The Department of Trade and Industry (DTI) is pushing for a faster but smooth negotiation process for the renewal of the Philippines-Japan Economic Partnership Agreement (PJEPA), which entered into force since 2008.
In a media briefing on Jan. 5, Undersecretary Allan Gepty of the DTI International Trade Policy Group told reporters that a General Review is ongoing by parties from both the Philippines and Japan, with the former advocating to quicken the pace of the general review and conclude the pending issues and interests that they would like to be covered under the trade review.
"There are also certain products that we're working on that hopefully would be given additional or enhanced market access in Japan. That's why at the political level, we're hurrying the renewal," said Gepty.
The improved market access for Filipino businesses and industries pertain to reduced tariffs.
"As always, they expect their tariff lines to remain positive. Same as us, as much as possible we also want zero tariffs. But it depends on the outcome of the negotiations. So sometimes [in] the landing zones, there's a timeline, reductions, or depending on the sensitivity of the product, tariff lines can still be positive but very minimal," he explained.
The Philippines' main export priorities to Japan is the market access for bananas and other tropical fruits, with producers lobbying to achieve favorable outcomes in the negotiations.
To date, there is a seasonal tariff charged for the Philippine banana (18 percent during winter and eight percent during summer).
For Japan's automobile exports, Gepty remarked that one of the pressure points they're utilizing to hurry the negotiations is the recently signed Philippine-South Korea free trade agreement (FTA) since South Korea have automotive interests in the Philippines that are similar to Japan.
Currently, there are zero tariffs for 3000cc and above high-end automobiles, while vehicles below 3000 cc are subject to 20 percent tariffs.
Notably, Gepty said they are also expecting Japan to tackle its emerging interests such as e-commerce and bilateral digital trade.
In regards to the timeline of the negotiations, it would depend on the conditions of both parties, he said noting that the Philippines has very clear offensive interests and policy directions for the partnership with Japan.
EU-FTA negotiations hopeful
Providing an update on the possible FTA with the European Union (EU), Gepty said they have just finished a stock-taking exercise where the parties involved reviewed the areas that could be covered by the FTA should they decide to resume the negotiation.
"Hopefully, in the first quarter of this year, both parties (EU and the Philippines) would reach a decision, and we're hoping that we will resume the negotiations," he remarked.
However, on the basis of the EU's offensive interest and trade negotiation agenda in their existing FTAs with other countries, Gepty said there are areas that have not been covered in the Philippines' existing FTAs such as limited mandates in government procurement (only including transparency and cooperation).
The Philippine negotiating team is expecting the EU to raise those concerns, and Gepty said they have also explained the country's current regime in order to inform the EU delegation of the current challenges faced by the country and stakeholders.
FTA negotiations were initially set between the county and EU in 2015, and continued in2 016 to 2017, but were stalled due to contentions on intellectual property rights (IPR) provisions.
Talks to resume FTA negotiations was brought about by President Ferdinand Marcos Jr.'s meeting with European Commission President Ursula von der Leyen in July 31, 2023.
Last August 2023, DTI Undersecretary Celerino Rodolfo said the Philippines is aiming for zero tariff for all products of interest, including investment-driven products and services. In particular, these may be electric vehicles (EVs), and renewable energy (RE) sources.
Since 2014, the Philippines has a trade agreement with the EU under the EU Generalized System of Preferences (GSP+) programme which allows over 6,000 eligible products to be exported duty-free.
The DTI said that the European Parliament has expressed its support to extend the trade agreement for four more years until 2027, since it expired by the end of 2023.
US GSP+ lobbying
In regards to the United States GSP+ program, Gepty said they are still in the process of advocating and lobbying, with many of their local stakeholders and counterparts in the US working to push the renegotiation of the agreement.
There's a strong demand, especially from local stakeholders that would benefit from continuing the US GSP+, he noted, since the US is one of the Philippines' major trading partners and largest export market, making up almost 15.4 percent of the Philippines' total exports.
"If you are going to gauge it on the historical, let's say actions taken by the US, it has been reauthorized. In fact, in the past it may be delayed, but there is a retroactive effect. Chances [for reauthorization] are very positive because the benefits are enjoyed by both local and US stakeholders," said Gepty.
According to DTI Secretary Alfredo Pascual, their lobbying tactic is to "work on individual members of the US Congress to get a constituency of support from some of their key figures."
Pascual said they are also working on a bilateral FTA with the US as an alternative to the GSP+, similar to its course of action with the EU, especially if the Philippines becomes ineligible for the GSP+ privileges by reaching the gross domestic product (GDP) threshold for becoming an upper middle country.
Implemented in the country since 2016, US GSP+ is designed to help stimulate economic growth of beneficiary countries and territories through trade, "covering a total 5,057 products or tariff lines or roughly 47.7 percent of the 10,600 total US tariff lines: 3,500 of which are open for all beneficiary nations while an additional 1,500 products are given to the least-developed beneficiary countries."