ASSESSING THE IMPACTS OF

ENVIRONMENTAL PROVISIONS IN RTAS

The Philippine Case: Japan-Philippines Economic Partnership Agreement

(JPEPA)

SAMUEL R. PEÑAFIEL (CESO III)

Regional Executive Director Department of Environment and Natural Resources

PHILIPPINES

01-02 June 2010, Paris

OUTLINE OF PRESENTATIOIN

I. Background on JPEPA

II. JPEPA Issues Prior to its Ratification A. Environmentally-Sensitive Products Covered in JPEPA

B. Resolution of JPEPA Issues

C. National Laws/Treaties Banning Entry of Hazardous Wastes

D. The Basel Ban Amendment

E. Commitment to Multilateral Environmental Agreements

III. Status of Implementation A. Activities after Ratification of JPEPA

B. The First Meeting of the Working Group on Energy and Environment Established under the Sub-Committee on Cooperation of the Agreement between Japan and the Republic of the Philippines for an Economic Partnership

C. Status of other Working Groups

IV. Impacts of Environmental Regulations on Trade/Investment A. Outcomes from Environmental Perspective

B. Outcomes from Trade Perspective

BACKGROUND ON JPEPA

JPEPA is a historic deal for the Philippines, arguably its

most important bilateral economic agreement in the

last 50 years, expected to deliver immediate benefits

to Filipino exporters from day one while promising

greater dynamic gains over the long term

The agreement covers the following chapters:

1. General Provisions

2. Trade in Goods

3. Rules of Origin

4. Customs Procedures

5. Paperless Trading

6. Mutual Recognition

7. Trade in Services

8. Investment

9. Movement of Natural

Persons

10.Intellectual Property

11.Government

Procurement

12.Competition

13.Improvement of the

Business

Environment

14.Cooperation

15.Dispute Avoidance

and Settlement

16.Final provisions

JPEPA ISSUES PRIOR TO ITS

RATIFICATION

Article 16 of the JPEPA on Classification of Goods states that: “The Classification of Goods in Trade shall be in conformity with the Harmonized System (HS).”

The HS is an international and uniform classification of all goods traded in the world, adopted by all countries. The description and coding system was adopted in the JPEPA negotiations.

This inevitably included hazardous waste products.

The provisions on hazardous products/wastes in the JPEPA are the same with Japan’s EPAs with Brunei, Indonesia, Malaysia, Singapore, and Thailand.

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WHAT ARE THE ENVIRONMENTALLY-

SENSITIVE PRODUCTS COVERED IN JPEPA? 1. JPEPA COVERS 5,975 SPECIFIC COMMODITIES OR TARIFF LINES. A TOTAL

OF 148 PRODUCTS OR 2.48% ARE IN THE ENVIRONMENT SECTOR:

NUMBER OF

PRODUCTS

%

SHARE

HAZARDOUS PRODUCTS/WASTES

PROHIBITED – MUNICIPAL ASH AND RESIDUES, SEWAGE

SLUDGE, RESIDUAL PRODUCTS OF CHEMICALS, OZONE

DEPLETING SUBSTANCES ALREADY PHASED OUT, ETC.

REGULATED – ARSENIC, SULPHURIC ACID, WASTE AND

SCRAP OF CAST IRON, STAINLESS STEEL, MERCURY,

CYANIDE, ETC.

30

118

0.50%

1.98%

TOTAL 148 2.48%

JPEPA ARTICLE 29: ORIGINATING GOODS

2. “For the purposes of subparagraph 1(a) above, the following goods shall be

considered as being wholly obtained or produced entirely in a Party:

articles collected in the Party which can no longer perform their original purpose

in the Party nor are capable of being restored or repaired and which are fit only

for disposal or for the recovery of parts or raw materials;

scrap and waste derived from manufacturing or processing operations or from

consumption in the Party and fit only for disposal or for the recovery of raw

materials;

parts or raw materials recovered in the Party from articles which can no longer

perform their original purpose nor are capable of being restored or repaired; and

goods obtained or produced in the Party exclusively from the goods referred to

in subparagraphs (a) through (k) above.”

RESOLUTION OF JPEPA ISSUES

SEVERAL JPEPA PROVISIONS EXPLICITLY PROVIDE FOR UPHOLDING ENVIRONMENTAL STANDARDS:

Article 27 (page 29) of the JPEPA, on the exports of goods provides that, “the parties shall cooperate with each other on the utilization of appropriate mechanism on the conformance with the importing party’s safety and environmental standards…”

Article 102 (page 85) of the JPEPA, on the promotion of investments provides that, “each party recognizes that it is inappropriate to encourage investments by investors of the other party by relaxing its environmental measures, to this effect each party should not waive or otherwise derogate from such environmental measures as an encouragement for establishment, acquisition or expansion in its area of investments by investors of the other party.”

