JPEPA Final

Q&A Primer
This publication was assisted by the Partnership

and Advocacy for Competitiveness and Trade (PACT),
a project jointly implemented by the De La Salle UniversityAngelo King Institute (DLSU-AKI) and the Philippine Exporters
Confederation, Inc. (PHILEXPORT) through a grant from the
United States Agency for International Development
"Targeted Intervention in Economic Reform and Governance"
(TIERG) project. The views expressed in the articles, papers
and other readings in this material do not necessarily reflect
those of PACT, DLSU-AKI, PHILEXPORT, USAID nor any of the
organizations associated with the PACT project.
ISSN 1908-8213
Understanding
JPEPA

ISSN NO.: XXXX-XXX-X
Q&A Primer
Understanding
JPEPA
Philippine copyright 2007 by Philippine Exporters Confederation Inc.
Primer_JPEPA_sept3.pmd
9/5/2007, 4:18 PM
Acknowledgement is given to the

invaluable assistance of the Department of
Trade and Industry, with the Department
of Foreign Affairs, other government and
private organizations, the Philippine
Chamber of Commerce and Industry, as
well as to the inputs taken from various
researches in completing this publication.
9/5/2007, 4:18 PM
TABLE OF CONTENTS
Acknowledgments ......................................................................................... 2
Foreword ....................................................................................................... 5
Background on JPEPA .................................................................................... 7
Features ......................................................................................................... 9
Implementation ........................................................................................... 28
List of References ........................................................................................ 30
Annex A ...................................................................................................... 31
Q&A Primer
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9/6/2007, 1:42 PM
Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)
FOREWORD
illed as a new age free trade agreement, the Japan-Philippines Economic

Partnership Agreement or JPEPA is the Philippines most comprehensive
bilateral agreement to date since 1954. Its implementation is expected to
reap economic benefits for the country.
This Primer is published to assist stakeholders to understand and appreciate
the JPEPA as an instrument to push our economic interests with Japan. Taking
this bilateral tract while regional and multilateral negotiations progress at a slower
pace is endorsed by government to sustain the momentum from and pave the
way to other Philippine trade agreements. The JPEPA is also expected to strengthen
RP market access to Japan despite similar EPAs by neighboring countries at the
bilateral and regional levels.
However, the JPEPA, as discussed in this Primer, covers the provisions as
they were signed in Helsinki in September 2006. The JPEPA is still subject to
Senate concurrence hopefully within the year. The ratification becomes relevant
in the light of preparations for the ASEAN-Japan Closer Economic Partnership
(AJCEP) which should complement the JPEPA.
Sectoral consultations have been scheduled to help facilitate the ratification.
But even as the current JPEPA version has been signed and finalized, mechanisms
are in place to clarify and address issues that will arise from these consultations.
One such mechanism can be through the implementing rules and regulations
(IRR) that will be drafted after the ratification. The Department of Trade and
Industry will lead the drafting of the IRR.
The Philippine Exporters Confederation, Inc. hopes that the Primer can
contribute even modestly to the successful implementation of the JPEPA.
September 2007
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BACKGROUND ON JPEPA
In capsule, what is the Japan-Philippines Economic Partnership Agreement
or JPEPA?
The JPEPA aims to facilitate and promote the free trans-border flow of
goods, persons, services and capital between the Philippines and Japan, and
strengthen the existing economic relations between the two countries. The
basic agreement consists of (1) the basic agreement with 16 chapters (120
pages) and eight annexes (100 to 170 pages); and (2) the implementing
agreement (33 pages), each providing specific provisions on various areas of
trade and related aspects.
It is the Philippines most comprehensive bilateral agreement to date
since the Laurel-Langley agreement of 1954 (Briefing Paper on the JapanPhilippines Economic Partnership Agreement prepared by the office of Rep.
Teddy Casio, November 22, 2006) and the Philippines-Japan Treaty of Amity,
Commerce and Navigation of 1973. Billed as a new age free trade agreement,
the Agreement was signed by President Gloria Macapagal-Arroyo and then
Japan Prime Minister Junichiro Koizumi in Helsinki, Finland in September 9,
2006.
By signing the JPEPA, the Philippines should be able to pursue particularly
its economic initiatives with Japan, invite Japanese investments and facilitate
technical assistance despite the relatively slower progress at the regional and
multilateral negotiations.
How does the JPEPA relate to other Philippine international trade
agreements?
The JPEPA is consistent with the Philippine posture that promotes
economic cooperation bilaterally (another effort covers US-RP relations,
currently under a Trade and Investment Framework Agreement or TIFA),
regionally (ASEAN Free Trade Area (AFTA) initiatives since 1991; participating
in on-going negotiations on an ASEAN-Japan Closer Economic Partnership
(AJCEP)) and multilaterally (GATT, and later WTO, membership since 1994
and participation in the Doha Development Round of WTO negotiations) to
facilitate trade.
Considering the relatively slower progress achieved at the WTO compared
with the bilateral agreements signed worldwide, the Philippines took a similar
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bilateral course to advance RP-Japan economic relations by signing the JPEPA.

Aside from Japan, the United States and the European Union led the shift to
bilateral, plurilateral or regional free trade agreements to get over and around
the various stumbling blocks that have bogged down the WTO. (Casio office,
2006)
On the other hand, one of the significant regional developments for the
Philippines was the signing of the Framework for Comprehensive Economic
Partnership (CEP) between the Association of Southeast Asian Nations and
Japan in October 2003. The AJCEP is negotiated based on this Framework.
AJCEP provides that ASEAN and Japan will negotiate the agreement as a
whole, taking into account the achievements of bilateral negotiations between
each ASEAN Member State and Japan, and the further progress of the ASEAN
integration process. It further provides that the concessions between Japan
and ASEAN members that have concluded a bilateral economic partnership
agreement (EPA) should not be re-negotiated under the AJCEP negotiations,
and that all Schedules of Concessions under the bilateral deals shall be annexed
to the AJCEP Agreement. Such Agreement should be consistent with the WTO
Agreement.
In signing the AJCEP which covers trade in goods, services and investment,
the Philippines enjoys the ASEAN-wide benefit of enhanced value as a regional
market, attracting investments as a result and providing an important
mechanism for strengthening co-operation and supporting economic stability
in East Asia.
By the year 2020, the export value from ASEAN to Japan is projected to
increase by US$20,630 million, equivalent to 44.2% of that in the base year,
1997. Meanwhile, Japans exports to ASEAN would have increased by
US$20,022 million, equivalent to 27.5%of that amount in the same base.
(The Joint Declaration of the Leaders of ASEAN and Japan on the
Comprehensive Economic Partnership, ASEAN-Japan Summit, Phnom Penh,
November 5, 2002)
Given that the JPEPA should be under the umbrella of the AJCEP
framework, the bigger market that the Agreement will create extends beyond
Philippine and Japanese consumers and taps those of ASEAN and the rest of
the world, thus giving rise to greater opportunities, larger economies of scale,
and more predictable and conducive environment for commercial activities.
The complementary nature in terms of culture and common history of
the economies of the Philippines and Japan likewise provides some levels of
confidence that the Agreement should be advantageous to both. These
advantages could however be whittled down if AJCEP commitments are
regionalized; hence, the need for JPEPA implementation before AJCEP.
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Regionalization may entail the Philippines to provide to other ASEAN

