Thursday, April 30, 2009

Philippine Perspective: Legal Issues and Objections to the ASEAN-Australia-New Zealand FTA

1. The agreement provides no assurance in the facilitation of trade in goods.

Chapter 6, Standards, Technical Regulations and Conformity Assessment Procedures, provides that nothing in this Chapter shall limit the right of a Party to prepare, adopt and apply standards, technical regulations and conformity assessment procedures only to the extent necessary to fulfill a legitimate objective. Such legitimate objectives are, inter alia, national security requirements; the prevention of deceptive practices; protection of human health or safety; animal or plant life or health; or the environment.

What is the limitation to this provision? What common standards shall be observed?

In interpreting the provisions of the agreement, it appears that parties have the right to adopt their own standards, technical regulations and conformity assessment procedure. Parties therefore have blanket authority to refuse market access of goods coming from another party on the basis and pretense of independent policy to fulfill legitimate objectives.

2. Contrary to what FTAs should be, the provisions of the AANZFTA in trade in services provide no preference to facilitate the free movement of natural persons of the parties.

Paragraph 3, Article 4, Chapter 9, of the agreement gives parties the right to deny entry of natural persons if they fail to follow immigration prescribed procedures and all the eligibility requirements for entry to the granting party. Article 7, Chapter 9, gives the State the full and wide discretion to discriminate the entry of natural persons by not preventing the Parties from applying measures to regulate the entry of natural persons of another Party into, or their temporary stay in, its territory, provided that such measures are not applied in such a manner as to nullify or impair the benefits accruing to another Party under said Chapter or to unduly impair or delay trade in goods or services or the conduct of investment activities under this Agreement.

As to what are considered nullification or impairment of the benefits under the Agreement, or unduly impairing or delaying trade in goods or services or the conduct of investment activities, are not clearly defined in said agreement. It only provides that the sole fact of requiring persons to meet eligibility requirements prior to entry to a Party shall not be regarded as nullifying or impairing benefits accruing to another Party, or of unduly impairing or delaying trade in goods or services or the conduct of investment activities under this Agreement.

3. The Agreement may directly violate investment provisions of the Constitution relating to acquisition and ownership of land, use of marine resources and the extraction and exploitation of natural resources.

Investment provisions of the agreement allow the acquisition and control by an investor of movable and immovable properties, and other property rights subject to reservations to be made by each government (Chapter 11). It also allows any concession to search for, cultivate, extract or exploit natural resources. And it provides for the application of national treatment in the acquisition, control and exploitation of said properties.

What are the limitations to this Chapter? What are the limitations reserved by the Philippine government? As of this moment, the government has not yet produced any reservation list.

In line with this, it is our position that the government shall reserve the following:

a. 1987 Constitution specifically but no limited to Article 12, the National Economy and Patrimony. The government shall reserve specific provisions of Article 12 but not limited to the following:

· Section 2- Natural resources shall not be alienated with the exception of agricultural land. The exploration development and utilization of natural resources shall be under the full control and supervision of the State. The State shall reserve the use and enjoyment of marine wealth exclusively to Filipino citizens.

· Section 3- Private corporation or association may not hold agricultural lands except by lease for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead or grant. And taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor.

· Section 5- The State, subject to the provisions of this Constitution and national development policies and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social, and cultural well-being. The Congress may provide for the applicability of customary laws governing property rights and relations in determining the ownership and extent of ancestral domain.

· Section 10- The Congress shall reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

b. Philippine domestic laws specifically but not limited to the following:

· RA 8371, Indigenous Peoples’ Rights Act

· RA 7042 as amended by RA 8179, Foreign Investment Act

· Foreign Investment Negative List

· RA 7652, Investors’ Lease Act

4. As regards provisions on intellectual property rights, the agreement obliges a party to be bound to a number of international agreements on IPR even if they are not a signatory to said IPR international agreements.

Basic is the principle in law that contracts are binding only those who are privy to said contracts. Therefore, obligation arising from contracts cannot be enforce against parties who are not privy to said contracts.

Chapter 13 of the agreement, allows a party, who is a signatory to other international agreements on IPR, to seek other parties to support its implementation. Said IPR international agreements are as follows:

(a) the Patent Cooperation Treaty 1970; (Philippines is a signatory)
(b) the Strasbourg Agreement Concerning the International Patent Classification 1971; (Philippines is not a signatory)
(c) the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure 1977; (Philippines is a signatory)
(d) the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks 1989; (Philippines is not a signatory)
(e) the Patent Law Treaty 2000; (Philippines is not a signatory)
(f) the International Convention for the Protection of New Varieties of Plants 1991; (Philippines is not a signatory)
(g) the TRIPS Agreement; (Philippines is a signatory)
(h) the Singapore Treaty on the Law of Trademarks 2006; (Philippines is not a signatory)
(i) the WIPO Copyright Treaty 1996; and
(j) the WIPO Performances and Phonograms Treaty 1996.

5. The agreement defines Intellectual Property Rights by including rights in plant varieties. This provision is inimical to the interests of farmers who have inherent rights as breeders of plants since time immemorial.

By including National Treatment provisions on intellectual property, laws such as RA 9168 or the Plant Variety Protection Act of 2002 will now be extended to parties under the AANZFTA. Thus, creating a monopoly on the development of seeds by transnational corporations.

6. The agreement sets limitation on the state’s power of taxation. The Chapter 15 provides that the agreement shall only grant rights or impose obligations with respect to taxation measures where:

(a) corresponding rights and obligations are also granted or imposed under the WTO Agreement;
(b) they are granted or imposed under Article 8 (Transfers) of Chapter 11 (Investment); or
(c) they are granted or imposed under Article 9 (Expropriation and Compensation) of Chapter 11 (Investment).

Parties are therefore not allowed to impose taxation measures outside these provisions.

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