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Article 4 of the Implementation Agreement, on enforcement against illicit trafficking provides that, “the customs authorities of the parties shall cooperate and exchange information in their enforcement against the trafficking of illicit drugs and other prohibited goods at their customs checkpoints.”

Article 9 (iv) of the Joint Statement Signed by the President and the Japanese Prime Minister, on Energy and Environment, provides for technical cooperation in the following areas, among others:

Promotion of development of Clean Development Mechanism (CDM) projects Human Resources Development in the field of environmental management Joint research and survey of its methodologies and other cooperation on

environmental impact assessment Cooperation on the implementation of polychlorinated biphenyls (PCB)

Management Program through the National Institute for Environmental Studies of Japan

Cooperation on oil management including oil stockpiling Cooperation on the management of hazardous and solid wastes Cooperation on the implementation of the Philippine Clean Water Act

RESOLUTION OF JPEPA ISSUES

RESOLUTION OF JPEPA ISSUES

DEPARTMENT OF JUSTICE (DOJ) OPINION (IN A MEMORANDUM TO THE PRESIDENT, DATED 14 AUGUST 2007)

The DOJ expressed the opinion hat there is no legal impediment in the implementation of the JPEPA and that the Agreement respects the national laws of our country.

The DOJ cited the Preamble which upheld the importance of implementing the measures in the JPEPA in the Parties’ laws and regulations

“Recognizing the importance of the implementation of measures by the

Governments of the Parties in accordance with their respective laws and

regulations;”

RESOLUTION OF JPEPA ISSUES

Japanese Prime Minister Shinzo Abe, on two occasions, assured the president that they would not be exporting toxic wastes and hazardous materials to the Philippines.

Exchange of notes between Japan’s Minister of Foreign Affairs Taro Aso and Foreign Affairs Secretary Alberto Romulo (dated 23 May 2010)

Reaffirmed the assurance of Japan’s Prime Minister Abe “That Japan would not be exporting toxic wastes to the Philippines as defined and prohibited under the laws of Japan and the Philippines in accordance with the Basel Convention, and the understanding that provisions related to this topic in the Japan-Philippines Economic Partnership Agreement (JPEPA) do not prevent the adoption or enforcement of such measures under existing and future national laws, rules and regulations of the Philippines and Japan.

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1. R.A. NO. 6969 (APPROVED BY THE PRESIDENT OF THE PHILIPPINES ON 23 OCTOBER 1990)

UNDER SECTION 13 OF R.A. 6969*, IT IS PROHIBITED TO: “Cause, aid or facilitate, directly or indirectly, in the storage, importation, or bringing into Philippines territory, including its maritime economic zones, even in transit, either by means of land, air or sea transportation or otherwise keeping in storage any amount of hazardous and nuclear wastes in any part of the Philippines”

WHAT NATIONAL LAWS/TREATIES BAN THE

ENTRY OF HAZARDOUS WASTES?

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2. BASEL CONVENTION

ENTRY ITO FORCE : 5 MAY 1992 RATIFICATION : 170 COUNTRIES

PHILIPPINES : 21 OCTOBER 1993

JAPAN : 17 SEPTEMBER 1993

UNDER ARTICLE 4 OF THE BASEL CONVENTION:

- Parties exercising their right to prohibit the import of hazardous wastes or

other wastes for disposal shall inform the other Parties of their decision

- Parties shall prohibit or shall not permit the export of hazardous wastes and other wastes to the Parties which have prohibited the import of such wastes

- Parties shall prohibit or shall not permit the export of hazardous wastes and other wastes if the State of import does not consent in writing of the specific import, in the case where the State of import has not prohibited the import of such wastes

WHAT NATIONAL LAWS/TREATIES BAN THE ENTRY

OF HAZARDOUS WASTES (CON’T.)?

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2. MONTREAL PROTOCOL ON SUBSTANCES THAT DEPLETE THE OZONE LAYER

ENTRY INTO FORCE : 1 JANUARY 1989

RATIFICATION : 191 COUNTRIES

PHILIPPINES : 17 JULY 1991

JAPAN : 30 SEPTEMBER 1988

- REGULATES AND EVENTUALLY BANS THE TRADE IN OZONE DEPLETING SUBSTANCES (ODS), E.G. CHLOROFLUOROCARBONS OR CFC, FREON

WHAT NATIONAL LAWS/TREATIES BAN THE ENTRY

OF HAZARDOUS WASTES (CON’T.)?

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WHAT IS THE BASEL BAN AMENDMENT?

PROVIDES FOR PROHIBITION IN THE EXPORT OF ALL TYPES OF HAZARDOUS WASTES (INCLUDING RECYCLABLES) FROM INDUSTRIAL COUNTRIES TO DEVELOPING COUNTRIES.

