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International Negotiation

Rio D. Lazaro 11/25/17


ABFS 403 Mr. Jumel Estranero

A. Title (Understanding the Political-economic relations of the Philippines with Japan 2015-2017)

B. Chapters
I. Introduction
II. A. Statement of the Problem
B. Methodology
III. Review of Related Literature
IV. Analysis
V. Conclusion
VI. Reference

I. Introduction

The Philippines and Japan has a long historical background in terms of colonization in the past. After the
defeat of Japan on World War II, Japan still become the second largest economy in the world. The current status
of Japan is third largest economy in the world competing with the United States and China (IMF, 2017).
The Philippines is the worlds 34th largest economy by nominal GDP (IMF, 2017). The first bilateral trade
treaty of the Philippines with Japan was the Japan-Philippines Economic Partnership Agreement known as
JPEPA which is an economic partnership agreement concerning bilateral investment and free trade. It was
signed in Helsinki, Finland on September 9, 2006 by former Japanese Prime Minister Junichiro Koizumi and
former Filipino President Gloria Macapagal-Arroyo (Ministry of Foreign Affairs of Japan, 2006).
Japan Prime Minister Shinzo Abe and Philippine Presidend Benigno Aquino III pledged on 2014 to deepen their
security cooperation, at a time when their countries are facing growing military assertiveness from China. But
when Philippine President Rodrigo Duterte sat on the throne, the security ties of the Philippines and Japan to
combat the aggressive claim of China have weakened (Japan times, 2016). Duterte reportedly announced both
economic and military separation from the United States, Japans sole military ally. The new dynamic
approach of Japan and Philippines to maintain their strong political-economic ties are will be answered on this
topic.
II. A. Statement of the Problem
This study aims to answer the following questions:
1) What is the past status of the Philippines political economic relation with Japan?
2) What are the factors of the political-economic dynamism of the Philippines to Japan?
3) What are the implications of the Philippines and Japan to maintain its strong political-economic ties?

B. Methodology
The researcher used the Basic qualitative method which is the most appropriate type of qualitative
research to be used since it is a research that primarily focuses on providing detailed information for this study.
This study is focused on the understanding of political-economic relation of the Philippine-Japan ties so the
institutionalism approach will be used. The secondary resource data will be the main source of data to be used
as to answer the research questions of the study.

III. Review of Related Literature

Seventy years since the end of the Second World War and six decades since the normalization of
bilateral relations in 1956, Philippines-Japan relations have dramatically evolved to span economic, cultural,
political, and increasingly, the defense and security realms. Japan continues to be the Philippines top trading
partner, with the Philippines-Japan Economic Partnership Agreement (PJEPA) serving as the foundation of the
economic relations. Japan is also a leading source of foreign investment and official development assistance
(ODA) in important sectors of infrastructure, agriculture, power and energy, and disaster risk reduction
(Amador, 2015)

Japanese tourists are among the top visitors to the Philippines, while the number of Filipino tourists in
Japan has also been steadily increasing due to the growth in the Philippine economy and the easing of travel
requirements set by the Japanese government. However, an area where the bilateral relationship has been
noticeably improving is in security and defense. Japan and the Philippines are strategic partners. While the
partnership encompasses cooperation in a wide range of issues, cooperation in maritime security and maritime
domain awareness has recently become a focus. This is in light of the developments in the region, particularly
their shared concern about Chinas actions and intentions in the South China Sea and the East China Sea. Japan
is embroiled in a dispute with China over the Senkaku/Diaoyu islands in the East China Sea. While not a
claimant in the South China, Japan also closely monitors the developments in the area given its reliance on the
vital sea lines of communication (SLOCs) for trade and commerce. Thus, Japan emphasizes the need to
maintain the openness and stability of the seas and has articulated its support for the Philippines efforts towards
a rules-based approach in the South China Sea (Amador, 2015).

The state visit of President Benigno Aquino III to Japan and his summit meeting with Prime Minister
Shinzo Abe in 2-5 June 2015 provided another opportunity for the two countries to further enhance their
strategic partnership. In their joint declaration, the two leaders highlighted possible collaboration between their
countries in defense equipment and technology. This is in addition to the 10 patrol vessels that the Philippines
were set to procure through a soft loan from the Japanese government. These vessels are expected to assist the
Philippine Coast Guard (PCG) in enhancing its capability to monitor the maritime borders of the country. But
more importantly, the two countries are also exploring the possibility of concluding a Visiting Forces
Agreement which would allow the participation and access of Japan Self-Defense Forces to Philippine military
facilities in areas that are of common interest such as disaster relief activities. The growing security relationship
between the Philippines and Japan reflects a broader trend of closer cooperation between and among US allies
in the region (Merced, 2015).

