VZCZCXRO5402
OO RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHML #2419 3010941
ZNR UUUUU ZZH
O 270941Z OCT 08
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2177
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCPDOC/USDOC WASHDC IMMEDIATE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION IMMEDIATE
UNCLAS MANILA 002419
SENSITIVE
SIPDIS
STATE FOR EAP/MTS, EAP/EP, AND EEB/TPP
STATE PASS USTR FOR BWEISEL, RBAE AND KEHLERS
STATE ALSO PASS USAID, OPIC
TREASURY FOR OASIA
USDOC FOR 4430/ITA/MAC
E.O. 12958: N/A
TAGS: ETRD EINV ECON PGOV PREL RP
SUBJECT: PHILIPPINES-JAPAN FREE TRADE AGREEMENT RATIFIED
REF: A) Manila 02133
1. (SBU) Summary: The Philippine Senate has ratified the Japan
Philippine Economic Partnership Agreement, the first bilateral free
trade agreement of the Philippines. The agreement elicited mixed
reactions from GRP officials, business and industry sectors, and
civil society groups. Nonetheless, the majority welcomed its timely
ratification given the global financial crisis and recent WTO
breakdown. The lengthy and tedious processes involved in the
negotiation and ratification of this agreement illustrate the
political challenge a bilateral U.S.-Philippine trade agreement
would represent to the Philippines.
Philippine Senate Ratifies JPEPA
---------------------------------
2. (SBU) On October 8, 2008 the Philippine Senate passed on third
and final reading a Resolution ratifying the Japan Philippine
Economic Partnership Agreement (JPEPA). Despite initial doubts
whether it would win Senate ratification, 14 senators voted for the
approval of the treaty, while only four voted against it.
3. (SBU) The ratified treaty is currently with the Department of
Foreign Affairs, for an exchange of notes with the Government of
Japan. Thirty days from the exchange of notes, the treaty will be
in force. The Embassy of Japan has made no official statement on
the ratification of JPEPA.
Mixed Reactions from JPEPA Stakeholders
---------------------------------------
4. (SBU) Led by President Gloria Macapagal-Arroyo, GRP officials
welcomed the ratification. Trade and Industry Senior Undersecretary
Thomas Aquino welcomed JPEPA's ratification and said that it will
double the growth rate of Philippine exports to Japan by 10 to 20
percent annually and will bring additional investments into the
country. Senator Mar Roxas, a co-sponsor of the ratification
resolution, said that the Philippine government and the private
sector must start working to maximize the opportunities resulting
from the agreement.
5. (U) A week after its ratification, anti-free trade groups and
civil society organizations filed a petition with the Supreme Court
to issue a temporary restraining order to prevent implementation of
JPEPA, and to annul the Senate's ratification of a treaty with
allegedly unconstitutional provisions.
6. (SBU) Business organizations, industry associations, and labor
groups strongly support JPEPA. They argue that it is in the best
interest of the country not to be left out of East Asian economic
integration, especially as most ASEAN nations are forging similar
bilateral deals with Japan. According to a manifesto issued by a
coalition of business groups and unions, "the gains that the
Philippines stands to get from the economic partnership far outweigh
feared losses foisted by its critics." Proponents also see
ratification of the JPEPA as a means of mitigating the effects of
the current global financial crisis and the failure of the DOHA
Round of trade talks to reach conclusion.
7. (SBU) A Philippine private sector observer said that JPEPA has
been a "practice FTA" to prepare for other, more rigorous and
comprehensive agreements like a potential U.S.-Philippine FTA. A
DTI interlocutor told econoffs that the JPEPA negotiations have
indeed been a learning experience. In particular, the GRP realizes
that it does not have the necessary staff and expertise to conduct
bilateral negotiations efficiently. Involved GRP agencies detailed
staff, but did not dedicate them solely to the task, and this
contributed to continuity breakdowns and a lack of follow-through
that complicated negotiations and led to some delays. In meetings
with Econoffs, Trade and Industry's Aquino has acknowledged a need
for greater capacity building for this purpose.
8. (SBU) Comment: JPEPA's tedious and lengthy process, from
negotiation to ratification, provided a glimpse of some of the
challenges that would face any future U.S.-Philippine free trade
agreement.
KENNEY