Conclusion of RP-Japan trade talks to be delayed — DTI official

Conclusion of the Japan Economic Partnership Agreement (JPEPA) will definitely be delayed as the government has formally informed Japan that it will seek no less than the same terms granted by Japan just this month to Thailand in the ongoing bilateral trade talks.

This was confirmed yesterday by Trade Undersecretary Thomas G. Aquino before he left for China.

Aquino said that following the announcement of a bilateral agreement between Thailand and Japan in which Thailand was able to secure very favorable terms, the Philippines will no longer settle for anything less than what Thailand got.

With this new development, Aquino said that the "conclusion of the JPEPA would now definitely be delayed."

Japan and Thailand last Thursday, Sept. 1, had announced that they had reached an agreement in principle on all major elements of the Japan-Thailand Economic Partnership Agreement or JTEPA.

Thailand was able to secure very favorable terms on automobile and auto parts tariffs as well as for the entry of certain Thai workers such as cooks and cultural instructors to Japan.

A significant part of the JTEPA with regard to market access for automobiles is that for "passenger cars with engines exceeding 3,000 cc, the tariff rates will be reduced in equal annual installments from 80 percent annually until it reaches 60 percent in 2009 and will then be maintained at 60 percent."

However, for passenger cars with engines not exceeding 3,000, Japan and Thailand would "renegotiate on market access improvement and the renegotiation would commence on a date to be agreed upon before the signing of the JTEPA."

Thailand, thus, will maintain its existing tariff on all other cars with an engine displacement of 3,000 and below and agreed to lower tariff on big engine vehicles only up to 60 percent.

The Philippines, due to intense pressure from Japan, had earlier been prepared to reduce to zero its tariff on automobiles by 2010.

The Philippines was leaning towards a phased tariff reduction over a five-year period for vehicles with an engine displacement of three liters and below instead of its earlier stance of a "sudden death" reduction.

The sudden death reduction would still apply, though, for vehicles with an engine displacement of three liters and above.

The phased reduction would involve a formula of 1-3-3-3-0.

Thus, upon the implementation of the JPEPA in 2006, the current 30 percent automotive tariff would be reduced by one percentage point to 29 percent.

In 2007, the tariff would be reduced by three percentage points to 26 percent, then to 23 percent by 2008, 20 percent by 2009 and down to zero by 2010.