Senate Economic Planning Office

September 2007 PB-07-01

Japan-Philippines Economic Partnership Agreement

(JPEPA): An Assessment
I. BACKGROUND

1.0 JPEPA is a comprehensive bilateral trade and 1.3 Philippine imports from Japan were pegged at US$7.3
investment agreement between Japan and the billion in 2006 or 14% of total imports (Table 1). The
Philippines aimed at increasing trade and investment leading Philippine imports from Japan consist of
opportunities between the two economies. It is the electronic products, industrial machinery and
first bilateral free trade agreement (FTA) for the equipment, transport equipment, iron and steel and
Philippines after 50 years. Japan, on the other hand, electrical machinery.
has signed FTAs with six economies (Singapore,
Mexico, Malaysia, Indonesia, the Philippines, Table 1. Top 5 Philippine Products Traded with
Thailand, and Brunei) and is on various phases of FTA Japan: 2004-2006
negotiations with other three economies (South Korea, (in million US$)
Vietnam, and India). Japan is also actively pursuing P a rticula rs 2004 2005 2006
FTA with the 10-member ASEAN bloc with a view of Ex ports 7,982 7,206 7,918
finishing it up by November 2007 during the 13th ASEAN 1. E lec tronic P roduc ts 5,624 4,846 4,451
Summit. 2. W oodcrafts and
90 101 624
Furniture
1.1 JPEPA was initiated during President Gloria
Macapagal-Arroyo’s visit to Japan in December 2002. 3. Ignition W iring S et
297 284 331
The formal negotiations between the Philippines and and Other W iring S ets
Japan started in February 2004. President Arroyo and 4. B ananas (Fresh) 177 173 169
then-Japanese Prime Minister Junichiro Koizumi
5. Iron Ore A gglom erates 83 93 138
agreed on major elements of JPEPA in November 2004
that would lead to the immediate removal of tariffs on Im ports 7,674 8,071 7,270
certain fruits, vehicles, steel products, electronic 1. E lec tronic P roduc ts 4,559 4,982 4,120
appliances, and garments. The JPEPA was signed in 2. Indus trial M ac hinery
Helsinki, Finland on 9 September 2006. 562 676 652
and E quipm ent
3. Trans port E quipm ent 502 478 499
Philippines-Japan Economic Relations
4. Iron and S teel 230 273 258
Trade Situation with Japan 5. Telec om m unic ation
E quipm ent and 317 269 225
1.2 Japan is the second largest trading partner of the E lectric al M ac hinery
Philippines next to the US. In 2006, Japan amounted
Source: National Statistics Office
to US$7.9 billion or 17% of the country’s total exports
(Table 1). The leading Philippine exports to Japan
consist of electronic products, woodcraft furniture,
ignition wiring sets, fresh bananas, and iron ores. Investment Situation with Japan
Japan is our biggest export market for asparagus,
bananas, papayas, nata de coco, mangoes, chicken, 1.4 Japan is the Philippines’ largest source of foreign
shrimps and prawns, and yellowfin tuna. direct investments (FDI) in 2005, but slipped to third
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 place behind the United States and Korea in 2006. FDI reduction on the automotive and iron and steel
from Japan was pegged at P27.5 billion in 2005, 3.5% products is consistent with our commitment under
higher than in 2004. In 2006, however, approved FDIs the ASEAN Free Trade Area (AFTA) to eliminate tariffs
from Japan declined to P20 billion (Table 2). FDI from by 2010 for the ASEAN-6. In the case of automotives,
Japan from 2000 to 2006 was estimated at P143.5 this is compatible with the present trend of global
billion1. production networks and vertical specialization in the
industry.
Table 2. Top 5 Sources of
Total Approved FDIs
2.2.1 Very minimal tariff lines (0.10%) offered by the
(in million PhP)
Philippines were excluded from any commitments,
Country 2004 2005 2006 such as rice and salt, or subject to renegotiations
Japan 26,596.2 27,538.9 20,065.7 (0.40%) in a future date, such as petrochemicals
Netherlands 1,473.1 19,157.6 7,188.1 and other chemicals.
US A 27,108.4 14,912.7 38,199.1
Table 3. Philippines’ JPEPA Tariff Schedule
K orea 3,260.3 10,828.4 54,326.8 L e g e nd Ca te go ry Nu m b e r o f % of T ota l
China 126.6 194.6 17,934.6 Line s Lin e s
A Im m ediate tariff e lim in ation 3,947 66.1 4
Source: Philippine Board of Investments E qual annu al tariff reduc tion s tarting
B4 97 1.63
2006, fina l re duc tion on 2010
Tariff e lim in ation on th e 1 s t day of the
II. SALIENT PROVISIONS IN THE JPEPA B 4** 2 0.03
5 th y ea r (2011)
B5 5 y ears or s ix annual in s tallm ents 230 3.85
On Investments 5 y ears , 1 y ea r grac e period, 5 equal
B 5* 220 3.69
annual ins tallm ents
O ne s ingle ins tallm ent at the
2.0 Under JPEPA, the Philippines and Japan agreed to B 5**
beginn ing of the 6 th y ea r
14 0.23
accord national treatment and most-favored-nation 7 y ears or 8 equal annual
B7 2 0.03
treatment 2 to investors of each Party. This basically ins tallm ents
10 y ear or 11 equa l annual
means that Japanese investors in the Philippines B 10
ins tallm ents
1,077 18.0 5