countries the same preferences given Japan under JPEPA, or that the Philippines
provides Japan the same preferences given other ASEAN countries, or both.
The JPEPA-AJCEP situation presents a complicated noodle bowl scenario
in implementing the Rules of Origin and other disciplines relevant to the
regional agreement itself and the bilateral agreements forged individually by
ASEAN member states with Japan.
For example, for Textiles and Textile Articles (Chapters 50-63), origin
can be conferred if each of the non-originating materials is entirely spun,
dyed, or printed, among others, in either Japan or the Philippines or in a
member country of the ASEAN. However, a different ROO in the JPEPA or
the one between Japan and another ASEAN country can render the above as
non-originating.
However, an FTA with Japan does not in any way rule out the utilization
by the Philippines of links with other regional partners such as, but not
limited to, those defined under the AFTA. Within AFTA, there are rooms for
improving the competitiveness of certain Philippine exports to Japan or other
third country through so-called triangular relations to benefit all participants.
For instance, Philippine furniture makers can explore producing in Indonesia
at lower costs using Philippine management and skilled workers combined
with Indonesian natural materials under joint venture agreements or
outsourcing. Therefore, competition from Thailand and Malaysia, which may
sign separate FTAs with Japan, can be mitigated by cooperation measures
among the Philippines, Thailand and Malaysia. In this case, competition
and cooperation should not be seen as mutually exclusive.1 (Royce Elvin O.
Escolar, An Analysis of Industry and Sector-Specific Impacts of a JapanPhilippines Economic Partnership, 2004)
What is the competitive edge of the Agreement compared to Japans other
bilateral FTAs and EPAs in the region?
Competitive realities in the ASEAN make the JPEPA an imperative to
protect Philippine interests. Simulation results show that the Philippines would
lose around 0.09%2 of GDP (around $40.77 billion based on the 2006
estimated GDP of $453 billion) if the country does not forge an FTA with
Japan. Other Southeast Asian countries are pursuing bilateral trade agreements
with Japan. Agreements with Singapore, Malaysia and Indonesia are already
1
This illustrates the concept of Co-opetition a game theoretic approach to business strategy that revolutionized the
way people look at competition (Brandenburger and Nalebuff 1996).
Figure considered only the lowering of Philippine tariffs and not Japans. This is based on a non-growth model with
fixed capital and labor and allocation of existing resources. However, using Japans General Trade Adjustment
Project (GTAP) model which accounts for capital accumulation and productivity gains, this figure should be from
1.7% to 3%.
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in-force; Thailands will soon be a reality3. Negotiations are currently being

held with and Brunei; while negotiations with Vietnam started in January this
year. In 2005, Indonesia accounted for 28.7% of total Japanese imports from
ASEAN; Thailand accounted for 21.4%; Malaysia, 20.2%; and the Philippines,
10.6%.
Without the JPEPA, the Philippine exporters share of the Japanese market
our second-largest export market will be further eroded by countries
implementing and pursuing their own EPAs with Japan. Efforts to mainstream
trade in pursuit of poverty alleviation will then experience a serious set back.
(DTI Briefer)
The Japan-Thailand EPA was reportedly signed on April 3, 2007 but its ratification/implementation may have been
deferred because of the coup.
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FEATURES
What are the most important among JPEPAs general provisions?
The General Provisions as enumerated below contain the fundamental
principles and basic rules for the economic partnership. It comprises the first
chapter of the JPEPA document and provides principles permeating all other
sections, unless expressly excluded.
Between 2003 and 2006, government agencies notably the Department
of Trade and Industry, the Tariff Commission, the Department of Tourism,
and the Bangko Sentral ng Pilipinas conducted a number of consultations
with the private sector while JPEPA was being negotiated. Many complain of
not having been consulted. The list of various consultations conducted is in
Annex A.
Review of Laws and Regulations: Each country shall determine the
possibility of amending or repealing laws and regulations relating to the JPEPA,
if the circumstances or objectives justifying these conditions no longer exist or,
if such circumstances or objectives can be addressed by less trade-restrictive
means.
Public Comment Procedures: The Japanese and Philippine governments
shall provide a reasonable opportunity for public consultations before the
adoption, amendment or repeal of regulations that affect any matter covered
by the Agreement.
Measures Against Corruption: Each country shall ensure that measures are
taken to prevent and combat corruption regarding matters covered by this
Agreement, consistent with the laws and regulations of both countries.
Implementing Agreement: Both governments shall conclude a separate
Implementing Agreement which details the procedures for the implementation
of the JPEPA.
Joint Committee: A Joint Committee composed of representatives from
both governments shall be established with the following functions:
a) review the implementation and operation of the JPEPA;
b) consider and recommend to the Parties any amendments to the
Agreement;
c) supervise and coordinate the work of the Sub-Committees;
d) adopt the Operational Procedures on Trade in Goods and Rules of
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e)
Origin referred to in Article 25, and the Operational Procedures on

Mutual Recognition referred to in Article 65; the Rules of Procedure
referred to in Article 159; and any necessary decisions; and
perform other functions as the Parties may agree.
In addition, the following Sub-Committees shall be established on the date of

entry into force of the JPEPA:
a) Sub-Committee on Trade in Goods;
b) Sub-Committee on ROO;
c) Sub-Committee on Customs Procedures;
d) Sub-Committee on Mutual Recognition;
e) Sub-Committee on Trade in Services;
f) Sub-Committee on Investment;
g) Sub-Committee on Movement of Natural Persons;
h) Sub-Committee on Intellectual Property;
i) Sub-Committee on Government Procurement;
j) Sub-Committee on Improvement of the Business Environment; and
k) Sub-Committee on Cooperation.
Communications: Each Party shall designate a contact point for
communications between the Parties on matters regarding the JPEPA.
The creation of the various Committees and Sub-committees above is an
important component of the JPEPA because it will help refine the various
provisions, cooperation mechanisms, and address implementation concerns
of the Agreement. (Yap, Medalla, Aldaba)
If indeed the Agreement is not confined to a trade pact, what does it cover?
Explain simply each of the covered areas.
The conventional free trade agreement covers mainly trade in goods and,
recently, trade in services. The economic partnership agreement goes beyond,
into such areas as bilateral cooperation, investment, government procurement,
competition, and business environment.
The JPEPA covers the following areas:
1. Trade in Goods will eliminate or reduce tariffs on 95% of industrial
and agricultural products
2. Emergency Measures will provide the rules for addressing serious
injury or threat thereof caused by increased imports.
3. Rules of Origin will determine originating goods for which
preferential tariff treatment will be accorded.
4. Customs Procedures will provide information exchange and
cooperation to facilitate trade through simplified and harmonized
customs procedures, including maximizing the use of ICT.
5. Paperless Trading will exchange information on best practices and
encourage cooperation between private entities.
6. Mutual Recognition will facilitate trade in electrical and other
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7.
8.
9.
10.
11.
12.
13.
14.
15.
products such that both sides shall accept results of conformity

