Loren, Pia raise eyebrows over Japan deal benefits

August 16, 2007 - (Manila Standard Via Thomson Dialog NewsEdge) Senator Loren Legarda has raised questions on the benefits the Philippines will derive from an economic partnership agreement with Japan.

Legarda, chairman of the committee on economic affairs, revealed that government agencies floated various estimates ranging from P6 billion to P221 billion.

Senator Pia Cayetano also appeared unimpressed by the potential gains from the controversial deal. Cayetano, chairman of the Senate committee on environment, said that the deal should be scrapped because of the unclear provision on toxic waste and hazardous wastes. It's still a no-deal.

Legarda and Cayetano both posed many questions on the real impact of the deal, officially called Japan-Philippines Economic Partnership Agreement.

Legarda said the Department of Trade and Industry put the deal's value at P221 billion, the National Economic Development Authority gave an estimate of P168 billion and the Philippine Institute for Development Studies, P6 billion.

Legarda said the large discrepancy in the projected economic gains from the JPEPA is baffling. Which is it? Why the huge disparity in the estimates? Is this a case of two separate agencies using different matrices? Or are the two agencies simply making wild `guestimates'? Why do their forecasts appear too rosy when compared to other projections?

Citing official records, Legarda said the trade departent is counting on the agreement to kick in P221 billion in the total value of goods and services or the gross domestic product.

Neda pegged the estimated economic gain at P168 billion or P53 billion lower than the trade department's appraisal.

PIDS said that the agreement would result in a minimal, albeit still positive P6.04-billion increase in GDP, she said.

The institute, a non-stock, non-profit government research institution engaged in long-term, policy-oriented research, predicted that the accord would contribute less than one-tenth of 1 percent (00.09 percent) to GDP, or only P6.04 billion.

The Neda and DTI should reconcile their figures and be able to clearly present a more acceptable estimate. They should be able to demonstrate realistic and sensible assumptions. We have to examine closely their premises, Legarda stressed.

For instance, she said, the two agencies must be able to assert that the farmers will be able to export more produce to Japan.

To illustrate, if we assume we will be able to sell an additional $100 million worth of fresh tropical fruits, we not only assume we have the best market share for these products in Japan now, we also assume our planters are in a position to quickly step up production to be able to capture the bigger market right away, Legarda said.

The Philippines is Japan's major source of tropical fruits, supplying the market with 79 percent of its bananas, 98 percent of its pineapples, 61 percent of its mangoes and 48 percent of its papayas, according to the institute.

Neda sees the agreement boosting GDP by 2.0 to 2.5 percent. This translates into an increase of P134 billion to P168 billion, based on this year's projected GDP of P6.712 trillion.

The trade department expects the deal to add 1.75 to 3.03 percent to GDP, or an increment of P116 billion to P221 billion.

As this developed, Cayetano questioned the legal significance of the side note exchanged between Japan Foreign Minister Taro Aso and Foreign Affairs Secretary Alberto Romulo last May.

Cayetano said the side note does not solve the toxic and hazardous substances issues surrounding JPEPA.

Cayetano made this assertion after Philippine Ambassador to Japan Domingo Siazon went to the Senate last Monday to lobby for the ratification of the agreement.

It's actually a letter of Mr. Romulo to Minister Aso, indicating that as part of the negotiation--in line with the Basel Convention--that the export of hazardous wastes to the Philippines will have to follow the Basel Convention and domestic laws. And Foreign Minister Aso replied that yes, we accept that and future laws, Siazon said.

I think it's premature to conclude that the side note already puts a closure to the toxic waste issue, even as the Senate has yet to fully deliberate on the other portions of the agreement, Cayetano said.

A more definite and legally binding commitment between the two governments, she said, would be for both governments to ratify the Basel Ban Amendment, which prohibits the movement of toxic waste from rich to poor countries in the guise of recycling.

Ratifying the Basel Ban Amendment would provide greater protection to the Philippines from becoming a dumping ground for toxic wastes, not only from Japan, but also from other industrial countries, Cayetano said.

The Basel Convention restricts the movement of toxic waste from industrialized to poor countries, but the Basel Ban Amendment plugs the former's loopholes by prohibiting toxic trade for any other purpose, including reuse and recycling.

The Philippines and Japan are among the signatories to the Basel Convention but both have yet to ratify the Basel Ban Amendment.