would be accorded the same privileges and rights as B 10 *

10 y ears , 1 y e ar grac e period , 6
154 2.58
Filipino investors in economic sectors where they are equal ann ual ins tallm ents
10 y ears , 5 y e ars grac e perio d, 6
allowed and vice-versa. Annex 1 enumerates the B 10 **
equal ann ual ins tallm ents
103 1.73

exceptions where Japanese investments are limited R Renegotiation 24 0.4

or prohibited due to mandates of the Philippine S S pec ial tariff treatm en t 92 1.54
E x c lude d from any c o m m itm ent of
constitution or existing domestic laws as listed in the X preferential treatm ent or renegotiation 6 0.1
Foreign Investment Negative List (FINL).
To ta l 5,968 1 00
Source: Philippine Tariff Commission
2.1 Under JPEPA, there is a provision on the performance
requirement (Article 93). Simply put, it means that
neither party can impose or enforce as a condition for 2.2.2 Note that 73% of the products subject to immediate
investment activities requirements such as research tariff elimination under JPEPA have existing low
and development (R&D) requirement, technology tariffs from zero to 5% (Table 4).
transfer and hiring and appointment of nationals as
Table 4. Analysis of “A” Products by 2005 MFN Tariff
executives, managers, or board member.
Level
On Trade 2005 MFN Ta riff Sha re to Tota l 2005 RP Im ports
(%) “ A” Line s (%) from Ja pa n
2.2 JPEPA covers 5,968 tariff lines of Philippine imports (in thousa nd US$)
(Table 3). The tariffs on 66% (or 3,947 product lines) 1 33.06 1,617,962
of these imported Japanese goods would be removed 3 34.8 541,066
immediately and 32% would be subject to gradual 5 4.89 60,337
tariff reduction once JPEPA enters into force. Some of 7 6.08 18,921
the goods that are subject to gradual tariff reduction 10 7.19 17,570
are automotive and iron and steel. Gradual tariff
15 7.92 8,168
1
NSO (2006). Philippine Statistical Yearbook. 20 0.98 2,539
2
National Treatment (Article 89 of JPEPA) means each Party (Japan or the
Philippines) shall accord to investors of the other Party and to their 30 0.4 8,259
investments treatment no less favorable than that it accords to its own 35 0.03 -
investors and to their investments. MFN treatment (Article 90) means
each Party shall accord to investors of the other Party and to their 40 0.25 -
investments treatment no less favorable than that it accords to investors Tota l 100 2,274,823
of a Third-Party and to their investment.
Source: Philippine Tariff Commission
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 2.2.3 Out of the 3,947 product lines subject to immediate 2.3 Japan, on the other hand, has 7,476 tariff lines of
tariff elimination, around 92% are industrial goods Philippine exports under JPEPA and 80% (or 5,994
(Table 5). These include machinery and mechanical product lines) of these are for immediate tariff
appliances, electrical machinery and equipment, elimination (Table 7).
clothing and textiles, organic chemicals and
pharmaceutical products, and other miscellaneous Table 7. Japan’s JPEPA Tariff Schedule
manufactured products (Annex 2). As of 2005, the Le ge nd Ca te gory Num be r % of
country imported around US$2.3 billion of these of Line s Tota l
Line s
products from Japan (Table 5).
A Imm ediate tariff elim ination 5,994 80.17
B3 3 y ears or 4 equal annual 3 0.04
Table 5. Analysis of “A” Products
ins tallm ents
by Product Sector B5 5 y ears or 6 equal annual 148 1.98
S e ctor S ha re to 2005 RP Im ports ins tallm ents
