‘BAD DEAL’ : JPEPA WORSE THAN JAPAN TRADE PACTS WITH INDONESIA, MALAYSIA

The Japan-Philippines Economic Partnership Agreement (JPEPA) is already a bad deal for the Philippines , but its flaws are highlighted further by comparing it with similar trade deals negotiated by Indonesia and Malaysia , according to independent think-tank IBON Foundation.

IBON research head Sonny Africa said that Indonesia and Malaysia were able to retain tariff protections on far more products and investment controls in far more sectors than the Philippines did under free trade deals with Japan .

Africa cited the fact that the Philippines only excludes two items – rice and salt – from tariff reduction or elimination in the JPEPA while Indonesia excludes 835 items in its economic partnership agreement (EPA) with Japan concluded in August 2007 Malaysia in turn excluded 38 items in its EPA with Japan of December 2005.

He pointed out that the advantages gained by the two Asian countries were not just in the number of exclusions but in the items they excluded from tariff reduction coverage. Indonesia ‘s exclusions among others include various items of livestock, poultry, fruits and iron and steel products while Malaysia ‘s include various items of livestock, poultry, dairy products, alcoholic beverages, tobacco, rubber and ammunition.

Africa further added that the unfairness in the JPEPA extends to provisions identifying sectors in which foreign investment is controlled or where “reservations” for existing and future protectionist measures are made. The Philippine effectively identifies only six sectors: fisheries, mining, firecrackers, domestic shipping, geothermal energy/natural gas/methane gas, and rice- and corn-related manufacturing.

By contrast, Indonesia identifies over 40 sectors including fisheries, tobacco and cigarettes, food manufacturing, handicrafts, textiles, agricultural machinery, pharmaceuticals, health, education, banking, insurance, construction, water transport, air transport, telecommunications, power, hotel, restaurants, wholesale and retail trade, film and other service activities. Malaysia only identifies at least 17 sectors, but it also asserts its economy-wide Bumiputera policy or affirmative action for Malaysia ‘s majority ethnic group. The wide-ranging industries Malaysia specifies include agriculture, fisheries and forestry, textiles and garments, tobacco and cigarettes, steel, cement, oil and gas, mining and quarrying, petroleum refining, motorcycle, cars, commercial vehicles, palm oil and sugar.

Malaysia and Indonesia continue to develop their domestic industries through active government protection and support over decades, which is why they continue to retain the right to use such measures even after entering into an EPA with Japan , said Africa . It is thus all the more ironic that the distant industrial laggard among the three, the Philippines, is the most eager to disarm itself of these measures which are among the minimum needed for any sort of real economic development, he said

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