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Cablegate: Senate Ratification of Philippines-Japan Free Trade

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OO RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHML #2133/01 2590132
ZNR UUUUU ZZH
O 150132Z SEP 08
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1820
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

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

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