Tota l “ A” from Ja pa n B7 7 y ears or 8 equal annual 140 1.87
ins tallm ents
Line s (%) (in thousa nd US $)
B 10 10 years or 11 equal annual 368 4.92
A gric ulture 8.41 3,121 ins tallm ents
Industrial 91.59 2,271,702 B 15 15 years or 16 equal annual 48 0.64
ins tallm ents
Tota l 100 2,274,823 P Special tariff treatment 26 0.35
Source: Philippine Tariff Commission Q Tariff rate quota 11 0.15
R Renegotiation 215 2.88
2.2.4 Special tariff treatment and gradual tariff X Ex c luded from any c omm itment 522 6.98
elimination will be pursued for sensitive sectors of preferential treatm ent or
such as the automotive industry (Table 6). renegotiation.
Tota l 7,476 100
Table 6. Philippine Imports Subject to Gradual Tariff Note: numbers do not add up due to rounding off.
Source: Philippine Tariff Commission
Reduction under JPEPA
Motor • Tariff rate remains at 30% for vehicles of cylinder
capacity exceeding 3,000 cc. 2.3.1 Industrial goods account for 93% of Philippine
vehicles*
• Tariffs on vehicles of cylinder capacity not
exceeding 3,000 cc, will be reduced from 29% to
export goods that are subject to immediate tariff
20% in 2009, subject to negotiations. elimination (Table 8). These include office machines
• Tariffs on buses with gross vehicle weight of 6 to & automatic data processing machines, electrical
18 tonnes will be reduced gradually from 14% to machinery and parts, road vehicles,
free in 2010. telecommunication and sound recording
• Tariff elimination on components, parts and/or equipment, textile yarn fabrics and clothing
accessories under the motor vehicle development
program is subject to negotiations in 2009 and apparels (e.g. knitted and crocheted fabrics) and
the MFN rate applies. inorganic chemicals and pharmaceutical products
Machinery
• Tariffs on household or laundry type washing (Annex 3).
machines will be eliminated in 11 equal annual
and
installments from 10% base rate to zero.
mechanical Table 8. Analysis of “A” Products by Product
appliances • Tariffs on flat-rolled products or iron or non-alloy
steel, of a width 600mm or more plated or coated Sector
with zinc or with aluminum-zinc alloys will be Sec tor Share to Total 2 00 4 RP e xports to
eliminated in 6 equal annual installments from 7% “A” Lines (%) Ja pa n
base rate to zero. (in thousa nd US$)
• Tariffs on window or wall type airconditioning Agricultu re 6.6 8 1 44 ,53 9
machines of an output not exceeding 21.10 kW
and airconditioning machines used in motor In du s trial 9 3.3 2 5 75 ,20 5
vehicles will be eliminated in 11 equal annual Total 10 0 7 19 ,74 4
installments from 10% base rate to zero.
Source: Philippine Tariff Commission
• Tariffs on refrigerator-freezers of a capacity not
exceeding 13 cu feet will be eliminated in 11
equal annual installments from 10% base rate to
2.3.2 Philippine agricultural exports, which are subject
zero.
• Tariffs on colour cathode ray tubes for TV and
to immediate tariff removal under JPEPA, include
Electrical
video monitors will be eliminated in 11 equal marine products such as frozen lobsters, frozen
machinery
and
annual installments from 15% base rate to zero. shrimps and prawns; and fruits and vegetables such
equipment • Tariffs on microwave ovens will be eliminated in 5 as coconuts, cashew nuts, mangoes, papayas,
equal annual installments from 3% base rate to durians, potatoes, cabbages, lettuce, carrots,
zero.
cucumbers, globe artichokes, asparagus, celery,
*This refers to brand-new motor vehicles.
mushrooms, truffles, and spinach (Annex 3).

