Furor Over JPEPA: Will Davao’s Banana Workers Benefit From It?

Published on November 26, 2006

A controversial bilateral trade agreement between the Philippines and Japan promises enormous economic opportunities for Filipinos, among them agricultural producers such as the banana workers and growers in the Davao regions. That, at least, is the Arroyo administration’s line. What they’re not telling the public is that, apart from the environmental hazards it poses, the agreement is a one-sided trade pact that benefits the Japanese more. The agreement, according to some economists, will also set a precedent that will further erode the Philippine economy. Davao Today’s Carlos H. Conde reports.

MANILA — On paper, it’s a remarkable document: Manila and Tokyo will open up trade by lowering tariffs on more than 11,000 commodities from both countries. For an export-oriented, import-dependent country like the Philippines, it presents enormous opportunities.

And for a region like Davao that produces so much agricultural products for the Japanese market, such as bananas, the potentials are great.

Or so the governments of both countries want Filipinos to believe.

The document, called the Japan-Philippines Economic Partnership Agreement (JPEPA), is the first bilateral trade agreement Manila signed with another country since the end of World War II. Japan is the Philippines’s top trading partner and is also the source of much of its development aid. The Philippines, on the other hand, is Japan’s major source of mainly agricultural products, like bananas and pineapples, most of it from the Davao regions in Mindanao.

JPEPA is one of the many such agreements Japan has entered into lately, which are part of what is now a trend among developed countries — primarily Japan, the US and those in Europe — to negotiate bilateral trade pacts following the collapse of the Doha round of negotiations at the World Trade Organization.

Critics have always said that bilateral trade agreements are often negotiated in secrecy. This agreement, they allege, is no exception.

Signed in September by Philippine President Gloria Macapagal-Arroyo and then Japanese Prime Minister Junichiro Koizumi, practically nothing was heard about JPEPA – until environmentalists came out last month to denounce it because, according to them, it will allow the entry to the Philippines of Japanese toxic wastes.

More Insidious Aspect

But the environmental and health hazards JPEPA poses is just one problem, critics say. They point out that a more insidious aspect of the agreement is that it will benefit the Japanese more than Filipinos.

JPEPA “is biased for Japanese imports,” said Jose Enrique Africa, an economist and head of research at Ibon Foundation, a Manila-based socio-economic research group.

While Manila agreed to immediately eliminate tariffs on key Japanese products — automobile and automotive parts, electrical and mechanical appliances for industrial use, and household appliances – immediately after the signing of the agreement, Tokyo will not do the same for key Philippine products for export to Japan, such as fruit and fruit juices, Africa said.

“Japan refused to give immediate zero-tariffs to Philippine bananas and pegged the tariff rate at 10 percent to 20 percent,” Africa said. He added that Japan “only offers a removal of tariffs 11 years after the agreement comes into force and promising to lower tariffs every year until the eleventh year.”

Manila also failed to convince Tokyo to open the Japanese market for tuna, cods and herrings, which are major Japanese imports. “Japan will only start talks on tariff reductions for Philippine tuna five years after the JPEPA takes effect,” Africa said, referring to the agreement. Japan, he said, “is also not committed to removing quota restrictions and reducing tariffs” on such Philippine products as herrings, cod, sardines and mackerel.

Japan’s Benefit

Another criticism of JPEPA centers on the contention that it would benefit Japanese corporations operating in the Philippines, such as car manufacturers like Toyota, Honda, and Mitsubishi that dominate the local automotive industry. These companies, Africa said, would benefit from lower production cost because of reduced duties on imported raw materials and parts.

As for the supposed benefits to Filipino agricultural producers, Africa said this is misleading — most of the bananas from Davao, for example, are exported to Japan by Japanese companies such as Sumitomo. These companies and their contract growers or affiliates in Mindanao, he pointed out, will benefit from any lowered tariff of these bananas, not the farmers and plantation workers.

Africa estimated that the Philippines will lose nine billion pesos of tariff revenues a year under JPEPA.

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