Doing Business in Free Trade Areas
PHILIPPINES-JAPAN FTA
November 7, 2012
DIRECTOR SENEN M. PERLADA
Bureau of Export Trade Promotion
Department of Trade and Industry
What is an FTA?
Agreement between two or more countries to
eliminate or reduce tariffs and other
requirements of commerce that restrict trade
between them.
Reasons for Philippine
Engagement in FTAs
Maintain
competitiveness
Cross-border industrial
complementation
Sustain inflows of
investments
Mutual support on
issues of common
interest
Existing PH FTAs
1.
ASEAN Free Trade Area ( AFTA)
2.
ASEAN-China Free Trade Area (ACFTA)
3.
ASEAN-Korea Free Trade Area (AKFTA)
4.
ASEAN-Australia-New Zealand Free Trade Area (AANZFTA)
5.
ASEAN-Japan Comprehensive Economic Partnership Agreement
(AJCEPA)
6.
Philippines-Japan Economic Partnership Agreement ( PJEPA)
7.
ASEAN–India Free Trade Area
(AIFTA)
Major Benefits of Free Trade Agreements
 FTAs increase competitiveness of PH exports because of zero or
lower duties to be paid by importers of PH products.
 Lowers cost of production of products
components from FTA partner economies.
with
imported
 Facilitates technology transfer and capacity building through FDI
(Foreign Direct Investments).
 Enhances market access for PH services ( e. g. tourism and travel
related services, engineering and agricultural design, maritime
services)
 Simplifies requirements for entry of business visitors, intra
corporate transferees, investors, natural persons supplying
professional services ( including nurses and certified caregivers).
Philippines-Japan Merchandise Trade
(Values in US$ Billion)
Year
Total
Trade
Exports to
Japan
% Share
to Total
Exports
Imports
from
Japan
% Share to
Total
Imports
Balance of
Trade
2007
14.14
7.30
14.47
6.84
12.32
0.46
2008
14.31
7.71
15.70
6.60
11.64
1.11
2009
11.57
6.21
16.15
5.36
12.45
0.85
2010
14.58
7.84
15.23
6.74
12.28
1.10
2011
15.40
8.89
18.40
6.52
10.77
2.37
Japan as a Market for PH Exports(% share)
2010
2011
Total PH exports US$51.50B
Rest of the
World
23%
Total PH exports -US$48.30B
Rest of the
World
16%
ASEAN
22%
China
11%
ASEAN
18%
EU
14%
USA
15%
EU
12%
China
21%
Japan
15%
USA
15%
*China includes Hongkong.
Japan
18%
Exports of Selected Product Groups
PH-Japan, 2011
US$ 8,886.14 M
PH-Japan, 2010
US$ 7,841.29 M
Electricals
4%, 628M
Minerals
7%, 406M
Homestyle
0%, 23M
Electricals
9%, 508M
Contruction
Materials
18%,
1,035M
Motor
Vehicle
Parts
15%,
850M
Food
5%, 285M
Electronics
38%,
2,116M
Homestyle
1%, 33M
Chemicals
8%, 423M
Minerals
10%, 564M
Food
9%, 469M
Construction
Matls
31%, 1,714
M
Electronics
12%, 628M
Chemicals
9%, 509M
Motor
Vehicle
Parts
24%, 1,316M
Japan as a Supplier of PH Imports(%share)
2010
2011
Total PH imports US$54.93
Rest of
the World
32%
Total PH imports US$60.49B
ASEAN
24%
ASEAN
28%
Rest of the
World
35%
EU
8%
EU
7%
China
9%
USA
11%
Japan
12%
China
12%
Japan
11%
USA
11%
*China includes Hongkong.
Imports of Selected Product Groups
PH-Japan, 2011
US$ 6,516.38 M
PH-Japan, 2010
US$ 6,744.36 M
Wearables
48.5M
1%
Pharmaceutic
als
Petroleum
12.2M
107.75M
0%
2%
Motor
Pharmaceut
Vehicle &
Petroleum icals
HomestyleParts
125.77M 12.81M Wearables
16.78M784.39M
0%
276.96M
2%
16%
0%
6%
Motor Vehicle
& Parts
859.23M
19%
Minerals
39.16M
1%
Electronics
2,719.97M
54%
Food
9.78M
0%
Chemicals
589.19M
12%
Electricals
370.22M
Constructio
7%
n Materials
78.42M
2%
Electronics
2,211.28M
48%
Minerals
236.91M
5%
Food
9.96M
0%
Homestyle
23.27M
1%
Chemicals
660.38M
15%
Electricals
332.99M
7%
Construction
Materials
85.63M
2%
PJEPA and AJCEPA
Complementary agreements providing options to businessmen
PJEPA
AJCEPA
ENHANCING MARKET ACCESS FOR PH EXPORTS
The Philippines Japan Economic Partnership
Agreement (PJEPA)
 PJEPA is the most comprehensive bilateral
economic agreement of the Philippines with
another country. It covers Trade in Goods,
Services, Customs Procedures, Investments,
Intellectual Property, Mutual Recognition ,
Movement of Natural Persons, Cooperation,
Competition, improvement of the Business
Environment.
 PJEPA levels the playing field with other countries,
including ASEAN markets that have bilateral EPAs
with Japan already in place
 The agreement entered into force on Dec.11,2008
The Philippines Japan Economic Partnership
Agreement (PJEPA)
 Tariffs on eighty one percent (81%)of export
products were removed immediately. Tariffs on
the remaining products will be reduced or
removed over a period of three to fifteen years.
 Tariff Rate Quotas on agricultural products such
as fresh pineapples, cane molasses, poultry
meat cuts.
The PJEPA
Tariff Elimination on PH Exports to Japan
Tariff Elimination Schedule
for Phil. exports
Immediate
Elimination ( A- zero duty
as of Dec.2008)
Tariff lines
7, 476
(81.2%)
Sample Products
Electronics
Garments
Furniture
Metal manufactures
Minerals
Certain jewelry items
Chemicals
Coconut ,papayas, mangoes
Shrimps and Prawns
Lobsters
Gradual (B3 –B15)
888
(9%)
Tuna(fresh, frozen)
Processed vegetables
Processed Fruits
Small banana varieties
Footwear
Carpets and other textile floor
Coverings
Prepared/Preserved fish
Leathergoods
Phased reduction / TRQ/
316
(4%)
Fresh pineapples
Fresh bananas
Poultry Meat Cuts
Cane sugar
Cane molasses
Ice cream
Renegotiation
269
(2.9%)
Motor vehicles
ENHANCING MARKET ACCESS FOR PH EXPORTS
The ASEAN – Japan Economic partnership
Agreement ( AJCEPA)
 Essentially the same Philippine tariff
commitments as in PJEPA.
 Longer tariff elimination schedules for some
products as compared to the PJEPA. Under
the PJEPA tariffs on 127 lines will
be
eliminated immediately
but under the
AJCEPA it will take five years.
 Implementation began in July 01 ,2010
under the
ambit of ASEAN.
ENHANCING MARKET ACCESS FOR PHILIPPINE EXPORTS
The AJCEPA

