Constitutionality of Jpepa

Here’s former Chief Justice Artemio Panganiban’s take on the Constitutionality of JPEPA published in his With Due Respect column in the Philippine Daily Inquirer last November 4, 2007.

Constitutionality of Jpepa
By Artemio V. Panganiban

These coming days, the Senate will continue its hearings on the Japan-Philippines Economic Partnership Agreement (Jpepa). During previous hearings, many senators expressed their frustration, saying that the Jpepa stands little chance of ratification, because of many constitutional and legal flaws raised by law scholars led by retired Justice Florentino P. Feliciano.

What Jpepa is. Economic partnership agreements (EPAs) are bilateral treaties entered into by Japan to promote mutually-agreed economic goals with the partner country, with the ultimate aim of “fostering the establishment of an East Asian Community (EAC),” comparable to the European Union (EU) or the Free Trade Agreement of the Americas (FTAA). The first EPA concluded by Japan with an Asean member was with Singapore in November 2002.

Discussions with the Philippines started in 2002 but it was only on Sept. 9, 2006 that the Jpepa was signed. The Japanese Diet promptly approved the treaty, but it is still pending ratification by the Philippine Senate. The Japan-Malaysia EPA became effective in July 2006 after its ratification by the Parliaments of both countries. This year, similar EPAs have been signed by Japan with the other major Asean countries: Thailand in April, Brunei in June and Indonesia in August.

Essentially, the EPAs involve the lowering of tariffs to promote trade between the signatories. But in reality, these treaties impose far more obligations and intrude more deeply into national economic policies. According to a Japanese scholar, they are economic intermarriages that will eventually lead to the formation of the EAC with Japan as the dominant partner.

World Trade Organization (WTO) Secretary General Pascal Lamy hinted during a forum at the Asian Institute of Management last August that the EPAs are valuable to Japan not only to facilitate the entry of Japanese goods and to protect Japanese investments but also to establish Japanese ascendancy in East Asia and to set up a counter foil to EU and FTAA in the global economic arena.

Legal obstacles. For Japan, what is at stake is the fulfillment of its envisioned regional goal; but for the Philippines, it is the primacy of its Constitution. Per Justice Feliciano, the constitutional problem is not the fault of Japan; it arose from the failure of our negotiators “to make plain, simple and comprehensive reservations for the obligations imposed in the Investments Chapter” of the treaty.

Similarly, former Sen. Wigberto Tañada assails the Jpepa for the alleged Philippine failure to assert the constitutional limits on foreign ownership of certain businesses, like real estate, mass media, advertising, and public utilities. Additionally, “Jpepa shackles our legislature—and our executive department as well—in initiating future protective or preferential measures…” to protect our economy. Furthermore, it “usurps the constitutional right of Congress to set tariff rates” because “Jpepa removes all tariffs for nearly 98 percent of all our tariff lines.”

Stated more simply, the Philippines failed to list down the investment areas in which Japanese (or other foreign) businessmen are not allowed by our Constitution and laws to engage in. As a consequence, the Jpepa—as the law between Japan and the Philippines—creates international obligations that are inconsistent with the Philippine legal order; and is thus unconstitutional.

Solutions to obstacles. Justice Feliciano proposes a renegotiation of the Jpepa to enable us to insert additional “Reservations and Exceptions” in Article 94 of the treaty by setting forth a “complete listing of all Philippine constitutional and statutory provisions … relating to investments … non-conforming” to the Jpepa and stating the right of Congress to enact future measures to implement the constitutional protection to Filipinos.

He likewise suggests an insertion in Article 18 suspending certain provisions of the treaty in case the Supreme Court issues a decision, or Congress passes a new law, adversely affecting the obligations of the Philippines.

For her part, Acting Justice Secretary Agnes Devanadera opines that the Jpepa is totally constitutional and should be ratified by the Senate in its present form. She says that new reservations “would not be feasible or necessary” because “Jpepa provides a list of areas where the Philippines is committed to allow the entry of Japanese investors. In sectors not specifically committed (like mass media), the Philippines is under no obligation to open its doors.”

With due respect, Secretary Devanadera’s unqualified endorsement of the treaty is fraught with danger. An eventual declaration of Jpepa’s unconstitutionality by our Supreme Court is not an impossibility, given the serious objections raised by Justice Feliciano and other constitutionalists. Such an eventuality is far worse than the Jpepa’s non-ratification in its present form. On the other hand, it may not be possible to renegotiate the treaty now, considering that the Japanese Parliament has already unanimously ratified it.

If, indeed, the Jpepa can no longer be renegotiated and modified expressly per the Feliciano proposal, the next best scenario that could pass constitutional challenge is a conditional or qualified ratification: the Senate ratifies the treaty on the understanding and interpretation that the Constitution is superior to any provision of the Jpepa and that the Philippines is not barred from applying current, or enacting future, legislations that implement our fundamental law.

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