RP, Japan may sign economic partnership pact next month

Negotiations for the stalled Japan-Philippines Economic Partnership Agreement (JPEPA) may result in a breakthrough that could allow for a signing of the agreement by next month.

According to sources involved in the talks, the Philippines and Japan will decide this week whether or not they are near enough to reaching an agreement on the automotive tariff issue.

If both parties feel that the automotive issue could delay the JPEPA, sources said, negotiators may agree to exclude the automotive issue and renegotiate it separately to allow for a signing of an agreement since on almost all other aspects, the Philippines and Japan are already in consensus.

Board of Investments (BOI) managing head and Acting Trade Secretary Elmer C. Hernandez confirmed that Senior Trade Undersecretary Thomas Aquino and a Philippine automotive sector delegation are in Japan for a crucial meeting with Japanese officials and Japanese automotive sector representatives for what may be a "make or break" meeting.

The Philippine delegation, Hernandez explained, are hoping to convince their Japanese counterparts on the need to understand the Philippine automotive position.

If the Philippine delegation is successful, Hernandez said, Japan would accept the Philippines’ revised automotive position which calls for a limited tariff reduction and would allow for a renegotiation by 2009.

On the other hand, Hernandez confirmed that similar to other free trade negotiations, either parties or both can agree to exclude certain provisions if it will delay an agreement.

Hernandez cited as an example the Philippines’ position in the ASEAN-China Free Trade Agreement which included an Early Harvest Provision.

The Philippines opted out of the Early Harvest Provision and negotiated with China for a later implementation of the EHP.

However, Hernandez could not say if such an option would be taken during the current talks in Japan.

The Philippines’ negotiating position improved following the revelation of the terms of the Japan-Thailand Economic Partnership Agreement (JTEPA) signed in September this year.

The favorable terms secured by Thailand has given the Philippines more leverage in securing much better terms than it had earlier been willing to agree to.

Particularly significant in the JTEPA was Thailand’s success is maintaining a tariff wall on its locally manufactured vehicles and autoparts, the lowering of Japanese tariff barriers against certain Thai agricultural products such as shrimps and mangoes, and the concessional entry of a limited number of Thai cooks and cultural instructors and dancers to Japan.

Japan, however, continued to refuse entry to certified careworkers or nurses.

Just before the announcement of the JTEPA, the Philippines was already close to agreeing to bring down to zero its tariff on automotives with an engine displacement of less than 3,000 cc by 2010, leaving virtually no tariff protection for the Philippines’ struggling automotive industry.

Following Thailand’s own refusal to completely remove all tariffs on its automotives, the Philippines is now insisting that some tariff protection is maintained against Japanese automotive imports.