The Japan Times: Nov. 20, 2004

Japan, Philippines clear steel hurdle, reach FTA accord

SANTIAGO (Kyodo) — Japan and the Philippines reached a basic agreement Thursday for a bilateral free-trade agreement after striking a deal on the stickiest issue — steel tariffs.

Economy, Trade and Industry Minister Shoichi Nakagawa and Philippine Secretary of Trade and Industry Cesar Purisima reached the agreement on the sidelines of a two-day ministerial meeting of the Asia-Pacific Economic Cooperation forum in Santiago, Nakagawa said.

The deal with the Philippines would be the third FTA for Japan, following pacts with Singapore and Mexico.

The agreement with the Philippines is expected to give momentum to ongoing FTA negotiations between Japan and other trading partners in Asia — Malaysia, South Korea and Thailand.

Nakagawa said the two nations reached a compromise on the Philippines’ tariffs on Japanese steel imports, based on Japan’s proposal that Manila scrap tariffs on 30 percent of Japanese imports and gradually reduce the remaining levies.

Nakagawa said tariffs on Philippine-bound Japanese steel exports definitely will be lowered with the agreement, and the two countries will fine-tune the details at working-level negotiations.

"With a basic agreement reached, negotiations at the political level are over," he said.

The agreement was reached after Purisima consulted President Gloria Macapagal Arroyo on the matter, according to Nakagawa.

The pact will probably be endorsed at a meeting between Prime Minister Junichiro Koizumi and Arroyo on the sidelines of the summit of the Association of Southeast Asian Nations plus three — China, Japan and South Korea — later this month in Laos.

The issue of accepting foreign workers in Japan was also a focal point. Japan and the Philippines agreed last month that a limited number of Philippine nurses and caregivers will be allowed to work in Japan with lesser restrictions on condition that they pass Japanese qualification examinations.

On agricultural products, Japan agreed to lower tariffs on bananas and pineapples from the Philippines. But the two sides sidestepped a decision on politically sensitive sugar imports.