ADOPTED BY THE PARTIES TO THE BASEL CONVENTION IN 1995. ADVOCATED BY THE EUROPEAN COUNTRIES AND INTERNATIONAL CIVIL SOCIETY GROUPS.

AFTER 12 YEARS, RATIFIED BY 63 COUNTRIES (INCL. BRUNEI, INDONESIA AND MALAYSIA).

DENR SUPPORTS BASEL BAN AMENDMENT AS LONG-TERM DIRECTION. BUT NEEDS TO ADDRESS FIRST POSSIBLE ECONOMIC DISLOCATIONS TO THE RECYCLING INDUSTRY.

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WHAT IS THE BASEL BAN AMENDMENT (CON’T.)?

ISSUE OVER ENTRY INTO FORCE:

- REQUIRES RATIFICATION OF ¾ OF THE PARTIES

- ADVOCATES CONTEND ¾ BASED ON NUMBER OF

PARTIES WHEN AMENDMENT WAS ADOPTED

(3/4 = 62 COUNTRIES). 63 RATIFICATIONS

SUFFICIENT ALREADY

- OTHER PARTIES CONTEND ¾ BASED ON ALL

PARTIES TO BASEL CONVENTION (3/4 = 128

COUNTRIES)

- UN LEGAL AFFAIRS OFFICE – IF NO AGREEMENT,

“CURRENT TIME APPROACH” WILL APPLY; I.E., ¾ OF ALL

PARTIES TO CONVENTION (128 COUNTRIES TO RATIFY)

IF U.N. INTERPRETATION IS UPHELD, ENTRY INTO FORCE WILL TAKE SOME TIME.

COMMITMENT TO MULTILATERAL

ENVIRONMENTAL AGREEMENTS (MEAS)

The JPEPA Preamble also reaffirmed its commitment

to other international agreements, as stated below:

“Bearing in mind their rights and obligations under

other international agreements to which they are

parties in particular those of the Marrakesh

Agreement Establishing the World Trade

Organization, done at Marrakesh, April 15, 1994;

STATUS OF IMPLEMENTATION

JOINT COMMITTEE

DTI, DFA

Trade in Goods

DTI Rules of Origin

BOC, BOI; METI

NEDA Board

CTRM Iron and Steel Products

BOI

Automobile and Parts

BOI

Customs Procedures

BOC; Ministry of Finance

Mutual Recognition

DTI-BPS

Trade in Services

NEDA; MOFA

Investment

BOI

Movement of Natural Persons

DOLE

Intellectual Property

IPO

Government Procurement

DBM - GPPB

Improvement of Business

Environment

DTI

Cooperation

NEDA; MOFA

Nurses & Certified

Caregivers

DOLE

Mutual Recognition

DOLE

Consultative Group on

Improvement of Business

Environment

Liaison Office on

Improvement of Business

Environment

Human Resource Development

TESDA, CHED; MOFA

MSMEs

DTI – SB Corp.; METI

Energy and Environment

DOE, DENR; METI

Transportation

DOTC; MLIT

Trade and Investment Promotion

DTI; JETRO

ICT

CICT; MOFA

Science and Technology

DOST; MOFA

Tourism

DOT; MLIT

Road Development

DPWH; MLIT

Financial Services BSP; DOF; Financial Services Agency

Competition

TC, DTI; Fair Trade Commission

JPE

PA

Im

ple

me

nti

ng

Str

uctu

re

JPEPA IMPLEMENTATION

Through the “Joint Statement on the Occasion of the Signing of the

Agreement between Japan and the Republic of the Philippines for an

Economic Partnership” signed on 9 September 2006 in Helsinki, Finland by

Philippine President Gloria Macapagal-Arroyo and Japan Prime Minister

Junichiro Koizumi, programs and projects under the Sub-Committee on

Cooperation were categorized accordingly:

i. Human Resource

Development

ii. Financial Services

iii. Information and

Communications

Technology (ICT)

iv. Energy and

Environment

v. Science and

Technology

vi. Trade and Investment

Promotion

vii. Small and Medium

Enterprises

viii. Tourism

ix. Transportation

JPEPA IMPLEMENTATION

Chapter 8 – Cooperation in the Field of Energy and Environment Article 34 – General Principles

Pursuant to Chapter 14 of the Basic Agreement, the Parties, recognizing that efficient utilization of energy as well as proper management of environment will contribute to the continued expansion of the economies of their respective Countries and sustainable development in the medium and long term, shall cooperate, in the field of energy and environment on the basis of equality and mutual benefit.