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 Table 9. Philippine Exports Subject to Gradual Tariff Reduction under JPEPA
• Yellowfin tunas, skipjack, halibut, haddock, coalfish, king crabs, sea
Marine products
urchins, abalone, plaice and sole - tariffs will be eliminated in 6 equal
annual installments from 3.5% base rate to zero.
• Vegetables such as tomatoes, garlic, and eggplants - tariffs will be
Vegetables and fruits
eliminated in 6 equal annual installments from 3% base rate to zero.
• Fresh bananas - tariffs will be eliminated in 11 equal annual installments
from 10% base rate to zero.
• Frozen sweet corn - tariffs will be eliminated in 8 equal annual
installments from 10.6% base rate to zero.
• Sweet potatoes - tariffs will be eliminated in 11 equal annual installments
from 12% base rate to zero.
• Watermelons and strawberries - tariffs will be eliminated in 6 equal
annual installments from 6% base rate to zero.
• Cereal grains of maize (corn) - tariffs will be eliminated in 11 equal
Cereals
annual installments from 21.3% base rate to zero.
• Prepared or preserved salmon, herrings, and mackerel - tariffs will be
Prepared or
preserved fish eliminated in 8 equal annual installments from 7.2% base rate to zero.
• Preserved sardines - tariffs will be eliminated in 6 equal annual
installments from 7.2% base rate to zero.
• Jams, fruit jellies, marmalades, fruit or nut puree - tariffs will either be
Prepared or
eliminated in 8 or 16 equal annual installments from base rate to zero.
preserved fruits
• Tariffs will either be eliminated in 11 or 16 equal annual installments from
Fruit and vegetable
base rate to zero.
juices
• Leather articles such as trunks, suitcases, vanity cases, wallets and
Leather articles
handbags
- tariffs will be eliminated in 11 equal annual installments from base rate
to zero.

2.3.3 Almost 10% of the tariff lines, mostly agricultural animal and vegetable oils, and pineapples
products, are subject to gradual tariff reductions weighing more than 900g.
(Table 9).
2.3.6 Those subject to renegotiations are:
2.3.4 Very minimal tariff lines (0.5%) offered by Japan · Agricultural goods such as meat of bovine
are subject to specific commitments: animals, meat of swine, bigeye tunas, bluefin
· Creation of tariff rate quota (TRQ) for pineapples tunas, longfinned tunas, tanner crabs, certain
smaller than 900g under a zero in-quota rate, dairy products, maize (corn) flour and starch.
instead of the applied 17% most-favored nation
(MFN) rate. On Movement of Filipino Professionals
· Creation of TRQ for chicken meat with 8.5% in-
quota rate, instead of the applied 11.9% MFN rate. 2.4 Under JPEPA, Filipino nationals would be allowed to
· Tariffs on sausages and similar products will be practice their profession in Japan subject to certain
reduced on the second year from 19.2% to 17% in conditions. The list of professions included are: legal
5 equal annual installments. services, accounting and taxation services,
architectural and engineering services, computer-
2.3.5 Around 10% of the tariff lines are either excluded related services, advertising and management
from any commitments or subject to renegotiations consulting services, translation and interpretation
in a future date. Those excluded are: services, services incidental to agriculture,
· Agricultural goods such as boneless meat of audiovisual services, higher education services,
bovine animals, fresh Pacific salmon, frozen red tourism and travel services, entertainment services
& Atlantic salmon, trout, herrings, cod, sardines, (theatre, live bands), and maritime transport services.
mackerel, frozen bluefin tuna fillets, scallops,
milk and cream, whey, butter and dairy spreads,
wheat and meslin, barley, rice, wheat starch,

