Reparations agreement with Japan

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Part of Philippine Armed Forces Journal

Title: Reparations agreement with Japan
Language: English
Source: Philippine Armed Forces Journal Volume IX (No. 6) October 1956
Year: 1956
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Fulltext: 1 REPARATIONS AGREEMENT wi!h J~P~Vf By Colonel Bias Alejandre, OS HE long pending J apanest' rt:parations agreem~:nt was finally ratified by the Philippines on 21 July 1956, almost e\e. ven years after the end of World War II. The J'eparations proper con~ists of goods and services to be made available in an annual average (for the first l(Lyears) of the yen equivalent of $25 million, and (fo1 the second 10-year~), the yen equiva lent of $30 million. The corollarr exchang~: uuH:;' between Feline Neri, plenipotentiary of the Philippines, and Tatsunusuke Takasaki, p\enipoh:ntiary of Japan, on 9 May 1956, sanctions commercial credit facilities from J apanese pdvate firms in thl form of long term loans to Philippine pri\'ate firms, up to the yen equi,•alent of $250 million O\"er the twenty.yt>ar period of the agreement. The good~ and services availabloto the Philippines under lhe repata PHILIPPINES AI!MEO FOHCES JOURNAL tions agreement are classified as fo]. lows: A .. l) Reparations in the fonn of capital godds, the to. tal value of which will be so much in Japanese yen as shall be equiva. lent to .. $500 million (US) 2) Reparations in the form of services, the total value of which will beth.., 9, 1956, in such manner a:s shall assure ',he maximum possible economic benefit of the Filipino people and in as equitable 3nd widespread a manner '3-S possible. To implement the policy declared the procu1·ement, disposition, and utilization of all goods and services procured from Japan under the terms of this Section shall be carried out yen e qui v a I en t of as closely as possible to promote $ 30 million (US) the economic rehabilitation and 3) Reparations in the form of Philippine pesos, the total value of which will be the yen equivalent of $ 20 million (US) B.- Commercial credit facili· ties from Japanese private firms in the form of long term loans to Philippine private firms to help accelerate the economic development of the Philippines, up to the yen equivalent of $250 million (US) Total ... $800 million (US) Fo1 the implementation of the r~>. pa1·ations agreement with Japan, the Philippine Senate passed S. Bill No. 520 dul'ing the Special Session; which stated the following: "It shall be the policy of the Government of the Philippines to utilize all reparations payments procured in whatever iorms from Japan under the terms of the Reparations Agreement be· tween the Republic of the Phil· ippines and Japan signed on May development of the country and in accordance with the broad program, criteria and priorities established by the National Eco. nomic Council, in addition to the following criteria: "(a) Capital Goods and Services. - Pursuant to the policy declared . . the capital goods and services received as reparations shall be made available to the approved gove1·nment pro. jects for each yea1· included in the national economic rehabilita:. tion and development program upon application from the agen· cy concerned and duly endorsed by the proper department head concerned and the Nationul Economic Council, as wdl a!\ •o Fi lipino citizens and entities. whol !y owned by Filipino citizens, who will themselves utilize such goods and/or services as bonrt fide producers or manufactu. rers; Provided, That the Govern ment shall not procure or utilize reparations goods fo1· the pu1 pose of entering into business in competition with private indus~· r tt"ies, where such industries have shown their capacity and readiness to ser\'e the public fairly and adequately." The National Economic Council on its part proposed the following Guiding Princip/u:"1. Priorities and criteria approved by the NEC to promote economic rehabilitation and de. velopment. 2. Nation-wide distribution. 3. Preference to pt·ivate productive projects and to transpor· tation and power. 4. Distribution only to Filipino end-users. 5. Only capital goods as a rule to be procured. 6. Basis of pt·ocurement prices to be the prevailing export pt·ices in Japan. 