SENATE RATIFICATION OF PHILIPPINES-JAPAN FREE TRADE

UNCLAS SECTION 01 OF 02 MANILA 002133 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: SENATE RATIFICATION OF PHILIPPINES-JAPAN FREE TRADE AGREEMENT REMAINS INCOMPLETE REF: 06 Manila 03820 ¶1. Summary. (SBU) The Japan-Philippines Economic Partnership Agreement (JPEPA),signed in September 2006, remains under review in the Philippine Senate. Philippine and Japanese government officials have varying estimates on the timeframe for its ratification. Some Senators still have constitutional concerns regarding some of the JPEPA's provisions, but Philippine government officials from the Executive Branch and most Philippine senators believe that these concerns were addressed by the recently concluded exchange of notes between the Governments of Japan and the Philippines, which the Philippine side considers binding. End summary. Senate Ratification Process -------------- ¶2. The Japan-Philippines Economic Partnership Agreement, the first bilateral free trade agreement of the Philippines (JPEPA),signed in September 2006 (reftel),is currently undergoing ratification in the Philippine Senate. According to an interlocutor at the Presidential Legislative Liaison Office at the Senate, three senators have formally interpolated, directing queries to Senate Trade and Commerce Chair Mar Roxas on the specific benefits and advantages on trade that the country will generate, and the repercussions if the Philippines does not ratify the treaty. Interpellations on JPEPA's constitutional aspects will go to the Committee on Foreign Relations, whose chair is Senator Miriam Defensor-Santiago. After the close of the debate, the treaty shall be voted upon and if approved will pass to third reading. Senate Committee Hearings and the Committee Report -------------- -------------- ¶3. (U) The Committees on Foreign Relations and Trade and Commerce conducted a series of joint hearings on JPEPA through the second half of 2007. Various stakeholders, including different government agencies from the executive branch, as well as representatives from non-government organizations, industry sector, academia, and trade experts presented position papers. The committees then prepared a joint report on the JPEPA recommending ratification. This report has circulated for signatures among the senators who are members of the Senate Foreign Relations Committee and Senate Trade and Commerce Committee. Fourteen of the twenty senators on the two committees have signed the report. Senate Ratification Timeframe -------------- ¶4. (SBU) Philippine government officials in the executive branch, the Senate, and Japanese embassy officials have differing estimates on the timeframe for the ratification process of the JPEPA. Trade Undersecretary Thomas Aquino estimates the process to take a month, while Japanese embassy officials sees ratification before the Philippine Congress adjourns in October. Senate staffers we have spoken to do not estimate ratification of JPEPA before December. Constitutional Concerns -------------- ¶5. (U) Senator Miriam Defensor-Santiago, Chair of the Senate Foreign Relations Committee, delivered her sponsorship speech last month. Until early this year, she advocated conditional ratification of the treaty, pointing to provisions in JPEPA that she said violated the Philippine Constitution. She warned that after ratification in the Senate, the treaty's constitutionality would be challenged in the Philippine Supreme Court. Thus, if the Supreme Court says that the treaty is unconstitutional, then the Philippines would not be able to enforce it. Exchange of Notes Addresses Issue of Constitutionality -------------- -------------- -------------- ¶6. (U) However, Senator Santiago as well as Philippine trade and foreign affairs officials believe that with the recently concluded exchange of notes between the Japanese and the Philippine government through Foreign Affairs Ministers Alberto Romulo of the Philippines and Masahiko Komura of Japan, questions and issues raised on constitutionality of the JPEPA have been addressed and corrected. ¶7. (SBU) The exchange of notes, facilitated by Philippine Trade Secretary Peter Favila and Undersecretary Jake Lagonera of the Office of the President, was carefully worded in order to avoid the need for JPEPA to be re-submitted to the Japanese parliament as well MANILA 00002133 002 OF 002 as to satisfy the Philippine Constitution. According to Senator Santiago, this exchange of notes, which the Philippine government considers a binding part of the treaty, will uphold the Philippine constitutional provisions reserving certain economic activities to Filipinos. The Arroyo Administration believes the exchange resolves the main questions surrounding JPEPA's constitutionality, the central issue for the Senate. We would note that Japanese Embassy officials have told us that their government does not consider the notes binding. Comment -------------- ¶8. (SBU) It is too early to tell with certainty whether JPEPA will be ratified, though we would venture that it will eventually win a narrow ratification. The burden of convincing fellow Senators falls largely on the Chairs of the Foreign Relations and Trade and Commerce Committees. Senators Defensor-Santiago and Roxas will need to refocus attention on the concrete benefits that the treaty will reap. With half the Senate up for reelection in 2010, and several senators organizing presidential runs, nationalist electoral politics are already overshadowing the debate on the economic merits of JPEPA. End comment. KENNEY