The Philippines has actively welcomed and supported Japans domestic reforms in its security sector.
Secretary of Foreign Affairs Albert del Rosario said in an interview that the Philippines welcomes Japan as a
significant balancing factor in the face of a militarily assertive China. During the summit with Prime Minister
Abe, President Aquino stated that the Philippines does not view with any concern Japans reinterpretation of
its Constitution particularly on the matters of defense. Even though the Philippines also suffered from Japanese
occupation during the Second World War, it no longer appears to be that of a dominant issue or key hindrance
in the deepening of their bilateral relations. The long history of economic cooperation, people-to-people
linkages, and shared democratic values may have softened any lingering resentment about Japans wartime past.
Furthermore, it is the convergence of perception of threats, challenges and opportunities that has allowed the
Philippines to pursue a forward-looking and comprehensive relationship with Japan (Teodoro, 2015).

Philippines and China relations are stable but it worsened through the actions of Benigno Aquino III
administration regarding in South China Sea dispute (Topacio, 2016). President Duterte announced his
separation from the United States and declared that he had realigned with China as the two agreed to resolve
their South China Sea dispute through talks (Blanchard, 2016). China hoped that we can follow the wishes of
the people and use this realignment as an opportunity to push China-Philippines relations back on a friendly
footing and fully improve things (Xi, 2016). President of the Philippines Rodrigo Duterte threw a tirade of
stinging pronouncement to the former President of the United States Barrack Obama and announced the realign
of its political economy to China (Blanchard, 2016). The United States is pursuing all of its programs and
projects in the Philippines despite of stinging pronouncements from President Duterte and hopes the close ties
will not change and it will continue to grow and there is no reason to change the way the two countries have
been treating each other as allies (Koscina, 2016).

On Dutertes first visit to Japan on October 2016, He blasted the US but played down his shift towards
China, addressing the audience of Japanese executives among the biggest investors in the Philippines. Duterte
stated that his visit to China where he announced the Philippines separation from US, signaled an independent
foreign policy rather than new alliance with Beijing (Harding, 2016). He also stated that he want to assure the
Japan that his China visit is only for economics. Duterte reaped over P309.84 billion worth of investment and
joint ventures (DTI, 2016). Duterte met several Japanese companies and witnessed several signing of business
letters of intent on investment plans, joint ventures, and expansion of operations in the Philippines. These
operations involved manufacturing, such as shipbuilding and iron and steel, agribusiness, power, renewable
energy, transportation, infrastructure, mineral processing, and retailing. The first country-leader who
congratulates personally the Philippine President Rodrigo Duterte was the Japan Prime Minister Shinzo Abe
(Japan times, 2016). As return, Duterte went to Japan this October 2017 to congratulate Japan Prime Minister
Shinzo Abe for winning in electoral voting this October 2017. President Duterte declared that the Philippines
and Japan are embarking on their golden age of strategic partnership, as Prime Minister Shinzo Abe promised
maximum support for Marawi rehabilitation and fleshed out the details of the 1 trillion yen aid package he
promised the Philippines back in January. With the two countries deepening their cooperation on economic and
security matters, Duterte said they were resolved to further expand their cooperative ties (Japan times, 2016).

IV. Data Analysis

1) What is the past status of the Philippines political economic relation with Japan?
Philippines-Japan ties are very stable in terms of political-economic harmony on the former administration.
Japan continues to be the Philippines top trading partner, with the Philippines-Japan Economic Partnership
Agreement (PJEPA) serving as the foundation of the economic relations. Japan is also a leading source of
foreign investment and official development assistance (ODA) in important sectors of infrastructure, agriculture,
power and energy, and disaster risk reduction. The bilateral relationship has been noticeably improving is in
security and defense. Japan and the Philippines are strategic partners. While the partnership encompasses
cooperation in a wide range of issues, cooperation in maritime security and maritime domain awareness has
recently become a focus. Japan and the Philippines pledged on 2014 to deepen their security cooperation, at a
time when their countries are facing growing military assertiveness from China.
2) What are the factors of the political-economic dynamism of the Philippines to Japan?
1. Competition between China and Japan to win over the Manila sides.
The Philippines is seeking investment from China and Japan for $135 billion worth of power projects
that President Rodrigo Dutertes government is ready to fast-track. China became the second top trading
partner of the Philippines next to Japan on 2016 because of Duterte visit in China which pledged 33
billion dollars in investment and aid by China.
Duterte reaped over P309.84 billion worth of investment, joint ventures and expansion of operations in
the Philippines from Japan. These operations involved manufacturing, such as shipbuilding and iron and
steel, agribusiness, power, renewable energy, transportation, infrastructure, mineral processing, and
retailing. And his last visit to Japan, Japan promised a maximum support for Marawi rehabilitation and
fleshed out the details of the 1 trillion yen aid package he promised the Philippines back in January.
2. South China Sea Disputes.
The bilateral relationship of Japan-Philippines 2015 has been noticeably improving is in security and
defense. Japan and the Philippines are strategic partners. While the partnership encompasses cooperation
in a wide range of issues, cooperation in maritime security and maritime domain awareness has recently
become a focus. Japan and the Philippines pledged on 2014 to deepen their security cooperation, at a
time when their countries are facing growing military assertiveness from China.
Japan also has an territorial dispute to China regarding to Senkaku Island, so the territorial
aggressiveness of China to the South China Sea could probably improved the stance of Japan to its
national interest. When Duterte visited China on 2016 to regain its mutual trust because of their
worsened relationship in terms of territorial security, the Japan lost his stance and rather shocked on
Rodrigo Dutertes statement to the separation of its foreign policy to US (which is Japans solely
military ally) and the realignment of its political-economy to China. When Duterte visited Japan on
October 2016, he restated that his visit in China is for economy only, his statement in separation doesnt
mean that he will realign its political-economy to China instead, an independent foreign policy for the
Philippines.