assessment procedures as conducted by the other party.
Trade in Services will provide standstill obligation or liberalization
of services sectors such as Outsourcing, Air Transport, Health-related
and Social Services, Tourism and Travel-related, Services, Maritime
Transport Services, Telecommunications, and Banking.
Investment will include provisions concerning National Treatment,
MFN Treatment and Performance Requirement Prohibitions for the
liberalization of investment and enhance transparency by specifying
all exceptions to these provisions.
Movement of Natural Persons will assure easier entry of qualified
Filipino nurses and certified caregivers through language training,
clear guidelines on exercise of profession/ occupation and
streamlined processing of application; possible application in other
professions.
Intellectual Property will enhance understanding of protecting
intellectual property, given Japanese practices, thereby elevating
Philippine status in Asia; includes cooperation and appropriate
protection and enforcement elements.
Government Procurement will increase transparency of government
procurement laws, regulations and procedures and possible access
and liberalization of government procurement activities taking into
account the development, financial and trade needs of both parties.
Competition will promote increased vigilance and increased attention
to the protection of fair competition; measures to promote
competition by addressing anti-competitive activities and cooperation
in the field of competition.
Improvement of the Business Environment will encourage
cooperation to improve the business environment of both countries.
A framework of consultations will be set up to ensure more efficient
and timely resolution of issues affecting Japanese and Filipino
enterprises in both countries.
Cooperation will provide bilateral economic assistance in ten fields
within the official development assistance (ODA) context.
Dispute Avoidance and Settlement will provide a mechanism for
addressing government to government disputes on the interpretation
of implementation procedures while relying on the primacy of
consultations.
It must be emphasize that numbers 13 and 14 are not the usual elements
of a traditional trade pact which makes JPEPA comprehensive and termed
as a new age FTA. New age FTAs have been developed in response to the
pressures arising from the growing trend in regionalism along with increasing
globalization and technological progress. They entail efforts that go beyond
the liberalization of goods and services espoused by traditional FTAs. (Yap,
Medalla & Aldaba)
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In trade, what exactly are we getting from JPEPA that nations without similar
agreements with Japan do not enjoy?
Philippine manufacturing and services industries will reap immediate
benefits through improved market access and additional streams of investment
flows. The JPEPA is expected to further boost Philippine exports to Japan which
consist of agricultural products such as fresh bananas, pineapples, and asparagus
and industrial goods like semiconductor and electronic products. (Yap, Medalla
& Aldaba)
The Agreement will enhance the Philippines attractiveness as a destination
for Japanese investment as it provides a framework that allows greater certainty
for investors. The negotiation of the Agreement itself has already enhanced the
focus of Japanese investors on the Philippines; this will continue during the
approval process and beyond. Further, the Agreement should serve as a powerful
incentive for Japanese investors to use the Philippines as a base for operations
in Southeast Asia. The elimination of tariffs by the Philippines will ensure stable
supply of critical inputs to the manufacturing sector.
The JPEPA is likewise expected to further boost Japans ODA to the
Philippines, even as Japans ODA already accounts for the largest in the
Philippines in recent years (Ronald A. Rodriguez, Understanding the Political
Motivations Behind Japans Pursuit of an EPA with the Philippines:
Considerations for the Philippine Side, 2004) Increased technical cooperation
and assistance as an integral part of Japans ODA (1) will bring capital formation
in the infrastructure sector which will stimulate an increase in foreign direct
investment that will encourage more employment opportunities and a host of
other forward and backward linkages as well as multiplier effects; (2) channeled
to the social services sector, will significantly improve poverty alleviation and
human development and (3) allocated to technical and vocational education,
will translate to an enhancement of skills and information technology literacy
that has the potential of improving the quality of labor force needed by the
various sectors and industries. Technical cooperation will boost institutional
building and capacity development that can improve governance and lead to
public sector reforms. (Jose V. Camacho Jr. and Agham C. Cuevas, The Dynamics
of Philippines-Japan Economic Cooperation: The Case of Japans ODA in the
Philippines, 2005)
What are the products and services that will immediately enjoy better access
to the Japanese market under the JPEPA?
1. Agriculture
Japan is the second-largest market for Philippine agricultural exports, closely
following the United States. With the Agreement, almost 95% of Philippine
exports to Japan (in terms of value) will face zero duties on day one. There will
be immediate positive impact on farmers, fishermen and food processors.
The Philippines grows bananas, pineapple, mango, avocado, and papaya,
principal fruit items that Japan imports. Meanwhile, okra and asparagus are
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The JPEPA is
expected to
further boost
Philippine
exports to Japan
which consist of
agricultural
products.
RPs two major fresh vegetable exports to Japan. Okra fetches a

price advantage because demand comes from hotels and
restaurants. Philippine pumpkin in frozen form is also a
potentially exportable vegetable to Japan. (Rosalina PalancaTan, Can the Japan-Philippines Economic Partnership
Agreement Benefit Philippine Consumer Goods Exporters,
2005). Over 90% of Japans supply of frozen vegetables is
imported. (Tan, Prospects and Problems of Expanding Trade
with Japan: A Survey of Philippine Exporters, 2004)
As the Japanese become increasingly health conscious, the

traditional requirements for appearance and size of vegetables
are projected to be replaced by safety considerations, meaning,
organic or chemical-free vegetables. (Tan, 2005) This
development is expected to help boost the miniscule share of
the organic market in Japan. JETRO consultants see a niche for
Philippine growers in the organic market, particularly, onions
and carrots. According to Japanese experts, these two vegetables
can be cultivated cheaply and easily without the use of chemicals in the
Philippines.4
In addition, the Philippines is nearer to the source of Japans marine

product imports such as tuna and exotic seafood items as compared to its
Southeast Asian competitors. Japan is the worlds largest market of raw tuna
for sashimi. Shrimps, lobsters and crabs are the other leading imported seafood
products in Japan... accounting for an overwhelming share of the shrimp and
lobster market. (Tan, 2005)
In general, the rate of liberalization of Japanese imports of agricultural and
fishery products is 59.1% (tariffs on 1,385 out of 2,344 products will be lifted
within 10 years).
a.
Fruits and vegetables: More than half of Philippine banana exports are
accounted for by Japan. Duties of 10% to 20% on small bananas and
other kinds (depending on the kind and form of the exported material)
will be eliminated over 11 years.
Japan buys almost 80% of total Philippine pineapple exports. With the Tariff
Rate Quota (TRQ) in place for pineapples smaller than 900grams under a zero
in-quota rate (as against the applied MFN rate of 17%) and for dried pineapples,
the Philippines can be able to export more. Under the TRQ, a total of 1,000
metric tons of these pineapples can be imported to Japan for the first year,
increasing by 200 metric tons annually until reaching a TRQ of 1,800 metric tons
in the fifth year.
4
The Philippines used to export onions to Japan in the 1990s. Philippine onions satisfied the quality requirement
(juicy and soft) but failed to meet the size requirement (Takusari, JETRO Manila Workshop Secretariat May
2003).
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TRQs emerged at the end of the GATT Uruguay Round as a compromise

