VZCZCXRO5402
OO RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHML #2419 3010941
ZNR UUUUU ZZH
O 270941Z OCT 08
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2177
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCPDOC/USDOC WASHDC IMMEDIATE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION IMMEDIATE

UNCLAS MANILA 002419 
 
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: PHILIPPINES-JAPAN FREE TRADE AGREEMENT RATIFIED 
 
REF: A) Manila 02133 
 
¶1. (SBU) Summary:  The Philippine Senate has ratified the Japan 
Philippine Economic Partnership Agreement, the first bilateral free 
trade agreement of the Philippines.  The agreement elicited mixed 
reactions from GRP officials, business and industry sectors, and 
civil society groups.  Nonetheless, the majority welcomed its timely 
ratification given the global financial crisis and recent WTO 
breakdown.  The lengthy and tedious processes involved in the 
negotiation and ratification of this agreement illustrate the 
political challenge a bilateral U.S.-Philippine trade agreement 
would represent to the Philippines. 
 
Philippine Senate Ratifies JPEPA 
--------------------------------- 
 
¶2. (SBU) On October 8, 2008 the Philippine Senate passed on third 
and final reading a Resolution ratifying the Japan Philippine 
Economic Partnership Agreement (JPEPA).  Despite initial doubts 
whether it would win Senate ratification, 14 senators voted for the 
approval of the treaty, while only four voted against it. 
 
¶3. (SBU) The ratified treaty is currently with the Department of 
Foreign Affairs, for an exchange of notes with the Government of 
Japan.  Thirty days from the exchange of notes, the treaty will be 
in force.  The Embassy of Japan has made no official statement on 
the ratification of JPEPA. 
 
Mixed Reactions from JPEPA Stakeholders 
--------------------------------------- 
 
¶4. (SBU) Led by President Gloria Macapagal-Arroyo, GRP officials 
welcomed the ratification.  Trade and Industry Senior Undersecretary 
Thomas Aquino welcomed JPEPA's ratification and said that it will 
double the growth rate of Philippine exports to Japan by 10 to 20 
percent annually and will bring additional investments into the 
country.  Senator Mar Roxas, a co-sponsor of the ratification 
resolution, said that the Philippine government and the private 
sector must start working to maximize the opportunities resulting 
from the agreement. 
 
¶5. (U) A week after its ratification, anti-free trade groups and 
civil society organizations filed a petition with the Supreme Court 
to issue a temporary restraining order to prevent implementation of 
JPEPA, and to annul the Senate's ratification of a treaty with 
allegedly unconstitutional provisions. 
 
¶6. (SBU) Business organizations, industry associations, and labor 
groups strongly support JPEPA.  They argue that it is in the best 
interest of the country not to be left out of East Asian economic 
integration, especially as most ASEAN nations are forging similar 
bilateral deals with Japan.  According to a manifesto issued by a 
coalition of business groups and unions, "the gains that the 
Philippines stands to get from the economic partnership far outweigh 
feared losses foisted by its critics."  Proponents also see 
ratification of the JPEPA as a means of mitigating the effects of 
the current global financial crisis and the failure of the DOHA 
Round of trade talks to reach conclusion. 
 
¶7. (SBU) A Philippine private sector observer said that JPEPA has 
been a "practice FTA" to prepare for other, more rigorous and 
comprehensive agreements like a potential U.S.-Philippine FTA.  A 
DTI interlocutor told econoffs that the JPEPA negotiations have 
indeed been a learning experience.  In particular, the GRP realizes 
that it does not have the necessary staff and expertise to conduct 
bilateral negotiations efficiently.  Involved GRP agencies detailed 
staff, but did not dedicate them solely to the task, and this 
contributed to continuity breakdowns and a lack of follow-through 
that complicated negotiations and led to some delays.  In meetings 
with Econoffs, Trade and Industry's Aquino has acknowledged a need 
for greater capacity building for this purpose. 
 
¶8. (SBU) Comment:  JPEPA's tedious and lengthy process, from 
negotiation to ratification, provided a glimpse of some of the 
challenges that would face any future U.S.-Philippine free trade 
agreement. 
 
KENNEY