There had earlier been fears that the conclusion of the JPEPA would be delayed to next year as the Philippine government sought better terms or at least similar to those granted by Japan last September to Thailand.
The JPEPA talks, in fact, had been suspended for some time and only resumed about three weeks ago.
According to Favila, he had informed President Arroyo about the progress of the talks and the possibility that an agreement in principle may be inked by November, just before the ASEAN Leaders meeting and also before the World Trade Organization (WTO) meeting in Hong Kong in December.
The Philippines and Japan have reportedly reached substantial agreement on trade in goods and services, the automotive tariffs and movement of natural persons.
The JPEPA terms would closely mirror the Japan-Thailand Economic Partnership Agreement or JTEPA.
The Philippines was essentially able to get the same flexibility whereby the Philippines would agree to a tariff reduction until 2009 but that a revalidation of the reduction would be done by 2007 and a possible renegotiation by 2009.
The Philippines had earlier been prepared to reduce to zero its tariff on automobiles by 2010.
The Philippines was leaning towards a phased tariff reduction over a five year period for vehicles with an engine displacement of three liters and below instead of its earlier stance of a "sudden death" reduction.
The phased reduction would involve a formula of 1-3-3-3.
Thus, upon the implementation of the JPEPA in 2006, the current 30-percent automotive tariff would be reduced by one percentage point to 29 percent.
In 2007, the tariff would be reduced by three percentage points to 26 percent, then to 23 percent by 2008 and to 20 percent by 2009.