JPEPA

Notes from Prof. Merlin Magallona’s August 14 Senate Lecture on the
Constitutional and Legal Implications of the JPEPA1

Quotes from Prof. Merlin Magallona

"JPEPA is one of the most atrocious treaties I’ve ever seen."
"Its provisions provide for arrangements which are highly anomalous."
"The JPEPA is a crude intrusion in domestic affairs."

General Observations:
1. "The JPEPA is a step towards the re-integration of Philippine economy into the
Japanese industrial system."

• Japan has a national strategy of relocating its manufacturing industry from mainland Japan to East Asian countries; and now the Southeast Asian countries

• Industrial relocation is preferred instead of the importation of foreign labor. With this strategy, it is now a recorded fact that manufactured goods from its relocated industries exceed the imported goods sourced from non-Japanese producers of other countries.

* The Philippines’ extensive grant of the national treatment principle in the JPEPA raises an important question: if very little preference is extended to the Filipino vis-à-vis the Japanese investors, what is the value of being a Filipino in your own national economy?

2. "The Philippine government will function as an insurance company of the Japanese
investors."

• Note Article 96 of the JPEPA on the Protection from Strife
Protection from Strife

Each Party shall accord to investors of the other Party that have suffered loss or damage relating to their investments in the Area of the former Party due to armed conflict or state of emergency such as revolution, insurrection, civil disturbance or any other similar event in the Area of that former Party, treatment, as regards restitution, indemnification, compensation or any other settlement, that is no less favorable than the most favorable treatment which it accords to any investors.

2. Any payments made pursuant to paragraph 1 above shall be effectively realizable, freely convertible and freely transferable.

Specific observations and legal concerns:

1. Several provisions in the JPEPA prove that the executive branch, in negotiating and concluding the JPEPA, actually exercised non-delegated powers or powers not belonging to the executive branch. Several provisions indicate a blatant usurpation of Congressional Power.

2. It severely restricts the Congressional power of taxation; which one must note is
a plenary power. It restricts the Congress’ legislative powers. The
legislators must be wary of the following provisions found in the JPEPA text:

Article 4: Review of Laws and Regulations: Each Party shall examine the possibility of amending or repealing laws and regulations that pertain to or affect the implementation and operation of this Agreement, if the circumstances or objectives giving rise to their adoption no longer exist or if such circumstances or objectives can be addressed in a less trade-restrictive
manner.

Article 18: Elimination of other duties (3)
Each Party shall eliminate other duties or charges of any kind imposed on or in connection with the importation of originating goods of the other Party, customs duties of which shall be eliminated or reduced in accordance with paragraph 1 above, if any. Neither Party shall introduce other duties or charges of any kind imposed on or in connection with the importation of those originating goods of the other Party.

Article 20: Export Duties
Each Party shall exert its best efforts to eliminate its duties on goods exported from the Party to the other Party.

3. The Philippines’ extensive grant of national treatment, not only in the trade in goods chapter but also in the investments chapter, collides with Constitutional mandate on the preferential use of Phil products, labor, etc.

4. The Senate must be warned that Article 17 of the JPEPA integrates the GATT. With this provision, all concessions in the JPEPA will accrue to all members of the WTO via the MFN principle.

5. The Senate must be warned of JPEPA’s ability to enlarge Japan’s power of regulation over domestic affairs. All concessions made in favor of other trading partners, if more favourable to concessions made to Japan via the JPEPA, must be also be extended to Japan. Article 132 of the JPEPA provides:

Negotiations on Non-discrimination

In the event that a Party offers a non-Party any advantages of access to its government procurement market or any advantageous treatment concerning the measures regarding government procurement, the former Party shall consent to enter into negotiations with the other Party with a view to extending these advantages or advantageous treatment to the other Party.

Legal Problems in the JPEPA’s investment chapter:

JPEPA’s definition of a Party’s Area, has very dangerous implications. Note that Article 2 defines Area as:

with respect to the Philippines, the national territory as defined in Article I of its Constitution. The term "national territory" also includes the exclusive economic zone and the continental shelf to which the Philippines exercises sovereign rights or jurisdiction in accordance with its laws and regulations and international law;

and with respect to Japan, the territory of Japan, and the exclusive economic zone and the continental shelf with respect to which Japan exercise sovereign rights or jurisdiction in accordance with its laws and regulations and international law;

Note that the JPEPA does not qualify the meaning of the phrase " sovereign rights or jurisdiction." The United Nations Convention on the Law of the Sea provides:

Article56

Rights, jurisdiction and duties of the coastal State in the exclusive economic zone

1. In the exclusive economic zone, the coastal State has:
(a) sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to the seabed and of the seabed and its subsoil, and with regard to other activities for the economic exploitation and exploration of the zone, such as the production of energy from the water, currents and winds;
(b) jurisdiction as provided for in the relevant provisions of this Convention with regard to:
(i) the establishment and use of artificial islands, installations and structures;
(ii) marine scientific research;
(iii) the protection and preservation of the marine environment;
(c) other rights and duties provided for in this Convention.

2. In exercising its rights and performing its duties under this Convention in the exclusive economic zone, the coastal State shall have due regard to the rights and duties of other States and shall act in a manner compatible with the provisions of this Convention.

3. The rights set out in this article with respect to the seabed and subsoil shall be exercised in accordance with Part VI.

** Despite the UNCLOS’ limitation of the coastal state’s rights over the exclusive economic zone, the JPEPA opens up the possibility of investments and the exercise of other rights by the Japanese in non-covered areas; on the ground that the EEZ and the continental shelf are defined as part of the national territory as defined in Article 2 of the JPEPA.

What is the binding power of the side agreement on the toxic waste provisions?

Professor Magallona stated that the binding power of the side agreement must be discussed by the Senate. He raised the fact that this so-called side agreement is a product of an exchange of notes (i.e. an executive agreement that requires no Senate concurrence). "This is a very peculiar situation." He also said that the Senate must request for a clarification of the provisions and scope of the side agreement because in its current state, the interpretation of what constitutes toxic wastes seems to depend on the definitions of an unidentified Japanese law.

1 Notes created by IDEALS, Inc. For the Magkaisa Junk JPEPA Coalition