jurisdiction, Africa said.

A regional free trade agreement with Japan will profit Japanese corporations the most, especially since the ASEAN is Japan ’s third largest trading partner. By urging the region to sign a similar pact as JPEPA clearly shows whose interests Pres. Arroyo has in mind, said Africa


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