1. PHILIPPINES-JAPAN FTA
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

2. 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. 2

3. Reasons for Philippine Engagement in FTAs
Maintain competitiveness
Cross-border industrial complementation
Sustain inflows of investments
Mutual support on issues of common interest 3

4. Existing PH FTAs ASEAN Free Trade Area ( AFTA)
ASEAN-China Free Trade Area (ACFTA)
ASEAN-Korea Free Trade Area (AKFTA)
ASEAN-Australia-New Zealand Free Trade Area (AANZFTA)
ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEPA)
Philippines-Japan Economic Partnership Agreement ( PJEPA)
ASEAN–India Free Trade Area (AIFTA) 4

5. 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 with imported components from FTA partner economies.
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). 5

6. 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 6

7. Japan as a Market for PH Exports(% share)
2010
2011
Total PH exports US$51.50B
Total PH exports -US$48.30B
*China includes Hongkong.

8. Exports of Selected Product Groups
PH-Japan, 2011
US$ 8, M
PH-Japan, 2010
US$ 7, M

9. Japan as a Supplier of PH Imports(%share)
2010
2011
Total PH imports US$54.93
Total PH imports US$60.49B
*China includes Hongkong.

10. Imports of Selected Product Groups
PH-Japan, 2011
US$ 6, M
PH-Japan, 2010
US$ 6, M

11. PJEPA and AJCEPA Complementary agreements providing options to businessmen11

12. The Philippines Japan Economic Partnership Agreement (PJEPA)
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 12

13. 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.

14. Tariff Elimination on PH Exports to Japan
The PJEPA
Tariff Elimination on PH Exports to Japan
Tariff Elimination Schedule for Phil. exports
Tariff lines
Sample Products
Immediate
Elimination ( A- zero duty as of Dec.2008)
7, 476
(81.2%)
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 14

15. The ASEAN – Japan Economic partnership Agreement ( AJCEPA)
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.

16. More choices in sourcing imported inputs
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

17. Enhanced market access in Japan for Philippine exports…
Examples of PJEPA & AJCEPA Benefits for Philippine Business
Sector
MFN
AJCEPA
PJEPA
Lauryl alcohol
Glycerol
Other plastic packaging materials
Epoxide resins
4.7 5
3.9
3.1
Copper foil, backed with refined copper
Copper foil, backed with copper alloys
Scrap, powders of other base metals 3
2.5 / 3
Other non-wired glass
4.2
Chemicals
& Plastics
Metals
Glass

18. Examples of PJEPA & AJCEPA Benefits for Philippine Business
Sector
MFN
AJCEPA
PJEPA
Frozen poultry meat cuts
Yellowfin tunas
Shrimps and prawns
Smoked fish 3
3.5 1 10
7.3
0 (TRQ)
0.6
Fresh Mangoes
Fresh pineapples 17
In Quota =0
(1,600 MT in 2012)
Refined coconut oil
Crude coconut (copra) oil
4.5% or 5 yen/kg whichever is greater;
Other plywood and veneered panels
Builders' woodwork
3.9
Resource and agro-based products

19. Important PJEPA and AJCEPA References
Text of the AJCEPA :
Schedule of Commitments:
(refer to the section on Annex 1 - Schedules for the Elimination or Reduction of Customs Duties)
Text and schedules of the PJEPA : (I’m an Exporter Section)
Japan Import Duties under PJEPA:
Philippine Tariffs:
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20. Thank you… 20