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2.5 Filipino nurses and care workers can practice their with international principles such as the Agreement
profession in Japan provided they meet the following on Government Procurement (GPA).
requirements. For a Filipino nurse, he/she must:
· pass the Philippine licensure exam and must have 2.12 The GPA is designed to open up as much as possible
at least three years work experience; government procurement to international competition.
· undergo skills and language training for six It is also designed to make laws, regulations,
months in Japan; and procedures, and practices regarding government
· pass the Japanese Nursing Examination, which is procurement more transparent and ensure that they
written in Nihonggo, with a maximum of three do not protect domestic products or suppliers, or
attempts. discriminate against foreign products or suppliers.
Japan is a signatory to GPA while the Philippines is
2.6 For a Filipino care worker, he/she must: not.
· finish a four-year college course and must be a
certified caregiver in the Philippines; 2.13 JPEPA provides for cooperation in order to promote
· undergo skills and language training for six trade facilitation and liberalization for the mutual
months in Japan; and benefit of the two countries. Specifically, the two
· pass the Japanese national exam, which is written countries agree to cooperate on the following areas:
in Nihonggo, for caregivers. a. human resource development,
b. energy and environment,
2.7 A Filipino nurse is given a maximum of 2 years’ stay c. science and technology,
in Japan to comply with the requirements while a d. trade and investment promotion,
caregiver is given 3 years. The provision is silent on e. small and medium enterprise,
who shoulders the cost of these trainings. f. tourism,
g. transportation, and
2.8 Practice of all professions in the Philippines remains h. road development
limited to Filipinos save in cases prescribed by law.
2.14 Furthermore, the treaty stipulates that the cost of
On Other Provisions cooperation is borne equitably between the two
economies and subject to available funds and
2.9 JPEPA included provisions tackling the so-called applicable laws and regulations.
‘Singapore issues’- investment, competition policy,
transparency in government procurement, and trade 2.15 Also, JPEPA has provision on Dispute Settlement
facilitation - complex subjects that led to the gridlock Mechanism that will create subcommittees to refine
in the World Trade Organization (WTO) talks and had the various provisions and cooperation mechanisms.
to be dropped to move the multilateral talks forward.
Japan and other developed countries are the main
demandeurs of the Singapore issues, which is seen by III. ADVANTAGES AND DISADVANTAGES FROM JPEPA
many developing countries as a primary interest of
richer economies. Advantages

2.10 JPEPA has provision on competition policy. The two 3.0 Orthodox economic theory on international trade
countries both agree to take measures regarding the dictates that free trade agreements (FTAs) enhance the
promotion of competition by addressing anti- competitiveness of sectors and industries in which
competitive activities to facilitate trade and one country has a comparative advantage vis-à-vis
investment flows between the two economies. Thus, the other. The agro-industrial production, employment
Japan and the Philippines are allowed to review and generation, and exports earnings of competitive
improve or adopt laws when necessary. sectors and industries are expected to increase with
FTAs. The importation of raw materials and capital
2.11 JPEPA opens up the possi bility of li beralizing equipment also becomes cheaper, bringing down
Philippine government procurement markets by further the cost of production. Cheaper, quality
granting national treatment and most-favored-nation imports are expected to benefit consumers through
treatment to Japanese goods, services, and suppliers. lower prices and better quality products.
To this end, a Sub-Committee on Government
Procurement is to be established. This Sub-Committee 3.1 Foregone tariff revenues from FTAs such as the JPEPA
is also tasked (1) to exchange and analyze information are partly retained in the country as business savings
regarding government procurement and (2) to discuss for expanding working capital and/or additional
issues such as increased transparency and investible funds to generate more economic activities.
consistency of measures on government procurement Also, the foregone tariff revenues will be offset by the

5
 boost on consumer spending which will stimulate Table 11. Projected Increase in Philippine
demand for goods and services. This increased Exports to Japan
economic activity, through the multiplier effect, will (in billion US$)
generate more jobs, incomes, and a bigger revenue P a rticula rs W ithout W ith JP EP A
base in the long-term. JP EP A* Low High
P rojected annual
3.2 Studies show that the two countries would benefit from 10% 15% 20%
growth rate
the proposed JPEPA. For instance, the treaty is expected
to generate a small but positive impact on our gross 2007 8.71 9.08 9.47**
domestic product (GDP) of around 0.09%3 as a result 2008 9.62 10.44 11.37
of better resource allocation and positive poverty 2009 10.63 12 13.64
alleviation effects, particularly in Metro Manila, 2010 11.76 13.81 16.37
where most industries are located. If potential foreign
2011 13 15.88 19.64
investment inflows and productivity gains would arise,
the benefits could be much higher ranging from 1.73% * Based on average growth from 2001 to 2006 (annualized
Jan.-Aug.) of 10.4% compared to total Philippine exports average
to 3.03%4. Japan, on the other hand, would gain a 0.03% growth of 13%.
rise in its real GDP. ** Bas ed on Philippine Export Development Plan (PEDP)
Projections
On Investment Source: Department of Trade and Industry

