Ford urges RP to renegotiate automotive tariffs under JPEPA

Ford Motor Co. is urging the government to renegotiate automotive tariffs under the Japan-Philippines Economic Partnership Agreement (JPEPA) so that it does not adversely affect local automotive production in the Philippines.

This was disclosed yesterday by Trade and Industry Secretary Peter B. Favila upon his return from New York where he accompanied President Arroyo in a series of meetings with American businessmen and investors.

The Philippines’s pending free trade agreement (FTA) with Japan is causing some concern to Ford which may be the most adversely affected if the Philippines agrees to lower tariff duties on Japanese-made cars. Ford, however, is not alone in asking the government to maintain some tariff protection for locally manufactured cars.

Honda Cars Philippines president Takashi Sekiguchi told The STAR that Japanese automotive firms in the country would like the government to negotiate for continued tariff protection for locally-made cars.

While Sekiguchi generally welcomes the JPEPA because its would enhance the exchange of technology, he believes that the viability of local automotive firms should be ensured under the JPEPA.

Ford is particularly concerned about the JPEPA tariff negotiations since the American car firm has invested $50 million for an export production facility in the country.

The Philippines, before a Japan-Thailand Economic Partnership Agreement (JTEPA) agreement was announced was leaning toward 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.