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Driving a hard bargain: Trade agreements easier said than done

(IHT/Asahi: November 24,2004)

DRIVING A HARD BARGAIN: Trade agreements easier said than done


The Asahi Shimbun

Japan is proving a tough negotiator for countries with their hopes pinned on FTAs.

MANILA—On a four-story building in Caloocan City, an industrial suburb just north of Manila, hangs a sign: "Your future is here.’’

Inside, women clad in blue uniforms labor over hiragana during breaks between classes. They are all students of International Direct Placement Specialist, a school that trains nursing care providers who want to work overseas. The beckoning future for many of them is in Japan.

Last week, after prolonged negotiations, Japan and the Philippines reached a basic accord on a free trade agreement (FTA).

But it hasn’t been an altogether smooth run. Manila was forced to concede on a number of issues.

However, the Southeast Asian country did get one of its key wishes-Filipino nurses and caregivers with Japanese qualifications and language skills will be allowed to work in Japan for longer periods.

For the Philippines, where 8 percent of gross domestic product is made up of overseas remittances, it is good news.

Japan’s labor market remains somewhat closed to foreigners without specific skills for the job. Foreign nurses can work, but only for four years.

Since the school in Caloocan City opened in 2002, around 1,000 students have graduated. About 250 students are currently enrolled. Anticipating an eventual opening of the Japanese market, the school has been offering Japanese lessons from the start.

Marlene Eugenio, 27, just finished a seven-month course. She is married to a construction worker and is the mother of an 8-year-old girl.

Before entering the school, Eugenio was a sales clerk at a department store where she earned 280 pesos (about 580 yen) for an eight-hour day-the minimum wage for workers in metropolitan Manila, where a tall Starbucks coffee sells for 85 pesos.

Before taking the job, she attended college but was forced to quit because she couldn’t afford the tuition.

When she first enrolled at the nursing care school, however, Japan was not on her list of prospective destinations. She changed her mind this summer after a local television network reported that Japan would accept Filipino nurses and nursing care workers as part of its FTA obligations.

"Compared with American and European countries, Japan is much closer to the Philippines both in culture and in geographical terms," Eugenio said.

"I also heard that Japanese people are kind. I am studying Japanese very hard and hope to eventually get a job there," she said, adding that she hopes to earn enough money in Japan to send her daughter to college.

International Direct Placement Specialist is one of around 700 vocational schools that train nursing care providers throughout the Philippines.

Last year, only about 18,000 of the 50,000 graduates could find employment overseas in places like Taiwan, Israel and Canada.

While the Philippines has all but closed the deal with Japan, other Southeast Asian countries are having a harder time of it. Both Thailand and Malaysia are finding Japan more than a little inflexible as it strives to protect its domestic markets.

Perhaps the most vigorously defended market is rice-the sticking point in FTA talks with Thailand.

Currently, Japan imposes a rice tariff of 490 percent. During three-day working-level talks between Thailand and Japan in Tokyo in August, Thai negotiators demanded rice tariffs be lowered.

"In Japan, there are many Thai restaurants and Thai food is very popular. Japanese consumers are sure to welcome imports of Thai rice," a Thai representative said.

A Japanese official retorted: "Thai rice is not popular in Japan because it is long-grained. Demand is limited to Thai restaurants." And that was that.

Thailand produces 26 million tons of rice annually, 7.2 million of which is exported.

It is the world’s biggest rice exporter, yet Japan imports a mere 120,000 tons.

And it is showing no signs of relenting. The Thai government could soon be forced to drop rice from the list of products slated for tariff reductions.

Japan is also taking a tough stand in talks with Malaysia-far tougher than the Malaysia had expected. One of the biggest hurdles to clear is Japan’s tariff structure for Malaysian forestry products.

Current tariffs for plywood, which makes up 5.5 percent of Malaysia’s total exports to Japan, stand between 6 and 10 percent. Malaysia wants those lowered.

But during the first round of FTA talks between the two nations on July 19 at the Japanese Foreign Ministry, Japanese officials indicated those tariffs would not be so easily chopped.

Officials accused Malaysia of foul play, saying that Malaysian companies were known to process timber taken illegally from the forests of Indonesia.

"Unless there is an effective system to verify that Malaysian plywood does not use illegally felled lumber, we cannot meet Malaysia’s request to lower tariffs," the Japanese delegation told their Malaysian counterparts.

Malaysia claims the demand was completely unexpected and denied the allegation. They added that there was no way to know if lumber was illegally smuggled. Needless to say, talks have reached somewhat of a standstill.

Thailand and Malaysia had hoped to sign deals with Japan by the end of the year. Now that looks unlikely to happen.

 source: Asahi