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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