In an interview with The STAR, Favila stressed that "our position is final. If they do not accept it, we are prepared to carve out the automotive provision so that we can sign an agreement, otherwise there will be no agreement."
Favila had earlier instructed Senior Trade Undersecretary Thomas Aquino to present the Philippines’ revised position on the automotive tariff issue wherein the Philippines is adopting a similar stand as Thailand.
In Thailand’s EPA with Japan, it agreed to reduce its automotive tariffs only down to 20 percent by to 2009, with a renegotiation at that time.
Before Thailand’s agreement was reached in September this year, the Philippines was leaning towards a complete removal of automotive tariffs by 2009.
However, following the Japan-Thailand EPA, the Philippines has revised its position, thus, frustrating Japan which had earlier though that the automotive issue was already settled.
Aquino, who is the lead negotiator in the ongoing JPEPA negotiation, recently informed his Japanese counterparts that the Philippines is prepared to remove the automotive tariff provision from the EPA if Japan is not willing to accept the Philippines’ revised automotive position.
Japan has asked for time study the new Philippine position on automotive tariffs.
Favila warned Japan thought that, "our position is final. How else do they define final?"
Favila revealed that apart from the automotive issue, both countries are already in agreement in most of the issues.
Thus, to enable a signing of an agreement, Favila said, the automotive provision could be left out for further negotiation.
However, Aquino, along with Chamber of Automotive Manufacturers of the Philippines (CAMPI) Elizabeth Lee, are still optimistic that Japan will relent and accept the Philippines’ new position.
Aquino and Lee were in Japan a week ago for a last ditch appeal to the Japanese automotive industry and Japanese government negotiators to understand the Philippine government’s position to help preserve the local automotive industry.
Without continued tariff protection for locally assembled cars, existing automotive manufacturers in the Philippines would likely stop local assembly of completely knocked down (CKD) units and resort completely to importation of completely built up (CBU) units.
Without local CKD operations, there could be massive layoffs in the automotive industry.
CBUs imports only require the addition of tires and batteries, while CKD assembly still has plenty of local auto part content and requires skilled labor.
Aquino pointed out that Japan is still interested in including the automotive provision based on its request to be given time to study the Philippine position.
Lee echoed Aquino’s observation following her own interaction with Japanese auto industry leaders.