jpepa: according to them (in laymen's term)

“Too much hysterics and too little sane reasoning,” is how a colleague of mine described what is going on with respect to the hearings on the Japan-Philippine Economic Partnership Agreement (JPEPA). I agree. Time’s a-wasting.

The way the agreement’s opponents see it, the JPEPA is not only one-sided (in favor of Japan, naturally), but the Japanese government is doing this in order to ensure that it can use the Philippines as a dumping ground for all its toxic wastes. Which is why, their story goes, the negotiations were in secret, and copies of the agreement were withheld from the public.

But there is another side of that story, and it goes like this: the benefits of the JPEPA far exceeds the costs; there is no way the Philippines can be used as a dumping ground (in fact, the Philippines is exporting some of its toxic wastes to Japan); the negotiations, which took place over a two-year period, were never secret; and the draft agreement has been available on the Internet since sometime the end of 2003/beginning of 2004. And the agreement is renegotiated every five years anyway.

The history of the JPEPA starts, I am told, with Japan’s entering, rather late, into the bilateral Free Trade Agreement (FTA) game. Previously, it preferred multilateral or unilateral action, but the emergence of China as a potential rival for leadership in East Asia, spurred it toward the so-called Comprehensive Economic Partnerships (CEP) or Closer Economic Relations (CER), which are more than just trade agreements. So the JPEPA idea was crystallized in time for President Gloria Macapagal-Arroyo’s 2002 state visit to Japan.

Please note that the Philippines was the first country (after Singapore) with which Japan pursued the idea. But it has since entered into the same kind of economic partnership agreements with Malaysia, Thailand (which will be in force by November of this year) Indonesia and Brunei -- with no problems at all. In fact, with Singapore, the five-year period is already up. What’s more, the agreement with Vietnam is pretty close to completion. And here we are, left at the starting post, with everybody moving in front of us.

What is the basis for the conclusion that JPEPA’s benefits to us far exceed the costs? These issues were studied by a team of researchers from various institutions under the auspices of the Philippine Institute for Development Studies (PIDS). I understand the accusation has been made that the PIDS, having been financed by the Japanese aid agency, Japan International Cooperation Agency, was partial to Japan. That is another example of ad hominem arguments (you can’t win on the issues, so attack the personalities). The PIDS is a government think tank, whose work is both nationally and internationally recognized. Moreover, anyone who doubts its independence and integrity has only to look at the policy research it has done, which pulls no punches, even during the Ferdinand Marcos dictatorship (of course, the language was couched rather diplomatically -- but the conclusions were still obvious).

In effect, what was found is that the JPEPA will cost the Philippines, in the form of direct foregone revenue (because of tariff reductions), something like P3.7-P4.2 billion a year. There are also costs to the bureaucracy, but these are minimal, because most of what the government should do would have been done with or without the JPEPA -- besides, the cooperation initiatives would entail government counterpart funding and would thus be limited to our own domestic absorptive capacity, taking on first the identified priority areas we could handle.

The benefits the country will derive from the JPEPA have been estimated to be anywhere between P6.5 billion to P110 billion based on current GDP figures, due to an improved investment climate (projected foreign direct investment from Japan amounting to P365 billion, plus more than 200,000 jobs, increasing as Japanese investors become comfortable and familiar with local partners). The studies also show an overall positive impact on poverty reduction (Metro Manila benefits most).

In the agreement, because of zero tariffs on both sides, the Philippines will now be open to a free flow of agricultural imports from Japan, and vice versa. Think of it, dear reader. What Japanese agricultural goods can we afford to buy? (Last time I was in Japan, a cherry cost the equivalent of $2.) On the other hand, what agricultural goods from the Philippines can the Japanese not afford to buy? Who do you think will benefit more?

With respect to services, the Japanese have opened their labor market for nurses and caregivers -- a landmark decision for them -- but the market will be filled, if we wait too long, by Indonesians and other ASEAN countries that already have an economic partnership agreement with Japan.

Now about the environmental issue -- the fear that we are going to be made a dumping ground for Japanese toxic wastes: As mentioned above, it is the Philippines that is sending toxic wastes to Japan, because we don’t have the technology to manage them. Sure, the tariffs on imported wastes will be zero. But that is irrelevant -- because their importation is banned (by international as well as national fiat). And in any case, my understanding is that Japan has signed a side letter making that even clearer.

Bottom line: The JPEPA is worth it. In fact, we can’t afford not to sign, because with everyone else but us on board, Japan will bring its business to them, and we may even lose what we already have. Is that what we really want?