7. Reparations to be regarded as part of the Foreign Exchange Budget." tocol induJtri•r will oiJo btntfit from th• rtporotion• ~ight now pri>'olt tlloblirhmtnt• ho .. rtonding opplicotion• lor •11uipmtnl ond othtt goodJ •u•ntiol lor thtir opttotion< Pending the creation by Congress reign Aid, under the NEC, from of an office or body to carry into among personnel of different offices effect the reparations agreement be. "loaned" for this purpose. Within tween Japan and the Philippines, one week, the Unit was able to put and the adoption by it of the policies. together a proposed list which was rules and procedures to be observed shown to the President in consulta~ in the requisition and disposition of tion with the Council of State, ior the repaTations goods to be supplied correction and/ot· approval. Upon reby Japan, and in order to allow the ceiving last-minute corrections, the widest possible participation of the final draft WII'S rushed to Malacaii.ang different bureaus and departments for approval by the Presiden'b and -.he of the government, the President in- Cabinet. This was done on 12 Septst,·ucted the National Economic ember, the day before Tokyo MisCouncil to set up a Reparations Task sion Designate Cesar Lanuza sailed Unit to consolidate, collate and re- for Japan. Again, the Task Unit commend a list of equipment and worked over-time to put together 10 ~:~~e~/~: gao:;~~:m:~;s:nt~;~~~si- ~:i~e~ ;:te~-h~e:~;a~i~naet;g~~Y t~e ~~:: (1 The Task Unit was organized on parations Advisers Secretary More~ 4 Sept. 1956 by the Office of Fo- no, Captain Hizon and Colonel Chan~ OCTOBER 195& I co, were handed to Lanu2a just be. Jay down the policy and mo1·e spPdfore sailing time of the ship that fically to promulgate the rules anri carried him to Tokyo. regulations to be observed in the ro::The publication of the First Year's quisition and disposition of the 1·cpa Jist of reparations items raised some rations goods and services to be supquestions and complaints, especial plied by Japan; the Task Unit found ly from the civilian ~ector, due \..o it almost impossible to "proco::ss" cithe :~ilocation of the $14.5 million to vilian applications. government agencies exclusively. Ci- However, al\hough Congress failed vilian industrialists questioned the to pass the needed implementing LRw propriety of excluding the general during the last special session; the public from the reparations pay Senate introduced and passed S. Rill ments; oblivious of the fact that No. 520 which gives an indication of there had not been enough time to the intent of Congress regarding the gather and evaluate applications policies and procedu1·es to be follow from qualified civilians. Most of the ed. Using this as a guide, the Repaapplications that had been J·ec,eived rations Task Unit started the prelihad come from civilians who had suf. minary soJ·~ing of the resolutions and fered damage Ol' losses during World inquiries received for the allocation War II, and the claims they had of reparations so that proper acknowlsubmitted were in the nature of edgements could be sent to the va "war damages." Some applicants rious applicants. sent inquiries regarding the possibi- Senate Bill No. 520 provides that: Jity of the redemption of Japanese "Goods other than capital goods war notes better known as "Mickey shall not be obtained from Mouse money." All these applicants l'eparations except in cases had previously been "canvassed" in where the inclusion of a mini1949-50, in connection with the sur. mal amount thereof in approved vey conducted under the Quirino ad- procurement lists of reparations ministration for the preparation of ~oods may be found necessary in the reparations claims against Japan. order that the aggregate amount Invariably, the applicants refer to of reparations goods and services the figures they had :o;ubmitted to to be delivered in any one year the then Secretary of Foreign Af· may reach the yearly average fairs, Joaquin Elizalde; or to Pres- total of deliyeries provided in ident Quirino and/or his Cabinet the "Repll'rations Agreement or in members. The total amount of re- case where such goods may not parations presented to Japan at that be obtainable from normal sourtime was $8 billion, compared to the ces of imports. Goods other than p1·esent amount of the approved re. capital goods that may be proparations agreement which is only cured from reparations as pro$800 million including the $250 mil vided herein shall be limited to lion for industrial loans. highly essential consumer goods Without an implementing law to and construction materials not classified as capital goods. The total value and detailed listing of which shall be made by the Commission approved by the Pt·esident upon l'ecommendation of the National Economic Council. Such goods shall be sold only by the National Ma-rketing Corporation (NAMAR CO) to bona fide retailers who are Filipino citizens or entities wholly owned by Filipino citizens who shall resell the same directly to consumers or end-11sers. " In all transactions involving the transfer of capital goods and/or services from reparations to the authorized private pa-rties specified in this act, the sale shall be dl!·ectly to end-users and not through middle-men. The contract of sale ~;hall beu· the condition that no capital goods thus acquired shall be resold, leased or in any other manner disposed within five years from the date of acquisition except when the resale, lease or other disposition is to Filipino citizens or to f.'utities wholly owned by Filipinos who shall continue utilization thereof in the projects for which the goods were originally intended or in similar projects included in the economic development program of a similat· priority; subject, howevet·, to thefurtherconditionthatthere sale, lease m· other disposition is approved by the Commission, on good n::.