between market access and tariffication. An effective TRQ system should only
restrict trade to the extent it limits the quantity of goods allowed access to a
market at the low in-quota duty rate. However, poor administration of TRQs
and high in-quota duties have prevented exporters from filling TRQs. In other
instances, exporters have not been able to meet fully market demands because
members have administered their TRQs in a manner that has restricted products
or suppliers, or both, or has raised the price of imports. (WTO Committee on
Agriculture Special Session: Proposal for Tariff Rate Quota Reform, 2000)
Japan will likewise immediately lift tariffs on vegetables such as asparagus
and okra, fruits such as mangoes, durian, guavas, papayas, mangosteen, figs and
dates, berries, apples, and grapes and meat such as turkey and duck immediately
after the JPEPA takes effect. Tariffs on garlic, peach and grape fruits will be lifted
in phases.
b. Marine products: Japan accounts for 45% of Philippine exports of shrimps
and crabs. Shrimps will get immediate elimination of tariffs; while tariffs on crabs
will go through gradual elimination. Tariff elimination for yellowfin tunas and
skipjacks will be completed in five years.
c. Sugar: A TRQ under an in-quota rate of just half of the applied MFN rate
will be introduced.
d. Poultry: TRQ for chicken meat will provide advantage for the Philippines,
with in-quota rate of 8.5% (against MFN applied rate of 11.9%)
e. Wines and drinks: There will also be immediate tariff elimination for
coffee, beer, and fermented beverages made from aratiles, bignay, calamansi,
coconuts, dalandan, guavas, marang, among others.
2. Industry
Both sides will eliminate the tariffs on almost all industrial goods within 10
years from the day of entry into force of the JPEPA. Philippine manufacturing
industries will reap both immediate benefits, through improved market access,
andmore importantlydynamic gains via additional streams of investment flows.
While Japan is already the biggest source of foreign direct investments (FDI) for
the Philippines, the country attracts only a small portion of total Japanese FDIs.
Equally important, the elimination of tariffs by the Philippines will ensure stable
supply of critical inputs to the manufacturing sector.
On textiles and apparels: Tariffs on almost all the goods will be mutually
eliminated immediately.
On other consumer goods: As an offshoot of Japans economic slowdown in
the 1990s, demand for luxury products from Europe and the United States flattened
and lower-priced imports from China and Southeast Asian countries are becoming
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increasingly popular. (Tan, 2005). Asian-made consumer products fall under the
mass market and medium-quality categories in Japans market. Mass market items
usually involve consignment processing, manufactured with the abundant
materials available in China and Southeast Asia, imported in small-sized lots
with a large variety of designs and require shorter delivery times (JETRO 2002).
Philippine exporters can focus on the medium-quality items because the
Philippine advantage lies in product design, craftsmanship and the unique
indigenous materials found in the country. Apart from favorable demand
conditions in Japans consumer goods markets, there are other market premiums
that put the Philippines at an advantage in Japan: (1) price premium. Relative to
other foreign buyers, Japanese buyers are willing to pay more for as long as they
get quality goods; (2) technical assistance by Japanese buyers to help exporters
meet the requirements of their market. This includes the regular inspection of
plants, development of tools and equipment to increase productivity, and
provision of equipment and machineries on credit. And three is the loyalty of
Japanese buyers; and (3) long-term business relationships cultivated by Japanese
buyers. The Japanese buyer will not seek nor accept offers from other suppliers
for as long as their present suppliers satisfy all their requirements. (Tan, 2005).
3. Services
Services account for almost 70% of the Japanese economy, a market which
is among the most difficult to access. The Agreement enhances Philippine service
providers access to the Japanese market and guarantees non-discriminatory
treatment, with limited exceptions.
Chapter 9 of the Agreement outlines the provisions regarding the movement
of natural persons. Without this chapter, the entry of Filipino nurses and caregivers
would not be possible because Japan did not commit to liberalize these sectors
in the World Trade Organization-General Agreement on Trade in Services a
deliberate move to send a signal that Japan is still not amenable to treating the
entry of natural persons for employment as part of trade but would rather deal
with the matter as part of immigration and, thus, covered by immigration laws.
Under JPEPA (Annex 8, Chapter 9), both countries will allow the movement
of natural persons for short-term business and visits of 90 days, extendable; intracorporate transferees, investors, natural persons who engage in Professional
Services, and specialized/skilled workers one or three years extendable, depending
on the classification; and, nurses one year, extendable and caregivers up to three
years, extendable. Nurses and caregivers have to qualify for the requirements of
the Philippine and Japanese laws on the practice of their specific professions.
The agreement also provides that there is no quantitative restriction on the number
of natural persons to be granted entry and temporary stay, except immigration laws
and regulations. Further, mutual recognition of education or experience obtained or
licenses or certifications granted, for fulfillment of standards for the authorization,
licensing, or certification of natural persons may be achieved through harmonization
or unilaterally granted. A review of the implementation of the movement of natural
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persons will be undertaken every five years after entry into

force of the JPEPA, and whenever agreed. (Highlights, DTI
Senate presentation, November 2006)
a. Outsourcing provides opportunities for Filipino
professionals to access Japanese market for engineering
design, interior design, architectural services, and motion
picture production services, among others.
Japan and the

Philippines will
eliminate the
tariffs on almost
all industrial
goods within 10
years from the
day of entry into
force of the
JPEPA.
b. Air transport (excluding those related to the exercise

of air traffic rights) will (a) enhance Japanese tourists access
to Philippines, (b) create market opportunities for providers
of air transport marketing services and computer reservation
systems (i.e., call centers), and (c) allow economies of scale
and scope in consolidating certain airline functions (e.g.,
repair, maintenance and ground handling).
c. Health-related and social services create a framework
for the country to provide medical care to the ageing
Japanese population and attract investments in the country
for retirement villages and health and wellness facilities.
d. Specifically on nurses and certified caretakers: the Agreement establishes

a formal arrangement for the acceptance of Philippine nurses and caregivers into
Japan, subject to various technical requirements and regulations of Japan. These
include the following minimum requirements: (1) For nurse-trainee5: they should
be qualified under Philippine laws with three years work experience and graduate
of an appropriate 4-year degree program; (2) For caregiver-trainee5: they should
be qualified caregivers under Philippine laws, a graduate of any 4-year degree
program and a recognized professional caregiver by the Philippine government;
(3) For qualified nurse (kangoshi or Japanese nurse) or caregiver
(kaigofukushishi or Japanese caregiver): proficient in both written and spoken
Japanese language.
e. Tourism and travel-related services will allow Filipino travel agents to
penetrate the market of Japanese tourists and of returning overseas Filipino workers
(OFW), fostering overall tourism market growth.
f. Maritime transport services (excluding domestic inter-island shipping) will
provide cargo shippers with a variety of maritime service providers, providing
efficient service to absorb the anticipated increase in sea-borne trade.
g. Banking will provide support to the expanded banking requirements of
expanded trade and investment activities between the Philippines and Japan.
5 Qualifications
1 and 2 are for trainees who do not yet have Japanese certification, and language instruction is part
of the training.
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h. Telecommunications will allow unhampered access to telecoms services

between the Philippines and Japan, critical for ICT-based businesses continuous
growth and for OFWs needs.
What among our major exports are not covered by the trade agreement?
Major Philippine exports to Japan are electronics and parts, semi-conductors
and other industrial manufactures like machineries and transport equipment. Most
of our industrial products have low tariffs already with rates ranging from zero to
3%. However, for sensitive sectors such as the automotive industry, gradual tariff
reduction will be pursued. But for certain products that are manufactured in the
country, no tariff reductions will be implemented but will be subject to negotiations
in 2009. (More on this in the topic on concessions to Japan below.)
However, the agriculture and fishery sector remains a sensitive issue for
Japan with certain products such as rice, wheat, milk, herrings, sardines, mackerel
and other fish being excluded from the JPEPA.
Apart from fresh pineapples and dried pineapples, Japan made no
commitments on other forms of Philippine pineapples (processed pineapples,
canned, etc., except citrus juices which falls under a different category) and for
almost all Philippine fruits except for guavas, mangoes, papayas, mangosteen,
figs and dates, berries, apples, durian and grapes which will receive immediate
tariff reductions/eliminations (Casio office, 2006)
Also excluded is raw sugar. Japan likewise quantified sugar contents in citrus
juices, concentrates, essences, extracts and other solutions. Negotiations for tariff
reductions/eliminations on these items (with sugar content of more than 30% or
more), as well as access to sugar development program, will start five years after
the agreement is enforced. (Casio office, 2006)
The Agreement also provides protection to Japans
fishing industry. Discussions for tariff reductions for tuna
begin after five years that the JPEPA has been implemented.
Tuna, along with cods and herring, are potentially huge
exports to Japan. In 2000, Japan imported 58% of its tuna
requirements. Japan also maintained its quota restrictions
and tariffs on Philippine herrings (excluding their liver and
roes), cods, sardines and mackerel. (Casio office, 2006)
Improved air
transport
between the
countries will
enhance
Japanese
tourists access
to the
Philippines.
When and how will these Philippine products enjoy the