3.3 JPEPA is expected to increase investment in the 3.5 Of the principal fruit items that Japan imports, the
Philippines since it provides greater certainty and Philippines supplies 58% of Japan’s total imports on
confidence for Japanese investors. BOI estimates that banana, 7% on pineapples, 1% on avocados and on
the expected FDI from Japan would amount to Php559 papayas. Meanwhile, only 1% of Japan’s vegetable
billion between 2007 and 2016 and is expected to imports are supplied by the country, which leaves
generate 35,477 more jobs to Filipinos (Table 10). more room for expansion. Our two major fresh
vegetable exports to Japan are okra and asparagus. In
Table 10. Projected Increase 2005, fish, crustaceans, and mollusks (e.g. shrimps
in Japan FDI to the Philippines and prawns) account for US$ 81.2 million of
P a rticula rs 1995 - 2005 2007 – 2016
Philippine exports to Japan.
P rojec t Cos t (in billion P hp) 137 559 3.6 Under JPEPA, Japan will immediately remove tariffs
E m ploy m ent 35,731 35,477 on certain agricultural products such as shrimps and
Revenue (in billion P hp) 4.75 4.72 prawns, asparagus, leguminous vegetables, dried
Note: Latest estimate from BOI enabling estimation of direct employment bananas, mangoes, mangosteens, and fresh papayas,
and revenue (withholding, other taxes and licenses) for the projected as well as manufactured goods like knitted and
period.
crocheted fabrics (Annex 3). Thus, these sectors are
Source: Department of Trade and Industry
expected to benefit directly from the treaty.

