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Ford warns gov’t on JPEPA signing

Manila Bulletin | 15 August 2005

Ford warns gov’t on JPEPA signing


Ford Motor Group in the Philippines has put up a strong pressure on the government against signing a free trade pact with Japan that will put its assembly and exports program in the country at a disadvantage over Japanese assemblers.

Board of Investments Elmer C. Hernandez has been meeting with local Ford officials, who time and again reiterated that their position be considered in the ongoing Japan-Philippines Economic Partnership Agreement (JPEPA).

But Hernandez said the concern of the American carmaker was understandable because they have an aggressive exports program for the country.

So far, the Ford Group is the only volume exporter of completely built-up cars assembled from its Sta. Rosa Plant.

It is also the lone participant in the Board of Investments’ Automotive Exports Program (AEP), which grants tax incentives to CBU exports that meet the specific volume requirements.

In fact, Hernandez stressed that Ford Motor Co. Philippines Inc. will roll-out its first 400 units of compact car model Focus for exports to Thailand in September this year.

This is on top of its existing CBU exports of Escape, Tribute and Lynx to Thailand and Indonesia.

"I think Ford is ready to take on the JPEPA challenge for as long as the zero import tariff will apply in 2010 yet or a sudden tariff death by 2010 and not go through a phased reduction," Hernandez said.

So far, the Philippines and Japanese negotiating teams have agreed that tariffs for big engine vehicles or those with 3 to 4 liter engine sizes will have to undergo sudden death or zero tariff by 2010.

At present, CBU tariffs on big-engine cars or those with 2.1 c.c. or 2100 liter engines are pegged at 35 percent while the small engines or 1.3 to 2 liter are at 30 percent tariff.

"What we have not agreed upon yet is the tariffs on below 3-liter cars and that is the problem," Hernandez said.

Cars below 3 liters account for the bulk of the domestic car sales. Local assemblers, mostly Japanese, are also concentrating on this market segment.

Issues on automotive, movement of natural persons and treatment of investments are the remaining issues to be settled in the ongoing Philippine-Japanese negotiations.

Based on the timetable, the negotiations are supposed to be concluded in September and signing of the agreement by December this year.

 source: Manila Bulletin