same treatment?
To take advantage of the opportunities under the JPEPA,
Filipino agriculture exporters, for one, must take into account
the emphasis that the Japanese put on food quality and
safety. Increased market access to Japan will also require
Philippine exporters to supply hormone free, even-sized,
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properly packed, and hygienic products. The JPEPA has provisions for mutual
recognition and conformity assessment procedures which aim to help our
exporters meet Japans standards and requirements like sanitary and phytosanitary
measures. (Yap, Medalla & Aldaba)
The Philippines should also consider reviewing and re-negotiating the
inclusion of the other agricultural and processed food sectors that have been
excluded. As major Philippine agricultural exports are not cultivated in Japan,
there is no reason why the Japanese agricultural sector needs to be protected vis-vis Philippine exporters. (Tan, 2005)
Electronics and automotive parts can better gain exports to Japan if support
industries are developed in the Philippines. This requires human resource
development programs such as: (1) basic research programs leading to new product
development, (2) engineering and technical academic support programs (e.g.:
curriculum development, building training laboratories with adequate and
appropriate machinery and equipment), and (3) programs that promote greater,
closer and constant interaction among academe, industry and government.
Japanese ODA may also be tapped for such a purpose. (Tan, 2005)
To facilitate services exports, the Philippines should take advantage of the
facilities set in the JPEPA such as HRD cooperation programs covering language
proficiency trainings, technical assistance in skills upgrading, mutual personnel
exchange and fellowship programs, and research and development in S&T.
On the other hand, Japan must commit to undertake import promotion
programs specifically for Philippine products to promote and facilitate the
flow of agricultural and food and consumer goods from the Philippines. Action
areas include (1) conduc seminars and workshops on the Japanese market;
(2) organize buying and sales promotion missions to the Philippines; (3)
establish accreditation program for Philippine private testing centers, and (4)
set up system and procedures for claim verification (Tan, 2005).
Since many of the domestic constraints relate with the small and medium
enterprises (SMEs) which comprise roughly 90% of Philippine exporters, an
SME-focused ODA agenda with two key elements is recommended: (1)
efficiency enhancement programs in the areas of production, quality control
(including use of additives/chemicals) and management, and (2) capital
accumulation loans programs that address the collateral problem of SMEs.
(Tan, 2005)
What concessions are we giving to Japan in return?

We have provided Japan the following:
a. On agriculture: immediate tariff elimination will be implemented on
fresh apples, grapes, pears and quinces.
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b. On iron and steel: the Philippines will introduce a TRQ to help ensure
sufficient volume for local producers. For flat-rolled products of iron or nonalloy steel with a current rate of 7%, tariff will be eliminated in six equal
annual installments from base rate to free. More importantly, the immediate
elimination of tariffs on certain steel products will ensure Philippine industries
access to Japans highly competitive specialty steel as production inputs.
c. On auto and auto parts: tariff eliminations on RP imports will (a) enlarge
domestic automotive market and (b) position Philippines as an emerging base
for Japanese regional auto production. The Japanese government has
cooperated in and contributed to human resources development in automobile
and related industries of Asian countries. In the Philippines, the Japanese
government has been cooperating in the development of auto parts industry,
including a five-year project to dispatch Japanese experts to help develop
human resources of the local auto parts industry.
Gradual tariff reduction will be pursued for auto and auto parts. However,
no tariff reductions will be implemented for certain products that are
manufactured in the country, although but they will be subject to negotiations.
In 2009, for vehicles of cylinder capacity exceeding 3,000 cc, the tariff rate
remains at 30%. For second-hand vehicles, the Philippines is allowed to impose
import duties.
For buses with gross vehicle weight of 6 to 18 tons, tariffs will be reduced
gradually from 14% to zero in 2010. For vehicles of cylinder capacity not
exceeding 3000 cc, tariffs will be eliminated from 29% to 20% in 2009,
subject to negotiations.
For components, parts and/or accessories under the motor vehicle
development program, the MFN rate will apply and tariff elimination will be
subject to negotiations in 2009. It is important to note that the Philippines is
committed under the ASEAN Free Trade Area (AFTA) to eliminate all tariffs
on the automotive sector by 2010. This is consistent with the global nature of
the industry characterized by international production networks and vertical
specialization.
d. On electrical and electronic appliances and their parts: tariffs will be
eliminated within 10 years. For washing machines with a current rate of 10%,
tariffs will be eliminated in 11 equal annual installments from base rate to
free.
e. On textiles and apparels: tariffs on almost all the goods will be
eliminated immediately.
f. On cement and some chemical products: the MFN rate will apply and will
only be eliminated on the sixth year of the Agreement. Given this period of tariff
elimination, the Philippines should be able to maintain and strengthen the
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technology and competitiveness of its cement and

chemical industries.
g. On machinery for crushing or kneading earth
whose current rates range from 1 to 5%: immediate tariff
elimination.
In return for the entry

and practice of
qualified nurses and
caregivers in Japan,
Japanese corporations
based in the
Philippines may also
opt to hire Japanese,
rather than Filipino
engineers or other
professionals.
h. On services: In return for the entry and practice of

qualified nurses and caregivers in Japan, Japanese
corporations based in the Philippines may also opt to hire
Japanese, rather than Filipino engineers or other
professionals. In general, the agreement does not restrict
either party to regulate the entry of particular natural
persons (professionals) subject to immigration laws and
procedures. (Casio office, 2006)
Can we invoke the Agreement if Philippine exports

that are covered are, in one way or another, denied
entry in Japan?
Parties to the Agreement are obliged to uphold their
commitments. Any issues arising in its implementation
can therefore be made subjects of dispute settlement as
highlighted in Chapter 15 on dispute avoidance and settlement. The Chapter provides
also for conciliation, mediation and arbitration.
How will domestic business be affected by this economic partnership?
Any adverse effects are possibly limited to certain product groups, since more
than 50% of the total value of Philippine imports from Japan already enter duty-free
even prior to the JPEPA, while another 35% are subject to tariffs of 5% and below.
These products include some machinery and electrical and electronic appliances,
garment products, auto and auto parts, footwear, furniture, tiles and certain steel
products. They can either be exported to other countries or, if these mainly supply
the domestic market, can use trade remedies for import surges.
As to safety nets such as the Safeguard Measures Act, emergency measures are
in-place to prevent or remedy the serious injury to a domestic industry and to facilitate
adjustment. Tariffs can be reinstated until such time that these firms can recover their
competitiveness. (Escolar).
Meanwhile, inadequate and inefficient government resources hinder the
implementation of social safety nets which have been much discussed in the context
of developing countries. Such measures available to policymakers should not be
limited to reinstatement of tariffs but should instead be directed to retraining and
relocation assistance to displaced workers; consolidation of small and medium
enterprises (SMEs) to help exploit economies of scale and standardization of quality;
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proper resource management and supply agreements with other countries to address
the lack of raw materials should be explored; boosting SME financing will increase
capital expenditures leading to increased productivity in the sector; this should be in
conjunction with government incentives such as the establishment of a one-stop
center to facilitate documents and implementation of tax-breaks for imported capital;
sustainable resource management; promotion of investments to improve the capacity
of port facilities are needed along with acquiring modern techniques of post harvest
handling and supply; and firms must also adapt to new technologies and be quick to
anticipate new opportunities for diversification. For instance, new opportunities that
will cater to Japans graying society will be in demand. (Escolar)
The Philippines also cited specific Constitutional provisions to limit or deter the
implementation of either the ban on performance requirements, or the national
treatment clause on investments. Annex 7 features Philippine reservations on granting
equal treatment to Japanese who are investing in land; acquisition of agricultural
lands and lands classified under the Comprehensive Agrarian Reform Program; in
forestry; fisheries; investments in firearms manufacture law enforcement, etc. No
reservations were, however, indicated regarding franchising and operation of public
utilities by aliens.
Government can also immediately install a program for affected workers,
especially older ones using retaining (new appropriate skills). For affected SME firms,
business transformation and survival strategies can be taught. These fall under HR
development and SME economic cooperation measures in JPEPA.
What Singapore Issues in the WTO are included in the JPEPA?
The 1996 WTO ministerial declaration initiated the analysis of issues related to
investment, competition policy, transparency in government procurement, and trade
facilitation, while the 2003 Cancun ministerial took them off the negotiating track.
This is mainly because developing countries saw them as being of primary interest to
developed economies, and many felt that resolution of the issues encroached too
much on domestic economic policy.
The Singapore Issues cover investments (Chapter 8), government procurement
(Chapter 11), competition (Chapter 12) and trade facilitation.
Investments: The sharp rise in foreign direct investment from 1973 to 1995
(from $25 billion to $315 billion) has brought the issue of investment to the front of
the multilateral trade debate. While all World Trade Organization-member states
acknowledge the connection between trade and investment, and all appreciate the
importance of foreign investment to development, there is disagreement over the
extent to which the WTO should be involved in setting international rules for foreign
investment. The WTO agreement, which came into force in January 1995, included
an agreement on Trade Related Investment Measures
Government procurement: The WTO Agreement on Government
Procurement (GPA), which has been signed only by some WTO members,
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requires non-discriminatory practices and open procedures in government