Integrates the Philippines into a regional
market with a population of more than 700
million.

Manufacturing inputs from other ASEAN
countries and Japan are considered
“originating” and may be used to qualify for
passing the ROO and getting AJCEP
preference.

More choices in sourcing imported inputs
Enhanced market access in Japan
for Philippine exports…
Examples of PJEPA & AJCEPA Benefits for
Philippine Business
MFN
Metals
Lauryl alcohol
Glycerol
Other plastic packaging materials
Epoxide resins
Copper foil, backed with refined copper
Copper foil, backed with copper alloys
Scrap, powders of other base metals
Glass
Chemicals
& Plastics
Sector
Other non-wired glass
AJCEPA PJEPA
4.7
5
3.9
3.1
0
0
0
0
0
0
0
0
3
3
2.5 / 3
0
0
0
0
0
0
4.2
0
0
Examples of PJEPA & AJCEPA Benefits for
Philippine Business
Resource and agro-based products
Sector
MFN
AJCEPA
Frozen poultry meat cuts
Yellowfin tunas
Shrimps and prawns
Smoked fish
Fresh Mangoes
Fresh pineapples
3
3.5
1
10
0
3.5
0
7.3
3
17
0
17
0
In Quota =0
(1,600 MT in 2012)
Refined coconut oil
Crude coconut (copra) oil
4.5% or 5
yen/kg
whichever is
greater;
0
0
3
0
0
3.9
0
0
Other plywood and veneered
panels
Builders' woodwork
PJEPA
0 (TRQ)
0.6
0
0
Important PJEPA and AJCEPA References
Text of the AJCEPA :
http://www.aseansec.org/agreements/AJCEP/Agreement.pdf
Schedule of Commitments:
http://www.aseansec.org/22572.htm
(refer to the section on Annex 1 - Schedules for the Elimination or
Reduction of Customs Duties)
Text and schedules of the PJEPA : http://www.dti.gov.ph (I’m an
Exporter Section)
Japan Import Duties under PJEPA: http://www.customs.go.jp/eng
Philippine Tariffs:
http://www.tariffcommission.gov.ph/eo_767
http:// www.tariffcommissiion.gov.ph/eo_905
http//www.tariffcommission.gov.ph/eo_852
Thank you…