Trade dept says JPEPA a boon to RP competitiveness, but industries balk

By Rafael S. santos
Published on Page B1 of the September 12, 2006 issue of the Manila Times

THE recently inked Japan-Philippines Economic Partnership Agreement (JPEPA) would boost local trade and hike economic competitiveness, Trade department said, but local industries appear unconvinced.

“Benefits from the JPEPA will accrue to almost all sectors of the economy,” Trade Secretary Peter Favila asserted.

The Philippines and Japan signed the bilateral Free Trade Agreement (FTA) Sunday in Helsinki, Finland, the result of four years of negotiations. The deal aims to gradually reduce tariff and non-tariff barriers for the free flow of certain goods and services between the two countries.

Favila said the FTA was in line with country’s development objectives, and added the move would give Philippine products a competitive advantage: “The JPEPA is a unique opportunity for us to compete more dynamically with our neighbors for the Japanese market. In 2005 Indonesia accounted for 28.7% of total Japanese imports from Asean; Thailand accounted for 21.4 percent; Malaysia, 20.2 percent; and the Philippines, 10.6 percent.”

But local trade leaders polled by the Manila Times have chided the government for its lack of transparency in its negotiations for JPEPA and lack of caution about the perceived effects the FTA will have on local industries.

The Fair Trade Alliance contended that the “secretive” negotiations have made the public widely uninformed on the provisions of the trade pact, and had asked the government to submit the agreement for Senate ratification.

The alliance also called on government to reveal the pact’s development framework, saying the Philippines seems to be offering a comprehensive list of goods to be liberalized without any clear reciprocal counter offer from Japan.

Favila explained the government is focused on the pronounced complementarities between the two countries and the need to attain bilateral cover for the Philippines’ merchandise exports against competitors aggressively pursuing free trade deals with Japan.

Singapore and Malaysia already have free trade pacts with Japan, while a deal in Thailand is in the works.

Japan is the Philippines’ second biggest trading partner and its biggest source of Foreign Direct Investments. Trade between the two countries amounted to $15.3 worth of goods and services in 2005.

The bulk of Philippine export goods set to enjoy the gradual elimination of tariffs are agricultural products and the services sector, while Japanese exports, on the other hand, is mostly industrial and manufacturing related.

Products that will particularly benefit include those goods that have given the Philippines competitive advantage: bananas, pineapples, and shrimps and crab as well as cane molasses and muscovado sugar, chicken, and tuna, the Trade department said.

“Almost 95 percent of Philippine industrial and agricultural exports [in terms of value] will face zero duties from day one of the implementation of the Agreement,” Favila said.

The Federation of Philippine Industries (FPI), however, cautioned the government about rushing into the deal, saying JPEPA might cause unwanted side effects for local industries.

Local industries are particularly worried that the removal of import tariffs for motor vehicles and semiconductors might weaken sales for domestic manufacturers and kill local players.

“The removal of import tariffs on the entry of Japanese motor vehicles will encourage Japanese manufacturers to flood the country with cheaper products and kill local competitors,” FPI told The Manila Times.

Automotive tariffs will be gradually reduced under JPEPA, and will become zero tariff goods by 2010.

FPI also asked the government for copies of the JPEPA, so that they could peruse the contents and formulate strategies to comply and maximize the provisions of the FTA.

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  1. Motor vehicles can be made affordable with the treaty, but the assembly plants will surely suffer. CBUs can now imported directly. The plants will close down and the employees laid off. This also applicable to the electronics sector. The government should have safety nets for this kind of liberalization. They should also address the importation of used motor vehicles and electronics.




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