procurement among countries and covers not only central government
purchasing of goods but also procurement of services, including public works
and procurement at the sub-central levels of government. Procurement in public
utilities is also included. The exact coverage is determined by national schedules
of purchasing entities and of services attached to the Agreement.
Competition: As governmental barriers to trade have been reduced, the
need to examine private measures with a potentially trade-distorting effect has
become necessary. In an increasingly global economy, differences in
competition policy norms and effectiveness of enforcement have more marked
international consequences, underscoring the importance of mutually-supportive
trade and competition policies. Competition policy issues interface with a
growing range of activities, giving rise to an increasing need to ensure the
mutual coherence of the two policy areas.
Facilitation: Economic facilitation measures are important to ensure the
efficient movement of goods, services, people, and capital. These cut across a
wide range of areas such as government regulations and controls, business
efficiency, transportation, ICT and the financial sector. These involve simplification
and harmonization of customs procedures, use of ICT and paperless trading along
with measures to improve the business environment and competition policy
framework to address anti-competitive business practices (Yap, Medalla & Aldaba).
Note that trade facilitation is also included in the WTO Doha Development Agenda
and has advanced the farthest in the negotiations.
What are the implications of the JPEPA on the Philippines negotiating position
in the WTO?
Both countries maintain that FTAs play an important role in strengthening
partnerships between countries in areas not covered by the WTO. Because of the
tedious, multilateral mode at WTO negotiations, the United States, Japan and the
European Union have started to shift to bilateral, plurilateral or regional free trade
agreements to address issues that are being challenged at the WTO. (Casio office)
On the other hand, there are arguments that the concessions that the
Philippines gave Japan may compromise the countrys negotiating positions in
the WTO and in similar bilateral agreements with other countries. However,
the JPEPA experience can also give RP an advantage to understand and position
itself better in the WTO with insights from the Japanese.
It is important to note that the concessions we gave for JPEPA do not violate
any WTO rule.
What safeguards are available to industries that may be adversely affected?
In Article 22, the JPEPA stipulates safeguard measures where either country
can invoke protection of its domestic industry/ies in case actual injury or threat
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22
9/5/2007, 4:18 PM
thereof is recognized. This can be due to increased imports as a result of the

commitments for the elimination or reduction of customs duties under the
Agreement. Under such a case, the following safeguards can be implemented:
(a) suspend the further reduction of any rate of customs duty on the
originating good, or
(b) increase the rate of customs duty on the originating good to a level
not to exceed the lesser of:
(i) the MFN applied rate of customs duty in effect on the day when
the emergency measure is taken; and
(ii) the MFN applied rate of customs duty in effect on the day
immediately preceding the date of entry into force of the Agreement.
However, neither country can apply emergency measures on an
originating good imported up to the limit of quota quantity granted under
TRQs applied according to the Schedules annexed to the Agreement.
Furthermore, an emergency measure can only be resorted to after an
investigation has been undertaken by the competent authorities of that country
according to procedures in its domestic laws and regulations that are consistent
with Article 3 (Investigation) and paragraph 2 of Article 4 (Determination of
Serious Injury or Threat Thereof) of the Agreement on Safeguards in Annex
1A to the WTO Agreement.
How true is the impression that we are opening the country as dumping
ground for toxic wastes from Japan?
The impression is not true. The Philippines and Japan are both signatories
to the Basel Convention on the Trans-boundary Movement of Hazardous
Wastes. In the Philippines, the Department of Environment and Natural
Resources under Republic Act 6969 or Toxic Substances and Hazardous and
Nuclear Wastes Control Act regulates hazardous wastes. Such import controls
and regulations on trade in hazardous wastes make tariffs redundant. Under
such a condition, tariffs may be reduced without expanding market access or
increasing imports because the more binding protection measures are import
controls. Further, the tariff lines on wastes and scraps have been in the tariff
and customs codes from the start. These were created mainly for customs
classification. (Yap, Medalla & Aldaba)
To dispel any doubt on Japans commitment not to violate any
environmental policies in the country, Japan and the Philippines have
exchanged letters clarifying the understanding of the Parties that toxic wastes
will not be exported in accordance with the Basel Convention and the domestic
laws of the Philippines and Japan.
Can we reject certain portions of the JPEPA and ratify the rest of the agreement?
No, since all provisions have been negotiated. Ratification covers each and
every provision of the Agreement. If there are reservations from either side on
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whatever provision, this hesitation effectively requires a renegotiation6.
For textiles and

textile articles,
origin can be
conferred if each of
the non-originating
materials is entirely
spun, dyed, or
printed, among
others, in either
Japan or the
Philippines or in a
memeber country
of the ASEAN.
However, there is a provision for re-negotiation for some

products after a certain number of years upon entry into force
of the JPEPA. These are the sensitive products with category
R in the Schedule of Commitments for tariff reduction/
elimination. Specific issues of concern may also be addressed
in the various JPEPA implementing committees.
What is the Rule of Origin (ROO) all about?

