JPEPA Exchange Of Notes: A Trojan Horse Exposed

Posted on 05 September 2008 by admin

Bagong Alyansang Makabayan
September 5, 2008

After many delays, Manila and Tokyo have finally produced the “exchange of notes”. The much awaited document, Senator Miriam Santiago said, will supposedly correct the constitutional flaws of the controversial Japan-Philippines Economic Partnership Agreement (JPEPA) and seal its ratification by the Senate.

Only five pages, the actual document is composed of: (1) the diplomatic letter of Foreign Affairs secretary Alberto Romulo to Japanese foreign minister Masahiko Koumura, dated August 22, identifying four major points of “shared understanding” between the Philippines and Japan and (2) Masahiko’s reply to Romulo, dated August 28, citing verbatim the points he raised and a statement confirming the shared understanding.

The first two points of the shared understanding refer to general statements pertaining to the parties’ commitment to respect each others’ national laws, including their constitutions; and to implement the JPEPA in accordance with each other’s respective charters.

Point number three, meanwhile, enumerates the provisions of the 1987 Constitution that the Philippines clarified shall not be amended by the JPEPA. These include provisions in Article II (Section 15), Article XII (Sections 1, 2, 3, 7, 8, 10-12 and 14), Article XIV (Sections 4 and 12), and Article XVI (Section 11). The provisions cover, among others, the protection of Filipino enterprises from unfair foreign competition; restrictions on foreign ownership of public lands and in the exploration and exploitation of natural resources; limitation to Filipinos of certain investment areas; preferential rights, privileges and concessions granted to Filipinos covering the national economy and patrimony; regulation of foreign investments; regulation of technology transfer and promotion; and the promotion of preferential use of Filipino labor, domestic materials, and locally produced goods.

The need for an exchange of notes arose from the indisputable fact that the JPEPA seriously violates several provisions of the 1987 Constitution. Santiago, main sponsor of the treaty and a self-styled constitutional expert, recognized that ratifying the JPEPA in its present form invites the risk of an eventual rejection by the Supreme Court (SC).

The constitutional provisions listed in the exchange of notes contradict the bilateral treaty’s terms on National Treatment (Japanese investors will enjoy the same rights and privileges reserved to Filipinos), Most Favored Nation (Japan will get the same most favorable treatment that the Philippines accorded to other countries), and prohibition of performance requirements (Japanese investors could not be forced to transfer technology or to procure locally their production needs).

Santiago described the exchange of notes as an agreement wherein “Japan” promises explicitly and specifically that it will respect the nationalist provisions of the constitution”. She also called the document an “integral” part of the JPEPA, which under the 1969 Vienna Convention on the Law of Treaties can be considered as a treaty “when the parties agree”.

With this document, the chair of the Senate foreign relations committee and her co-sponsor Senator Mar Roxas, head of the trade and commerce committee, are confident that the JPEPA will surely pass scrutiny by their colleagues. By October, they hope to muster the needed two-thirds vote and complete the ratification process – more than two years after the JPEPA was signed by Gloria Arroyo and then Prime Minister Junichiro Koizumi.

But despite all the hullabaloo about the exchange of notes, including Roxas’s refusal to defend the JPEPA unless it was produced and Santiago’s “no exchange of notes, no treaty” stance, the document is nothing but a general statement of commitment from Japan to respect the1987 Constitution. It could have been a stronger and more binding document if it explicitly amended the questionable provisions of the JPEPA, as originally proposed by retired SC justice Florentino Feliciano who first raised the constitutional issues during one of last year’s Senate hearings.

In fact, the exchange of notes could be a Trojan Horse just awaiting the opportune time to attack. A closer look at point number four of the shared understanding reveals the hidden intentions of the document:
“4. The present exchange serves only to confirm the interpretation of and does not modify the rights and obligations of the Parties under the provisions of the JPEPA.” (emphasis added)

In other words, the unconstitutional provisions of the agreement remain and will still bind the Philippines once the JPEPA gets ratified. The exchange of notes did not resolve the constitutional issues but in effect just deferred the question to be tested by actual legal conflicts over the treaty’s implementation that may arise in the future. This places the Constitution under unnecessary duress because under the Vienna Convention on the Law of Treaties, the Philippines could not raise unconstitutionality for failure to comply with its JPEPA obligations.

Point number three of the exchange of notes, in reality, does not guarantee that the JPEPA will not undermine the 1987 Constitution. It simply clarified that the bilateral agreement will not amend the pertinent constitutional provisions. But it does not prevent Japan, for example, to insist before an international court on its right accorded by the JPEPA to fully own local public utilities because the Philippines did not exempt it from Article 89 (National Treatment). Another potential area of legal tussle is the prohibition of performance requirements and future non-performing measures. What the Philippines reserved in the JPEPA are existing measures, thus undermining the constitutional mandate of Congress to restrict foreign investments in certain economic activities in the future when the national interest requires.

The Trojan Horse in the exchange of notes is also exposed by the calculated use of the phrase “shared understanding”. As such, Japan can argue in the future that as a simple “shared understanding” and not a categorical “agreement”, the exchange of notes is merely a diplomatic note that does not modify anything in the main treaty and does not bind Japan to specific legal obligations. As a matter of fact, it is equivalent to the diplomatic correspondence between the foreign affairs heads of Japan and the Philippines in May 2007 confirming the former’s vow not to dump toxic wastes in the country. But despite this exchange of diplomatic notes, the liberalization of toxic waste trade between the parties under the JPEPA remains, which creates the condition for increased exports of Japanese hazardous materials to the Philippines.

Despite Santiago’s relentless propaganda that the JPEPA will be ratified by the Senate, a host of issues about the treaty remains unresolved. The exchange of notes itself is viewed differently by some senators. According to Senator Francis Pangilinan, the exchange of notes is in effect a renegotiation of the original JPEPA and said that a bloc of four to five senators is forging a consensus that renegotiation is the best option. Senator Aquilino Pimentel, on the other hand, pointed out that aside from constitutional issues, there are also equally important trade issues that must be scrutinized by the Senate.

The battle against the JPEPA is certainly far from over. Advocates of just and mutually beneficial economic agreements and defenders of national patrimony and sovereignty must be more aggressive in convincing at least eight senators to firmly reject the obviously defective economic treaty. With a host of bilateral economic deals, including one with the US, in line, the outcome of this campaign takes a higher level of strategic importance. (END)

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