President Arroyo has issued the executive order that will pave the way for the modification of tariff rateS for imports from Japan under the Japan-Philippines Economic Partnership Agreement (JPEPA).
Executive Order No. 767 was signed by the President last November 7 as a requirement under the agreement as trade between the Philippines and Japan will be liberalized through the reduction or elimination of import tariffs on both sides.
Three years after the agreement was signed between President Arroyo and then Japanese Prime Minister Junichiro Koizumi, the Philippine Senate finally ratified the agreement, thus paving the way for its implementation.
“This economic partnership would create larger and new markets, improve efficiency and enhance consumer welfare that would boost the vibrancy of economies and thereby expand trade and investment not only between the Philippines and Japan, but also in the region,” according to the EO.
Under Section 402 of the Tariff and Customs Code of 1978, the President is empowered to modify the rate of duty for the promotion of foreign trade upon the recommendation of the National Economic and Development Authority, even without the approval of Congress.
A long list of goods that would be affected by the modified rates was included in the EO, most of which would enjoy zero duty upon implementation of the treaty or after a year or two under the schedule provided.
Some of the goods in the list would be subject to negotiations next year.
Upon the effectivity of the EO, the articles specifically listed in the annex, which are entered or withdrawn from warehouses in the Philippines for consumption would be levied the rates of duty prescribed subject to compliance with the rules of origin as provided for in the agreement.
While the Philippine government would lose some revenue with the adjustment in the import duties of Japanese products, it is expected to make up for it through higher consumer spending because of the resulting cheaper price of goods from Japan.
The Department of Trade and Industry also expects an increase in economic activity, which through the multiplier effect, will generate more jobs, incomes, and a bigger revenue base in the coming years.
More than 50 percent of imports from Japan still enjoy duty free privileges and a significant percentage of the balance is subjected to tariffs five percent and below so the government expects that the impact of the JPEPA on revenues would not be too significant.
The agreement would also result in an increase in Japan’s importation of agricultural and food products as well as other consumer manufactures such as textile and furniture.