The ROO confers origin to wholly obtained goods or
products produced entirely in either Japan or the Philippines.
It determines originating goods for which preferential tariff
treatment under the JPEPA will be accorded. (George
Manzano, Preferential Rules of Origin for the JapanPhilippine Economic Partnership: Issues and Prospects,
2004). In effect, ROO determines the nationality of a
product to ensure that only Philippine and Japanese products
enjoy the tariff preference negotiated under the Agreement
and for purposes of reporting and of applying trade policy
measures such as tariffs, safeguard action, anti-dumping duties and the like.
As the practice of international division of labor or subcontracting becomes more
pervasive, the task of identifying the nationality of a product becomes less
straightforward. Hence, there is greater need for specifying clearly the ROO that sets
out the guidelines and framework for ascertaining the origin of traded goods. (Manzano)
There are three major rules under the ROO, i.e., wholly obtained rules, change
in tariff classification (CTC) rules, and value-added rules. The CTC is a clear,
transparent and predictable rule to use in conferring origin to a certain good. Under
CTC rules, a certain product which falls under a HS classification different from the
HS classification applicable to any of the materials used is considered to be an
originating good because the change in tariff classification represents that the used
materials have undergone sufficient manufacturing or processing.
The value-added rule allows the applicability of JPEPA trade liberalization
benefits, by determining its country of origin through reference to the valueadded to goods in its manufacturing or processing undergone in the country.
In deciding the ROO for JPEPA, the following important guidelines were
considered: (1) not creating unnecessary hindrances to trade; (2) developed
and applied in impartiality, neutrality and consistency, and with due
transparency, clarity and predictability; and (3) simple for customs authority
to implement and easy for traders to understand.
6
Mechanism for amendment of Agreement in Final Provisions
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The Chapter on ROO in the Agreement also gives details of the documentary
requirements to claim such preferences.
How does the ROO in the JPEPA benefit the Philippines?
Because the ROO defines the nationality of a product, it serves as safeguard
against illegal transshipments e.g., passing of one countrys goods for that of
another. A mechanism exists to check on the validity of certificates of origin
against transshipments.
Separate product specific rules have been outlined under the JPEPA. The
product specific rules using the value-added method require that the qualifying
value content (QVC) of a good should not be less than the percentage specified
by the rule for that good.
For the purpose of calculating the QVC, the following formula shall be applied:
F.O.B. V.N.M.
Q.V.C. = X 100
F.O.B.
Where:
Q.V.C. is the qualifying value content of a good, expressed as a percentage;
F.O.B. is the free-on-board value of a good payable by the buyer of the good
to the seller of the good, regardless of the mode of shipment, not including
any internal excise taxes reduced, exempted, or repaid when the good is
exported; and
V.N.M. is the value of the non-originating materials used in the production
of a good.
Based on the product specific rules for Base Metals and Articles of Base
Metal (Chapters 72-83 of the Harmonized System), for example, the required
QVC is not less than 40%. The same is also true for Products of the Chemical or
Allied Industries (Chapters 28-38) and all other products with QVC provision.
Accumulation
In determining whether a good qualifies as an originating good of either Japan
or the Philippines, an originating good of the other Party used as a material in the
production of the good in the former Party may be regarded as an originating material
of the former Party.
In addition, ASEAN content can also be used in conferring origin on some
products. For Preparations of Vegetables, Fruit, Nuts or Other Parts of Plants (Chapter
20), a product can be origin-conferring if each of the non-originating materials is
harvested, picked, gathered or produced entirely in a member country of the ASEAN.
Lastly, for cocoa powder not containing added sugar or other sweetening matter (HS
1805), origin can be conferred if the non-originating cocoa beans, which are harvested,
picked or gathered in an ASEAN member country, constitute at least 50% by weight
of the good.
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While designed to enable both countries to better reap the benefits of closer
economic partnership, cooperation measures will complement Japans assistance
program to the Philippines, thereby boosting implementation of the Medium-Term
Philippine Development Plan (MTPDP). (DTI at the Senate). The Philippines can
gain much from Japans capital, technology and expertise to strengthen its capacity
to meet the challenges posed by the new age (Yap, Medalla & Aldaba). Working
groups in the fields mentioned above will be formed within one year from entry
into force of the Agreement. (DTI at the Senate).
In what areas will Japan help the Philippines in the cooperative agreement
included in the JPEPA?
With the aim of strengthening their economic partnership, the Parties shall
engage in cooperation in 10 specified fields:
Fields of Cooperation
Possible Areas/Forms of Cooperation
Human Resource Development
education and training

harmonization of competency standards
Financial Services
promotion of regulatory cooperation

in financial services
improvement of financial market
infrastructure
Information and Communications

Technology (ICT)
human resource development in the

ICT sector
development of ICT infrastructure,
ICT-related services and digital content
Energy and Environment
improvement of utilization of energy

protection and management of the
environment
Science and Technology
advanced science and technology

agriculture, forestry, fisheries and
management of natural resources
human health and nutrition
Trade and Investment Promotion
trade and investment activities, including

those conducted by private enterprises
Small and Medium Enterprises (SMEs)
strengthening of management and

competitiveness of SMEs
human resource development
Tourism
promotion and development of tourism

Transportation
improvement of the technology of

transportation
improvement of the technology of road
development
10 Road Development
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In what form will the assistance come?

The implementation of cooperation activities shall be subject to the
availability of appropriated funds. The cost of cooperation shall be further borne
in as an equitable a manner by both sides through the efficient and effective
utilization of resources. Additionally, existing consultation mechanisms between
the countries for ODA and other existing cooperation schemes shall be respected.
Japan extends its ODA in three forms: grant, loan and contributions and
subscriptions to multilateral donor agencies. Grant is comprised of grant aid and
technical cooperation or technical assistance, which does not require the
repayment of obligation from recipient countries. (Camacho Jr. and Cuevas)
Economic cooperation is extended by Japan primarily through its ODA by taking
into account each countrys request, its social and economic status, and its bilateral
relations with the recipient country. In geographical terms, Asia continues to be a
priority region as it receives the largest ODA from Japan, although a considerable
decline can be noted from 63.2 percent in 1999 to 54.8 percent in 2000. (Camacho
Jr. and Cuevas)
Consistent with its ODA charter, Japans special emphasis is in Asia as this
region poses strategic linkages in its trade prospects. Priority aid areas comprise
of peace building and promotion of understanding of Japan, the development of
basic infrastructure to promote economic integration and growth in Asia,
environment and energy, and poverty eradication. The Philippines has consistently
ranked as one of Asias top ten recipients of Japanese aid. (Camacho Jr. and
Cuevas)
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IMPLEMENTATION
How and how soon will the Agreement take effect?
The JPEPA becomes effective on the 30th day after the date when both
countries have ratified the Agreement and have exchanged notes of ratification
of the same. On the part of the Philippines, the final step for ratification is the
Senates concurrence.
How long will the JPEPA be effective?
The JPEPA shall remain in force unless terminated by both countries by
giving, through diplomatic channels, one-year advance written notice to the
other.
Does the JPEPA have provisions for review?
Both countries may review the JPEPA together with its implementation
and operation in 2011 and every five years thereafter, unless otherwise agreed
by these parties.
The JPEPA may be amended by agreement between the Parties in
accordance with their respective legal procedures.
How will the implementing rules and regulations for the JPEPA be finalized
and which office can we address concerns and issues on JPEPA
implementation?
The DTI may put up an inter-agency body to draft the implementing rules
and regulations (IRR) in consultation with the private sector. The subcommittees,
in clarifying the interpretations of certain provisions, can likewise help address
concerns regarding JPEPA.
Further concerns and issues can be addressed to the Office of the Senior
Undersecretary, Department of Trade and Industry, DTI International Building
(formerly LC Building), 375 Senator Gil J. Puyat Avenue, Makati City, telephone/
fax no.: (632) 8953993, website: www.business.gov.ph, email:
jpepa.dti@gmail.com.
As a whole, is JPEPA good or bad to the Philippine economy and its people?
The JPEPA offers a window of opportunity for the country to move forward.
The economic gains that can be gained from increased trade with Japan, not
only goods but also services, can be translated into increased investments,
higher employment, and technology transfer that will boost a wide range of
business sectors in the Philippines from energy to transport to
telecommunications and information and communications technology.
Specifically, various research studies show the following benefits:
1. On high-skills work opportunities: this is the first time ever for Japan
to open up its closed services sector to nurses, caregivers, professional
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28
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2.
3.
4.
5.
6.
service providers and skilled specialists. Japan will provide nurses

