Signing of RP-Japan FTA seen to take place next yr

TOKYO, Japan — The signing of the free trade agreement (FTA) between Japan and the Philippines is likely to take place in the first semester of 2006 with ongoing negotiations deadlocked due to unresolved issues.

"There are still a number of concerns that need to be sufficiently addressed and we have to ensure that both parties will come out of negotiations satisfied with the results," said Philippine Ambassador to Japan Domingo Siazon.

Siazon said that aside from the issues on services, the movement of people, the number of qualified Filipino nurses and caregivers that Japan will accept annually to work in hospitals and in home care or retirement facilities, there is also the sticky issue of the proposed tariff reductions for Japanese automobiles exported to the Philippines.

Under the proposed Japan-Philippines Economic Partnership Agreement (JPEPA), the Japanese government still wants to press for a phased tariff reduction for its vehicles with engine displacement of three liters and above over a period of five years or until 2010.

The Philippines, however, prefers to impose sudden zero percent tariff by 2010 in keeping with the tariff schedule of the ASEAN Free Trade Agreement (AFTA).

Upon the expected implementation of the JPEPA in 2006, the current 30 percent tariff on vehicles will be reduced by one percentage point to 29 percent. By 2007, this will go down by three percentage points to 26 percent, then by another three percentage points to 23 percent by 2008, 20 percent by 2009 and zero by 2010.

"We have to push for a 2010 tariff reduction instead of a gradual reduction because other car manufacturers not benefiting from a free trade agreement but have huge investments in the Philippine automotive sector will be affected. It would be better if we just impose the zero tariff plan by 2010 which is what Thailand will do under its own FTA with Japan," said Mauino Haresco, Philippine commercial attaché in Japan.

The Philippine auto assemblers are opposing the plan to reduce tariffs on imported Japanese vehicles with engines larger than 3,000cc since this would result in sharply lower demand for their own products. American car manufacturer Ford Motor Co. will also be threatened by the phased-in tariff cut.

Auto parts makers added JPEPA will have consumers shifting to imported large-engine vehicles due to the reduced tariffs and at the same time this will eliminate incentives for Japanese automakers to expand their local production facilities, particularly for sedans with engines of 1,800cc or more, affecting local parts manufacturers and auto workers.

Moreover, larger engines would require higher fuel consumption at a time when the Philippine government is promoting energy conservation to cope with spiraling oil prices in the world market.

The automotive issue is one of the four issues that continue to delay the conclusion of the JPEPA which the government earlier targeted to sign before the end of the year.

Aside from automotives, the movement of natural persons, the trade in goods and the trade in services have remained as the contentious issues in the ongoing JPEPA negotiations.

Earlier, Japan already concluded talks regarding providing greater market access to Philippine agricultural products.

Siazon said the Philippine agriculture sector stands to gain from JPEPA, since Japan is now the biggest market of local agricultural producers. He noted that 95 percent of Japan’s pineapple and banana imports come from the Philippines, while about 45 percent of its papaya requirements are sourced from Mindanao-based producers.

By next year, the Philippines is expected to dislodge Thailand as the biggest supplier of fresh okras to Japan as buyers shift to the more cost-competitive and better-quality okra grown by Tarlac farmers in Luzon.

JPEPA seeks to promote freer trans-border flow of goods, persons, services, and capital between the Philippines and Japan.

Another unresolved issue is the movement of persons.

"Japan wants to limit this number to 100 yearly but the Philippine government is asking that the number should be raised or be based on demand," said Siazon in a previous interview.

Japan said it will finally allow entry of qualified nurses and certified careworkers if they satisfy certain requirements, such as learning the Japanese language to get their national licenses. This is on the assumption that the Philippine side will provide a similar framework to meet the Japanese interest.

After taking the national license examinations, qualified nurses will be given initial employment contract of up to three years, and four years for certified careworkers.

Candidates that passed the Japanese language program should then enroll and complete caregiver courses. The certificate of completion of these courses will allow them to seek employment in established facilities.

"There is a big demand for nurses and caregivers, especially since there is a growing elderly population in Japan," said Siazon.

The Japanese government also wants to limit the number because it wants to control the number of Filipinos illegally staying and working in this country where an estimated 20,000 to 30,000 are unregistered.