BEYOND BORDERS: THE PHILIPPINE

COMPLIANCE ON THE ASEAN COMPREHENSIVE

INVESTMENT AGREEMENT, THE ASEAN RULES-
BASED APPROACH AND THE INVESTMENT
LIBERALIZATION CASE ANALYSIS

John Carlo T. Pajo

11383925
INTRODUCTION
STATEMENT OF THE PROBLEM
• In SEA, It was reported that the region continues to attract
increasing amounts of Foreign Direct Investment (FDI). However,
the Philippines show signs of decline in FDI. It was reported by
the World Economic Forum (WEF) that despite the improvement
of the Philippines’ overall competitiveness ranking, the
Philippines is still behind its ASEAN counterparts. To date,
experts suggest there is slowing down of inflow investments to
the Philippines due the strict Constitutional Restriction as held in
the case of Gamboa v. Teves. One challenge being sought by
different investors is the inflow of investments into the
Philippines. If restrictions were to be amended or be liberalized
by the Philippine government, foreign investors would prefer to
invest in the country resulting to further inflow of investments.
 THESIS STATEMENT
• The Philippines appear to have fell short with the minimum requirements
provided by ASEAN Comprehensive Investment Agreement (ACIA)
although it may not constitute a violation of the treaty. The treaty itself
provides a reservation list of industries that prohibits or restricts foreign
investments.
• The Philippines cannot fully liberalize the investment environment of the
country due to the Constitutional Limitation of Foreign Investments.
However, the Philippines has legal policies and/or programs viable in
achieving the minimum requirements provided by the ASEAN through
the Rules-Based Approach.
• Micro, Small, and Medium Enterprises (MSMEs) is the largest driver of
economic growth, easement of business registration procedure and
requirements is needed to allow rapid economic growth within the
Philippines to achieve standards agreed upon by the parties in the ACIA
OBJECTIVES
• To identify whether the Philippines complies with the ACIA Agreement and other related
instruments provided in the AEC 2025 Consolidated Strategic Action Plan
• To identify whether the Constitutional Limitation is the actual hindrance for the country to
comply with the Agreement
• To understand the building blocks of ASEAN
• To recommend possible solutions to the problem
SIGNIFICANCE OF THE STUDY
• To allow further understanding of:
• International investment law
• International economic law
• To allow the reader-audience to have a better understanding of the 3 pillars of ASEAN
• Limitations, pros and cons of foreign investments in the Philippines
• Possilbe output policy suggestion for economic changes for the economic growth of the
Philippines
SCOPE AND LIMITATIONS
• Issues on Public International Law & the Philippine Constitution
• General Principles
• International Economic Law
• International Commercial Law/ Business Law
• Domestic Laws
• Foreign Investments Law
• ASEAN Mechanisms
• Goal
• Mechanisms
• Principles
• Compare 4 ASEAN State Policy/Programs on:
• Investments
• Compliance
• FDI Information and StrategyFocused on foreign investments
• Absence of Filipino Comsumers and Local Investments
Reason

WHY FOREIGN INVESMENTS???

• As declared also by the Supreme Court in Tanda v. Angara, to wit:

“All told, while the Constitution indeed mandates a bias in favor

of Filipino goods, services, labor and enterprises, at the same
time, it recognizes the need for business,exchange with the rest
of the world on the bases of equality and reciprocity and limits
protection of Filipino enterprises only against foreign competition
and trade practices that are unfair. In other words, the
Constitution did not intend to pursue an isolationist policy. It
did not shut out foreign investments, goods and services in
the development of the Philippine economy. While the
Constitution does not encourage the unlimited entry of foreign
goods, services and investments into the country, it does not
prohibit them either. In fact, it allows an exchange on the basis of
equality and reciprocity, frowning only on foreign competition that
is unfair.
Relavant Points

REVIEW OF RELATED LITERATURE

ASEAN
• SEA historical engaged in trade of goods and services
• No isolation
• Always compared to EU, NAFTA
• Regional economic blocs
• Originally founded to control and combate communism
• Shifted towards social-economic mandate
• Formed the AEAN Economic Community
• To integratre all SEA markets
• Currently composed of 10 member-states
INTERNATIONAL LAW