~.sonable grounds, such as death or bankruptcy of the original buyers. All contracts of sale of capital goods from reparations shall include the furthet· condition that gt·oups, associations, and corporations who are recipients of such goods shall not permit any 1>ubsequent change in ownership or control as shall at any time a-fter change the contt·ol or ownership wholly held thet·ein by Filipino citi"zens. It shall further contain a provision that any transfer of own. ership, whether by virtue of fL private contract or through court proceedings shall be to Filipino citizens or entities wholly owned by Filipinos who shall be. gin utilizing them in such projects as. the National Economic Council shall determine, within. one year froffi notice of the Council's. decision. Goods other than capital goods procured as reparations under the provisions of the next preceding subsection shalt be sold for cash only at prevailing market prices for similar goods. "Cash Payment. - The twenty million dollars ($20,000,000) cash payment shall accrue to a Trust Fund to be used exclusive. Jy for the benefit and rehabilitation of veterans of the Philip. pines during World Wa~· II and their widows and orph.ans as Congress may from time to time provide." With the above wishes of Congress as stated in Senate Bill No. 520, for "'guide-posts," the Reparations Task Unit started the classification of the numerous applications for reparations from civilians and private entities. These applications from the civilian sectot started pouring into Malacafiang, the Foreign Affairs Department, and the National Economic Council as soon as the Reparations Agl"eemcnt was 11igned. And ,hey co,·er all fields of our eCOlJOmy, from lhe simple agricultural hand! ;' tc.ols t•equested by \.he Banio Lieutenants Association of the Philip· pines (BLAP) to the complex ma·nufacturing- machineries J"equestcd by private industrialists. Indeed, a cross-section of the hundreds of ap plications that have been t·cccivcd by the NEC so far, could very well ~tart the "integrated" agl"icultuJ·al-industrial de,·elopment program of the President. , ;t--.1 On October 17, 1956, Executive Order No. 208, creating an Interim Reparations Commitb·e, was signed by Prrsident Magsaysay after consultation with leaders of Congress and his Cabinet. The purpose of the Ex~cu tive Order is "to allow the widest possible participation by both the public and private elements of the c6untry in the determination by the Govemment of the second and succeeding years' schedule of repat·ations goods and set·vices to be supplied by .Japan; and so as to Jlrovide for a provisional body or agency to reeeive the rf'pat·ations goods and services hom Japan, pending the creation by Congress of an office or body to carry into effect the Reparations Agreement between Japan and the Philippines signed on May 9, 1956." Executive Order No. 208 provides: "SECTION 1. There is hereby cteated a Reparations Committee, hereinafter referred to as the Committee, composed of 3 Chairman and two members who shall be designated by the President of the Philippines. "SEC. 2. The Committee shall have the following powers, functions and duties: (aJ To prepare the draft schedules for the second :1nd succef'ding- years of the repa!·ations goods and services to be le<JUlSitioned f1om Jopan und~1 rhe J:epa!·atJOn~ Agl"f'ement, ,., Two }opon••• inoug.,role Ill• slclrl of sof•ogong '>perolio"' will• 1/orgl offering ond cete,.onrol bte<Jhng of bol1/e of •ine :'\'ational Economic Council su that there may be a coO!·dinat"d effort in the implementation of the national economic policies by making appropriate recommendations for a judicious selection and disposition of the 1·eparations goods and ser\·ices. 1 "SEC. 3. In the discharge of its duties and the promulgation of its rules and regulations, the Committee shall be guided by the following principles and considerations: (a) Industries and activLttes detet·mined by the National Economic Council as essential to the economic development of the countr·y shall be given top prior. ity in the requisition and disposition of reparations goods and services; (b) Filipino citizens and coz·. poz·ations or associations theca· pita\ of which is wholly owned by such citizens shall be giv..:n prefe1·ence in the award of reparations goods and se!'vices; (cl The economic feasibility of the projects and the capability of the applicants to make maximum uses of the goods and services involved shall always be taken into account. "SEC. 4. The Committee is au. thorized to call upon any depaz·tment, bureau, office, agency or instrumentality of the Go\·ernment for detail of officials and emplo~·ees and for such othe1· assistance as it may need in the discharge and accomplishment o>f its tasks. "SEC. 5. This order shall take effect immediately."