Stop the mad pursuit of Bilateral Free Trade and Economic Partnership Agreements!

We—farmers, fisherfolks, rural women, workers from the formal and informal sectors, and non-government organization belonging to the Stop the New Round! Coalition—express our strong opposition to government’s mad pursuit of bilateral free trade agreements particularly with Japan, China and the United States of America.

What’s the deal?

In the SNR! campaign on the WTO in 2003, we raised the issue of information disclosure. We demanded that negotiations in the WTO on possible new agreements, which would have far reaching implications on livelihoods and jobs, are matters of public interest. The negotiating agenda therefore of the Philippine government should be subjected to public scrutiny and debate.

Today, we raise a similar concern over the lack of transparency over these bilateral trade negotiations. Very few Filipinos know that the government is negotiating an economic partnership agreement with Japan, or is negotiating under ASEAN with China and India, or that studies have already been done on a possible US-Philippines Free Trade Agreement.

These agreements remain in the realm of government technocrats and the business community. Information and documents regarding these agreements have not been made available to the public to generate the kind of informed public debate over these agreements that we think is necessary. We do not know what is expected from deals with economic superpowers like China, Japan, India, and the United States under these bilateral and regional trade agreements. At the very least, the government should make an effort to let the people know what agreements we are entering into.

The dangers of bilateral FTAs

The public must be warned that the proliferation of bilateral free trade agreements is yet another alarming facet of the global trade liberalization agenda. Hidden from view by regional and global negotiations and considering their secrecy, they do not attract attention and scrutiny. Yet, they are being used as channels to get faster, deeper free trade and investment commitments than is possible and allowable in a malfunctioning World Trade Organization (WTO).

Bilateral negotiations are more daunting, wide-ranging and more detailed than the multilateral approach. As is often the case, highly developed economies, which have more resources and budget for marathon technical negotiations, enjoy the advantage in the bilateral talks and are able to maximize their interests.

The emerging trend is that the developed countries are more demanding in bilateral negotiations than at the multilateral level. In the area of services, the current model of EPA go further than the General Agreement in Trade and Services (GATS), which theoretically gives developing countries the option to gradually liberalize and to exclude some sectors, for example, the health and education sectors, from the liberalization process. EPAs, on the other hand, call for reciprocal and progressive liberalization of all service sectors as soon as possible. On the other hand, only a few developing countries committed themselves to the deregulation of the services sector under the WTO.

Through the EPAs and bilateral free trade deals, developed countries are trying to bring in new issues (e.g., investment, transparency in government procurement, competition policy and trade facilitation), which were roundly rejected during the WTO negotiations. In fact, the rejection of these new issues led to the collapse of the Cancun negotiations as the developing nations did not want to negotiate on new issues before the old issues have been exhaustively settled.

The case of JPEPA

The negotiations over a Japan-Philippines Economic Partnership Agreement (JPEPA) is now nearing completion. Unfortunately, the terms and documents being negotiated under JPEPA (especially the list of product coverage) and other free trade deals in the pipeline are not publicly available. The JPEPA negotiating process lacks transparency and is unfair! It is disturbing the way the Philippine government has been fast-tracking this highly secretive negotiation process.

Given the dearth of information, civil society participation in these emerging trade agreements is sorely lacking. Apart from some token consultations with select private sector stakeholders, government has not provided any venue for more substantive discussions and deliberations on these important trade issues and developments. As a result, very few people even know about these bilateral and regional trade agreements.

Possible Constitutional Violations

But given its “FTA plus” nature, the Japan-Philippine Economic Partnership Agreement (JPEPA), is in danger of contravening or virtually supplanting at least five provisions of the Philippine Constitution:

  1. Article II, Sec. 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.
  2. Article XII, Section 1. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.
  3. Article XII, Section 10. 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.
  4. Article XII, Section 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.
  5. Article XII, Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity.

National treatment—the requirement that foreign investors be treated no less favorably than domestic investors, regardless of the circumstances—is a fundamental principle of EPAs and bilateral free trade pacts. This provision limits the array of options and actions that could be taken by national governments in protecting their economies. Thus, the EPA with Japan will override not only our laws governing foreign investment but the Constitution itself. EPAs will virtually “denationalize” the control of land, natural resources, and public services such as water, energy, health, education, and other vital public services. By extending “national treatment” to foreign investors, the agreement would lead to the near total loss of national control over investment and deprive government of its ability to conduct industrial policy and undertake strategic planning.

Government’s failure to adequately inform the public so that they can have meaningful participation in trade negotiations is in itself a violation of the Constitution. We are committed to promote a broad process of participation by all stakeholders, which allow them to become informed so that they can analyze cost and benefits, develop proposals and present these to government officials.

The false choice between Bilateral agreements and WTO agreements

Raising our serious concern over the bilateral approach does not imply, however, that we are amenable or contented with the current multilateral approach to trade liberalization under the WTO. In fact, the two approaches complement each other. It is not really a question of what approach is best or optimal to promote and facilitate trade. Needless to say, both approaches espouse the same neo-liberal, free trade dogma that threatens the viability and survival of small and large enterprises.

It is in this context that the Stop the New Round! Coalition reiterates its opposition to further trade and trade-related liberalization whether through bilateral and regional trade agreements or the WTO.

We urge the government to seriously rethink its mindless pursuit of bilateral free trade agreements. Initial government projection shows that the government stands to lose PhP16.9 billion in foregone revenues starting this year (PhP15.37 billion in potential Customs duties and PhP1.54 billion in value-added tax payments) if the provision calling for the tariff elimination of select commodities under the JPEPA would be approved. It is indeed incomprehensible why the government rabidly pursues bilateral free trade while the country is experiencing its worst fiscal crisis in decades.

We are calling on the Philippine Congress to investigate the economic impact of the various bilateral free trade deals being pursued by the Executive branch. The Legislative branch must now act to defend Philippine national interests not only in the WTO negotiations, but more importantly in bilateral and regional free trade talks, particularly in the ASEAN Free Trade Area (AFTA), the Japan-Philippine Economic Partnership Agreement and the RP-China Free Trade Agreement. The protection of domestic markets and local sources of livelihood should be the guiding principle in determining the Philippines’ decision whether or not to participate in any form of trade agreement.

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