Public
International Law

Int’l Business Int’l Economic

IHL Int’l HR Law
Law Law
INTERNATIONAL ECONOMIC LAW
• Fields
• Regional Economic Intergration
• EU
• ASEAN
• International Law and Development
• International Commercial Arbitration
• International Intellectual Property Law
• Interntional Business Regulation
PRINCIPLES OF INTERNATIONAL LAW
• Pacta sunt servanda
• Jus Cogens
• Erga Omnes
• Aequo et Bono
PACTA SUNT SERVANDA
• All agreements shall be kept in good faith
• Deutsche Bank AG Manila Branch v. CIR
• Demands the performance in good faith of treaty obligations on the part of the
states that enter into the agreement. Every treaty in force is binding upon the
parties, and obligations under the treaty must be performed by them in good
faith
JUS COGENS
• A customary int’l law that has attained the status of a peremptory norm, accepted and
recognized by the Int’l Community of states as a rule from which no derogation is
permitted and can be modified only by a subsequent norm having the same character (
Art. 53, VCLT)
• Vinuya v. Romulo:
• Jus cogens literally means compelling law. It refers to norms that command
peremptory authority, superseding conflicting treaties and custom.
• Considered peremptory in the sense that they are mandatory, do not admit
derogation, and can be modified only by general international norms of equivalent
ERGA OMNES
• Refers to determined obligations that states have towards the international community.
• Literally means in relation to everyone
• Origins:
• Roman Law
• Used to describe obligations or rights towards all.
• Vinuya v. Romulo citing Barcelona Traction Case:
• It concerns all States.
• States can be held to have legal interest in their protection; they are erga omnes
• Vinuya v. Romulo citing Bruno Simmas
• Became one of the rallying cries of those sharing a belief in the emergence of a
value-based international public order.
EX AEQUO ET BONO
• Used by tribunals in settling disputes on equitable considerations
• ICJ can only decide a case ex aequo et bono if the parties to the dispute agree to its use
• Example:
• Delimitation of the Maritime Boundary in the Gulf of Maine Area
• Canada v. USA
STATE PRACTICE OF INTERNATIONAL LAW
• Important
• Customary international law and interpreting treaties
• ICJ relies on state practice to determine content of customary rules instead of
conclusions on non-binding actions by international bodies or on its own decisions
• Criticism: A. Mark Weisburd:
• ICJ has been inconsistent in its treatment of the practice of parties to
treaties in cases presenting interpretation questions. He further argues
that ICJ, while proclaiming the necessity of relying on such practice –
other occasions failed even to acknowledge the existence of practice
contract to the result it reaches
• Examples:
• Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion
• Libyan Arab Jamahiraya v. Malta
CUSTOMARY INTERNATIONAL LAW
• John H. Currie
• CIL arises from state practice and opinion juris of a discrete and limited number of
states
REGIONAL CUSTOM
• AKA as Special Customary International Law that deals with non-generalizable topics.
• Defined as a practice among states within a specific part of the world, area or region in
which can be established and it is practiced as law
• Binding among the states of that region but not elsewhere
• John H. Currie
• It departs from the CIL. It is only binding upon and opposable against those
states practicing in its formation
• Hefler and Wuerth
• Commentators have long asserted that a custom can, in principle, be restricted
to a geographically linked group of countries. It leaves other nations unaffected
IMPORTANCE OF INTERNATIONAL LAW
• It governs the international relations between states and other international entities or
subjects of international law
• Dixon:
• IL is intrinsically bound up with diplomacy, international politics and the conduct of
foreign relations.
• Sir Arthur Watts:
• Having IL creates a culture of order. International affairs culture has not yet firmly
established but recognizes the steady progress of these norms.
STATE OBLIGATIONS: SOURCES OF IL
• Art. 38 (1) • Publicists/ Jurists:
The Court, whose function is to decide in accordance
with international law such disputes as are submitted to • 2 Sources
it, shall apply:
international conventions, whether general or particular, • Primary
establishing rules expressly recognized by the
contesting states; • Conventional IL

international custom, as evidence of a general practice

• Int’l Conventions
accepted as law;
• Int’l Customs
the general principles of law recognized by civilized • Secondary
nations;
• Judicial Decisions
subject to the provisions of Article 59, judicial decisions • Teachings of most
and the teachings of the most highly qualified publicists
of the various nations, as subsidiary means for the highly qualified
determination of rules of law. publicists of various
nations
INTERNATIONAL ECONOMIC LAW
• Field of international law relating to investment, economic relations, economic
development, institutions and regional economic integration
• Necessary to allow the necessity of people to be accessible.
• W/O Trade
• Stagnation of economy
• Under development of products, goods and services
• Inaccessibility of persons to other commodities and supplies
DEVELOPMENT OF IEL
• GATT/WTO