and caregivers with free training and allowance for board and lodging
for six months as part of the trial process (DTI statement in Daily
Tribune, August 2007);
On inward investments: bigger net equity investments is expected
from Japan, RPs 2nd largest source of foreign direct investments and
one of the top five global FDI source (UNCTAD World Investment
Report 2006, Greenfield FDI projects). Investments reached US$938M
from 2002 to 2006 (BSP Key Statistical Indicators, quarterly 2007)
and seen to expand with new projects worth P222 billion in the first
four years of JPEPA implementation (DTI statement in Daily Tribune,
August 2007).
On exports: under JPEPA, RP can ship a broader range of agricultural
and industrial products to Japan, RPs 2nd largest export market and
one of the top five global import markets (ITC Trademap, COMTRADE,
UN Statistics Division). In 2006, exports to Japan have grown to
US$7.74B (BETP-managed Tradeline Philippines, Annual, 2007).
On appropriate technology: the JPEPA can enable certain segments of
multi-country production processes to take place in the country (e.g.
integrated circuit testing and design lay-out, outsourced business
process, etc.) (PTIC-Japan/BOI).
On economic cooperation to include technical assistance: intensified
cooperation between the two countries are projected in ten economic
fields included in the Medium-Term Philippine Development Plan
(MTPDP), with Japan being the largest Official Development Assistance
(ODA) partner of the Philippines. JBIC loan facility reached US$4.7B in
2006 or 49% of total ODA loans (NEDA Press Release, July 18, 2007).
On over-all economic growth: with increased exports, inward
investments and remittances, additional output growth should be
expected. Overall output (GDP) calculated to grow from a low of 1.7
to 3.3% (Yap, Medalla, Aldaba). Any GDP uplift will go a long way to
complement intervention measures designed to address poverty
alleviation.
On the whole, the costs associated with the implementation of JPEPA are
perceived to be low. Based on trade weighted tariffs using 2001 imports from
Japan, rough estimate of foregone tariff revenues amounted to around P3 billion
to P5 billion. It should be noted, however, this is expected to be more than
offset by tax revenue gain from increased economic activity resulting from the
partnership. (Yap, Medalla, Aldaba).
Finally, the Agreement will add significantly to the Philippines standing
and empowerment as a growing economy in a globalized world. Countries in
the region will have increased incentive to invest in and trade with the
Philippines because of our stronger linkage with one of the worlds most
powerful economy. The Agreement will also be a major incentive for other
economies of importance to us to seek improved trading relationships with the
Philippines. (DTI Briefer)
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LIST OF REFERENCES
The full text of the Japan-Philippines Economic Partnership Agreement is available
online at http://www.business.gov.ph/DTI_News.php?contentID=136
Office of Rep. Teddy Casio, Briefing Paper on the Japan-Philippines Economic
Partnership Agreement, November 22, 2006
The Joint Declaration of the Leaders of ASEAN and Japan on the Comprehensive
Economic Partnership, ASEAN-Japan Summit, Phnom Penh, November 5, 2002
Escolar, Royce Elvin O., An Analysis of Industry and Sector-Specific Impacts of a
Japan-Philippines Economic Partnership, 2004
WTO Committee on Agriculture Special Session: Proposal for Tariff Rate Quota
Reform, 2000
DTI Briefer on the JPEPA
Yap, Josef T., Medalla, Erlinda M., & Aldaba, Rafaelita M., Assessing the Japan
Philippines Economic Partnership Agreement, 2006
Rodriguez, Ronald A., Understanding the Political Motivations Behind Japans
Pursuit of an EPA with the Philippines: Considerations for the Philippine Side,
2004
Camacho Jr., Jose V. and Cuevas, Agham C. , The Dynamics of Philippines-Japan
Economic Cooperation: The Case of Japans ODA in the Philippines, 2005
Palanca-Tan, Rosalina , Can the Japan-Philippines Economic Partnership
Agreement Benefit Philippine Consumer Goods Exporters, 2005
Palanca-Tan, Rosalina, Prospects and Problems of Expanding Trade with Japan:
A Survey of Philippine Exporters, 2004
Highlights of JPEPA: DTI Presentation at the Senate, November, 2006
Manzano, George, Preferential Rules of Origin for the Japan-Philippine Economic
Partnership: Issues and Prospects, 2004
The Japan-Philippines Economic Partnership Agreement (JPEPA): Presentation of
the JPEPA Philippine Coordinating Committee at the LEDAC. August 2007.
30
30
9/6/2007, 9:56 AM
ANNEX A
Consultations with the Private Sector
1)
Update/Consultation on the JPEPA

4 August 2004
BOI Penthouse
2)
DTI Private Sector Consultation Meeting

23 September 2004
AVR, BOI Penthouse
JPEPA-Related Meetings with Private Sector Representatives/Observers

1)
5th Meeting of the Working Group on the JPEPA

8-9 July 2003
Manila
2)
1st Meeting of the Joint Coordinating Team (JCT) for the JPEPA
26-27 September 2003
Manila
3)
2nd Meeting of the JCT for the JPEPA

13-14 November 2003
Manila Diamond Hotel
Other Meetings/Consultations/Request for Inputs

1)
Bureau of International Trade Relations (BITR) Consultation with the Academe

on the Proposed JPEPA
8 November 2002
BITR Boardroom
2)
Bangko Sentral ng Pilipinas Request for Inputs from the Private Sector
Letter dated 22 July 2003
Consultations Conducted by the Department of Tourism

1)
Consultation with the Tourism Private Sector

October 2003
2)
Survey on the Philippine Commitments on Tourism and Trade-Related

Services for the GATS, AFAS and JPEPA was conducted to solicit views and
comments on the requests and offers to be made on Tourism Services
January 2004
31
31
9/5/2007, 4:18 PM
3)
Meeting with PAGCOR, the SPA Association, and the Philippine Leisure
and Retirement Authority to assess possible services in said sectors which
could be included in the Schedule of Commitments on Tourism Services in
GATS, AFAS and JPEPA
August 2004
4)
Private Sector Consultation to confirm Request and Offers for the 5th
Negotiating Session of JPEPA
October 2004
Consultations Conducted by the Department of Energy
For the proposed JPEPA, the DOE consulted with its line units, namely, the
PNOC and its subsidiaries, NPC, TransCo, PSALM, and NEA on various
information required from the energy sector
The DOE also consulted attached agencies on the Product Specific Rules of
Origin (ROO) under the Trade in Goods Chapter of the JPEPA held on 24
February, 11 March, and 20 June 2005.
Public Hearings Conducted by the Tariff Commission

1)
2)
3)
4)
16 July 2004
31 May 2005
22 December 2005
22 February 2006
Board of Investments (BOI) Consultations with the Private Sector
Consultation letters were sent out by BOI to industry associations with regard
JPEPA ROO and Offer List for the period covering July to December 2004,
January to December 2005, and January 2006
32
32
9/5/2007, 4:18 PM
JPEPA
Q&A Primer

ISSN 1908-8213
Understanding
JPEPA

JPEPA Final

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Q&A Primer

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ISSN NO.: XXXX-XXX-X

Philippine copyright 2007 by Philippine Exporters Confederation Inc.

Acknowledgement is given to the

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

illed as a new age free trade agreement, the Japan-Philippines Economic

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

bilateral course to advance RP-Japan economic relations by signing the JPEPA.

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Regionalization may entail the Philippines to provide to other ASEAN

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

in-force; Thailands will soon be a reality3. Negotiations are currently being

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Origin referred to in Article 25, and the Operational Procedures on

In addition, the following Sub-Committees shall be established on the date of

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

products such that both sides shall accept results of conformity

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

RPs two major fresh vegetable exports to Japan. Okra fetches a

As the Japanese become increasingly health conscious, the

In addition, the Philippines is nearer to the source of Japans marine

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

TRQs emerged at the end of the GATT Uruguay Round as a compromise

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

persons will be undertaken every five years after entry into

Japan and the

b. Air transport (excluding those related to the exercise

d. Specifically on nurses and certified caretakers: the Agreement establishes

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

h. Telecommunications will allow unhampered access to telecoms services

When and how will these Philippine products enjoy the

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

What concessions are we giving to Japan in return?

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

technology and competitiveness of its cement and

In return for the entry

h. On services: In return for the entry and practice of

Can we invoke the Agreement if Philippine exports

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

requires non-discriminatory practices and open procedures in government

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

thereof is recognized. This can be due to increased imports as a result of the

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

whatever provision, this hesitation effectively requires a renegotiation6.

For textiles and

However, there is a provision for re-negotiation for some

What is the Rule of Origin (ROO) all about?

Mechanism for amendment of Agreement in Final Provisions

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Primer on the Japan-Philippines Economic Partnership Agreement (JPEPA)

Possible Areas/Forms of Cooperation

Human Resource Development

education and training

promotion of regulatory cooperation

Information and Communications

human resource development in the