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Automakers holding up JPEPA

ABS-CBN, 11 April 2005

Automakers holding up JPEPA

Niel V. Mugas

Issues involving tariff protection and reduction on automotive products have delayed the conclusion of talks over the planned Japan-Philippines Economic Partnership Agreement (JPEPA).

Under a proposed draft, tariffs on auto and auto parts will be eliminated or reduced to zero without exceptions by 2010 as part of the improved market access of the Philippines. Tariffs on other automotive products will be eliminated once the agreement takes effect.

Auto industry sources said some Philippine-based producers are uncomfortable with this draft provision since it endangers the local industry’s viability.

The same industry players are instead calling for a gradual tariff reduction on completely built-up units (CBUs) and auto parts as a form of protection.

Auto makers are also in disagreement over the tariff-reduction schedule to be followed.

Leading automotive firms want most favored nation (MFN) tariff rates to be lowered to 25 percent by January 2006, or six months after the expected signing of the JPEPA in June this year to allow more access for Japanese-made vehicles.

This rate is 5 percent lower than the prevailing 30-percent MFN rate, which is the tariffs imposed on products imported from outside the Southeast Asian region.

Other players however are pushing for 20 percent.

Small industry players are appealing for more protection by pegging the MFN rate on CBUs at 28 percent by January.

An auto industry official said pushing for a slower tariff-reduction schedule is very crucial if the viability of local automotive players were to be ensured.

 source: ABS-CBN