The talks are expected to focus on the contentious issues of automotive tariffs, investment treatment, services, trade in goods and waste provisions concerning used appliances.
According to sources involved in the negotiations, the return of the Japanese negotiators gives a glimmer of hope that a more favorable agreement for the Philippines may be achieved and that an agreement in principle may be in place by the end of the year.
However, the conclusion and signing of the JPEPA is not likely to be held this year and may have to be pushed back to next year because of legal complexities.
The Philippines’ negotiating position improved following the revelation of the terms of the recent Japan-Thailand Economic Partnership Agreement (JTEPA).
The favorable terms secured by Thailand had given the Philippines more leverage in securing much better terms than Japan had earlier been willing to agree to.
Japan and Thailand reached agreement last Sept. 1 on the JTEPA.
The JTEPA allows Thailand to maintain a tariff wall on its locally manufactured vehicles and autoparts. Japan has also agreed to lower tariff barriers against certain Thai agricultural products such as shrimps and mangoes, and open the doors to a limited number of Thai cooks and cultural instructors and dancers.
Japan, however, continued to refuse entry to certified careworkers or nurses.
Trade and Industry Secretary Peter B. Favila had previously acknowledged that "while we will definitely seek better terms from Japan, realistically it will not be at par with what Thailand got."
Favila admitted that the Thai economy is currently more vibrant than that of the Philippines.
More glaringly, the Thai automotive industry is almost four times larger than that of the Philippines which continues to languish due to strong competition from the used motor vehicle market. Thailand, in fact, is being labeled as the "Detroit of Asia."
Japan has also acknowledged its strong bilateral trade with Thailand which amounted to nearly $35 billion last year. In comparison, Japan’s bilateral trade with the Philippines is around $10 billion only.
Just before the announcement of the JTEPA, the Philippines had come close to agreeing to bring down to zero its tariff on automotives with an engine displacement of less than 3,000cc 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 expected to ensure that some tariff protection is maintained against Japanese automotive imports.