3) What are the implications of the Philippines and Japan to maintain its strong political-economic ties?
Japan was the country's top trading partner in 2014, accounting for $19.15 billion in total trade. The amounts to
15 percent of the country's total trade. Exports to Japan totaled $13.9 billion while imports were valued at
$5.252 billion, posting a trade surplus of $8.649 billion. Japan and Philippines have free-trade agreement and
economic partnership agreement to maintain their political-economic harmony. Japan puts a lot of investment to
the Philippines such as investment plans, joint ventures, and expansion of operations in the Philippines. These
operations involved manufacturing, such as shipbuilding and iron and steel, agribusiness, power, renewable
energy, transportation, infrastructure, mineral processing, and retailing, And also the Japans promised of a
maximum support for Marawi rehabilitation and fleshed out the details of the 1 trillion yen aid package he
promised the Philippines back in January.

V. Conclusion
Philippines-Japan ties are very strong in terms of political-economy. The raising power of China and regaining
of its mutual trust to the Philippines doesnt affect their political-economic harmony with Japan. Japan wants to
maintain and sustain the economic improvement of both sides, helping each other in terms of security and
economy, to boost the mutual trust and to stabilize a harmonic relation between them. Philippines is taking this
as opportunity, dealing with two major economic powers to boost its economic diplomacy and maintain its
national security in control.

VI. Reference

Ministry of Foreign Affairs (2017) Economic Diplomacy of the Japan and Philippines. Retrieved from
http://www.mofa.go.jp/policy/economy/index.html

Salaverria L., Tubeza P. (2017) PH agrees to hold bilateral talks with China to resolve sea conflict. Retrieved
from http://globalnation.inquirer.net/162650/ph-agrees-hold-bilateral-talks-china-resolve-sea-conflict

Amador J., Merced L., Teodoro J. (2015) The Philippines foreign policy and relations towards major powers.
Retrieved from http://www.centreasia.eu/sites/default/files/publications_pdf/etude_philippines_2015_dgris.pdf

Romero A. (2017) Japan pledges over $1B loan to Philippines to fund key infra projects. Retrieved from
http://www.philstar.com/headlines/2017/10/31/1754294/japan-provide-philippines-over-1b-loan-fund-key-
infra-projects

Salaverria L. (2017) Duterte says PH, Japan reach golden age of strategic partnership. Retrieved from
http://globalnation.inquirer.net/161288/philippine-news-updates-president-duterte-japan-prime-minister-shinzo-
abe-marawi

Harding R. (2016) China visit was just economics, Duterte tells Japan. Retrieved from
https://www.ft.com/content/e8113902-9b5b-11e6-8f9b-70e3cabccfae
Kikuchi D., Yoshida R. (2017) Abe confirms Y1 trillion aid package with Duterte as Tokyo races Beijing for
Manilas support. Retrieved from
https://www.japantimes.co.jp/news/2017/10/30/national/politics-diplomacy/abe-confirms-%C2%A51-trillion-
aid-package-duterte-tokyo-races-beijing-manilas-support/#.WhVgftOCzIV

Ministry of Foreign Affairs (2017) A Japan-Philippines Economic Partnership Agreement. Retrieved from
http://www.mofa.go.jp/region/asia-paci/philippine/joint0411.html

Yap C., Batino C. (2017) Philippines courts Japan, China to invest in $135 billion power project. Retrieved
from https://www.japantimes.co.jp/news/2017/08/18/business/philippines-courts-japan-china-invest-135-
billion-power-project/#.WhWEltOCzIU

BBC News, (2017) Japan country profile. Retrieved from http://www.bbc.com/news/world-asia-pacific-


14918801

Lopez E. (2016) Commentary: Japans slowdown and its impact on Philippines. Retrieved from
http://www.philstar.com/business/2016/09/28/1628334/commentary-japans-slowdown-and-its-impact-
philippines

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