US car firms worried over proposed RP-Japan FTA

The Philippines’s pending free trade agreement (FTA) with Japan is causing some concern to American car manufacturers which, in turn, are lobbying with the US government to intercede with the Arroyo administration.

American car manufacturers Ford and General Motors are concerned specifically with a possible provision in the Japan-Philippines Economic Partnership Agreement (JPEPA) that would give preferential tariff to smaller engine Japanese automotives to the detriment of US vehicles especially those with a big engine displacement.

The US government, in a video conference last Friday, expressed its trade concerns to Philippine trade officials.

Aside from the JPEPA concerns, the US authorities also reportedly expressed their sentiment on Executive Orders 418 and 419 which impose a P500,000 additional specific tax on imported used vehicles and increased the import duty on big engine vehicles.

Ford Motor Philippines is exempted from the gas guzzler tax because it is the lone participant in the Automotive Export Program (AEP).

But GM is directly affected by the gas guzzler tax because it imports completely built units from the US.

EO 419 imposes a 25-percent tariff on imported CBUs with an engine displacement of over 2,100 cc.

Previously, the tariff on imported big engine CBUs was only 20 percent.