Gov’t seeks Japan commitment to invest in RP automotive sector

The government is seeking Japan commitment to invest in the local automotive sector under the Japan-Philippines Economic Partnership Agreement (JPEPA).

Trade Undersecretary Elmer Hernandez said over the weekend that the Philippines wants Japan to commit to invest heavily in the local automotive industry comparable to the investments it is pouring into Thailand.

The government has already complained to Japan that the Philippines needs more investments since it continues to struggle to grow the local automotive sector, while Thailand is already way ahead.

The Philippines, furthermore, is still holding out for a "sudden death" reduction in automotive tariffs even as Japan is trying to push a compromise whereby tariffs on smaller engine vehicles could be reduced ahead of schedule.

A "sudden death" formula would allow the Philippines to maintain existing tariffs on completely built-up units (CBUs) at 30 percent until 2010 when all tariffs would be reduced to zero.

Ford Motor Philippines, the country’s lone exporter of CBUs, is intensely lobbying for the "sudden death" formula as it feels that it would be the most disadvantaged once the JPEPA is signed.

Completion of negotiations for the JPEPA is targeted for this month.

However, Senior Trade Undersecretary Thomas G. Aquino had hinted at a possible delay in the signing of the JPEPA due to the need for further fine-tuning of certain provisions.

Aquino had explained that the Philippine panel does not want to rush the agreement.

"It has to be a good deal. We want to conclude it as soon as possible, but it (the agreement) cannot be born out of tension or we will not be able to live with it," Aquino explained.

As such, Aquino foresees the signing of the agreement to take place before the end of the year.

Some of the provisions of the agreement that need further fine-tuning, Aquino cited, include the provisions of Rules of Origin, the automotive sector and the movement of natural persons.

The Philippine negotiating team is very careful in bargaining with their counterpart to ensure that the agreement that would be signed by both governments abides by Philippines Laws and that local businesses gain from the accord, Aquino said.

The proposed JPEPA seeks to enhance bilateral economic relations between the Philippines and Japan.

The governments of Japan and the Philippines are still in the thick of negotiations as the final leg of the talks is underway. Both parties are reviewing the completed chapter provisions of the proposed accord and have assured that the final draft JPEPA text would be out soon.

The JPEPA, considered as a bilateral milestone between the two countries, seeks to promote freer trans-border flow of goods, persons, services and capital between the Philippines and Japan.