Article 36 – Working Group on Energy and Environment

Pursuant to Article 147 of the Basic Agreement, a Working Group on Energy and Environment (WGEE) shall be established under the Sub-Committee. The functions of the Working Group shall include:

a. Exchanging views and information on cooperation in the field of energy and environment and identifying ways of further cooperation;

b. Monitoring, reviewing, and discussing issues concerning the effective implementation of this Chapter;

c. Reporting the findings and actions taken by the Working Group to the Sub-Committee regarding issues relating to the implementation of this Chapter; and

d. Discussing other issues relating to cooperation in the field of energy and environment;

JPEPA IMPLEMENTATION

The Working Group is Composed of the Following: a. senior officials from the Ministry of Economy, Trade and

Industry of Japan and the Department of Energy of the Philippines, as co-chairs;

b. For Japan, officials from the Ministry of Economy, Trade and Industry, the Ministry of the Environment, the Ministry of Foreign Affairs and, where appropriate, officials from other government agencies and, upon the consent of the Philippines, invited representatives of relevant entities with necessary expertise relating to the issues to be discussed; and

c. For the Phlippines, officials from the Department of Energy, the Department of Environment and Natural Resources and, where appropriate, officials from other government agencies and, upon the consent of Japan, invited representatives of relevant entities with necessary expertise relating to the issues to be discussed.

The First Meeting of the Working Group on Energy and Environment

Established under the Sub-Committee on Cooperation of the Agreement between

Japan and the Republic of the Philippines for an Economic Partnership

On November 17 2009, Japan and the Republic of the Philippines held the First

Meeting of the Working Group on Energy and Environment established under the

Sub-Committee on Cooperation of the Agreement between the two countries for an

Economic Partnership. The Meeting was conducted by means of video conference

held at the JICA Philippine Office.

Director Takuma Yamaguchi of the Ministry of Economy, Trade and Industry and

Director Jesus T. Tamang of the Department of Energy Co-Chaired the Meeting.

Director Yamaguchi headed the Japanese delegation composed of officials from the

Ministry of Environment, Ministry of Foreign Affairs and Japan International

Cooperation Agency. On the other hand, Director Tamang led the Philippine

delegation comprising of officials from the Department of Energy, Department of

Environment and Natural Resources and the National Economic and Development

Authority.

During the Meeting, Japan and the Republic of the Philippines agreed to review the

progress of the projects listed under the Common Strategies for Action of the

Economic Partnership Agreement to which the Parties exchanged information.

The First Meeting of the Working Group on Energy and Environment

Established under the Sub-Committee on Cooperation of the Agreement between

Japan and the Republic of the Philippines for an Economic Partnership

The two countries also discussed ways of enhancing existing cooperation. For the

Republic of the Philippines, the Department of Energy identified additional areas of

investments in the energy sector with particular emphasis on renewable energy and

power. In addition, the Department of Energy raised, as another way of furthering

said cooperation, the following areas: energy technology transfer (such as but not

limited to waste to energy projects); partnership in the development and formulation

of policies to promote Energy Efficiency and Conservation; and enhanced

partnership on climate proofing of energy systems and facilities.

Japan, for its part, indicated that they have yet to identify ways to further the

cooperation on energy and environment. Japan will need more time to review and

evaluate the Philippine proposals.

Lastly, the two sides agreed to submit a Record of Discussion at the forthcoming

(face-to-face) JPEPA Sub-Committee on Cooperation Meeting scheduled on 26

November 2009 to be held in the Philippines with Japan committing to draft the said

Record of Discussion for comments of the Philippines.

STATUS OF OTHER WORKING GROUPS

Other working groups also scheduled meetings

with their Japanese counterparts from

17,24,25 and 26 November 2009.

The DENR, as co-chair of the Philippine side of

the Working Group on Energy and Environment

(WGEE) also sent representatives to the

Working Groups on Tourism and Science &

Technology

IMPACTS OF ENVIRONMENTAL

REGULATIONS ON

TRADE/INVESTMENT

OUTCOMES FROM ENVIRONMENTAL PERSPECTIVE

Assurance that expansion of economic activity through trade liberalization would not result t in environmental degradation, as envisaged under the principle of sustainable development

Stakeholders share the responsibility of implementing environmental laws and policies, thereby increasing the awareness that ENVIRONMENT IS EVERYONE’S RESPONSIBILITY

Stakeholder participation in policy formulation and decision-making create policy ownership, and encourages support in implementation

OUTCOMES FROM TRADE PERSPECTIVE

Fiscal and/or non-fiscal incentives for environment-

related priority activities will encourage investments,

which will redound to increased level of employment,

revenue and income

Industry compliance to environmental regulations

does not necessarily lead to higher cost of production

In the final analysis - GREEN IS GOOD BUSINESS.

www.denr.gov.ph