3.7 Also, the country can increase its market penetration

by supplying goods which it has a comparative
On Trade in Goods advantage – fish, fruits, charcoal, iron ore
concentrates, non-ferrous metal, silver platinum ores,
3.4 JPEPA is also expected to increase our exports to Japan, crude vegetable materials, wood manufactures, office
Philippines’ second largest export market, due to a machine, travel goods/handbags, clothes (excluding
broader range of agricultural and industrial products fur), watches and clocks, and other manufactured
that will be allowed under the treaty. The Philippines’ goods.
exports to Japan are currently averaging at 10% annual
growth for the past six years (Table 11). The annual 3.8 Moreover, JPEPA provides the mechanism where the
growth of our exports for 2007 is projected at 8.7% country can regain its declining share on Japan
without JPEPA. With JPEPA, however, our exports are imports on mostly agricultural products (e.g. fresh
estimated to grow faster at 9.1% at the very least. and dried fruits, fresh and chilled vegetables, sugar
confectionery, fermented beverages, frozen fish fillets,
prepared crustaceans and mollusks, sauce, seasoning
and condiments, frozen fruits and nuts, unpickled
3
Coror aton, C. (2003). “Phil -Japan Bilateral Agreement: Analysis of vegetables, and sausages of meat) and consumer
Possibl e Effects on Unemployment, Distribution, and Poverty in the
Philippines Using CGE Microsimulation Approach.” manufactures (e.g. festive articles, clothing
4
Kawasaki, K. (2003). “Impact of FTAs in Asia”, REITI Discussion Paper Series accessories, plastic articles, suits/jackets/trousers,
03-E-018, Research Institute of Economy, Trade and Industry.
6
 pulp/paper/board articles, plastic floor and wall 3.15 Also, this market access in services provides a
covering, plastic and rubber apparel, children’s toys, mechanism for technology transfer and cooperation
metal furniture, glass articles, skirts, textile articles, which could facilitate improvements in the
nightwear and underwear, household linens, competitiveness of Filipino workers. JPEPA ensures
mattresses, knitted hosiery, and hand paintings and this by setting up HRD cooperation programs covering
drawings). language proficiency trainings, technical assistance
in skills upgrading, mutual personnel exchange and
3.9 To maximize the benefits from these opportunities, fellowship programs, and research and development
Filipino exporters must take into account the strict in Science and Technology.
requirements of the Japanese on food quality and
safety. Filipino exporters need to supply hormone-free, On Cooperation and Trade Facilitation
even-sized, properly-packed, and hygienic products.
The JPEPA has provisions on mutual recognition and 3.16 There are substantial gains likewise from the enhanced
conformity assessment procedures for products and provisions of the treaty on various areas of
processes which would help Filipino exporters meet cooperation and capability building such as:
Japan’s standards and requirements like sanitary and cooperation and technical assistance to cope with
phytosanitary measures. sanitary and phytosanitary standards (SPS)
requirements in Japan; cooperation in trade and
On Movement of Natural Persons investment promotion; cooperation in small and
medium enterprises, tourism, transportation, and road
3.10 Under JPEPA, Filipino nationals would be allowed to development; capacity building in paperless trading;
practice their profession in Japan subject to certain technology transfer and cooperation which could
conditions. In the immediate future, at least two facilitate improvement in the competitiveness of our
groups of Filipino professionals are expected to workers through cooperation in human resource
benefit from JPEPA: Filipino health professionals development, language proficiency training, technical
(nurses and care workers) and seafarers. assistance in skills upgrading, mutual personnel
exchange and fellowship programs, and research and
3.11 For Filipino health professionals, JPEPA establishes a development in Science and Technology; and trade
formal arrangement for the acceptance of 1,000 facilitation measures such as simplification and
Filipino health professionals to work in Japan for the harmonization of customs procedures.
first two years JPEPA will be in force. With Japan’s
3.17 These measures are important to ensure the efficient
ageing population, the demand for careworkers in
movement of goods, services, people, and capital.
Japan is increasing and the country can take advantage
These provisions not only reduce transaction costs
of this opportunity.
but also promote greater trade and greater certainty
in the business environment. The Dispute Settlement
3.12 Filipino seafarers, likewise, are expected to benefit
Mechanism provision in JPEPA is also important as it
from JPEPA through Japan’s continued assistance in
provides the venue to refine and strengthen the
education and skills enhancement. In fact, Japan made
provisions of this treaty. All these may put pressure
investments in the Philippines’ efforts to streamline
on us to implement necessary legal and regulatory
and build up the skills, professionalism, and
reforms to make our institutions more attuned to the
continued process improvement through appropriate
changing international economic environment.
training centers and facilities. It donated a
computerized system to the Maritime Training Council 3.18 The interplay of FDI and trade in a mutually beneficial
(MTC) to maintain the integrity of the assessment and way cannot be discounted and this would be reinforced
certification process for the Filipino seafarers. with JPEPA. FDI and trade are well recognized as
facilitators of growth and development. Capital,
3.13 The Japanese assistance becomes more imperative as technology transfer, management expertise, training
Japanese shipping firms want to draw an additional for the local work force, and access to wider markets
8,000 to 10,000 experienced Filipino seafarers to man are some of the benefits from FDI. These benefits can
up to 600 new ships to be built until the year 2010. complement the resources and capabilities of the
Japan is the largest employer of seafarers, employing Philippines and increase our export competitiveness.
72% of the 240,000 Filipino seafarers deployed Given the Philippines’ current level of development it
worldwide. can benefit significantly from Japan’s capital,
technology, and expertise to strengthen its capacity.
3.14 This provision of movement of natural persons under
JPEPA is expected to boost remittances of Filipino 3.19 As an observation, the ageing Japanese population
overseas contract workers (OCWs). implies a small fraction of the population as part of
the labor force. Ramification of such population
structure is two-pronged: (1) Japan would need to
7
 expand market of its domestic goods in order to territorial waters (Table 12). Also, a Sub-Committee
maintain viability of its industries and business on Government Procurement would be formed to look
enterprises; and (2) Japan would need young skilled into opening up the Philippine government
workers for its industries. procurement contracts to Japanese nationals, implying
that the Japanese will be allowed to enter into
Disadvantages government procurement contracts. Since it is not
categorically stated in the treaty, it is not clear whether
3.20 FTA is a two-edged sword. While free trade enhances Japan can invest in these areas included in the FINL.
competition, uncompetitive industries languish and
eventually close shop unless it can make a turn around
and face competition. While free trade benefits Table 12. List of Items in FINL Not Listed
consumers in general, it is disadvantageous to sectors Under the Exclusion List of JPEPA*
that cannot cope up with the competition. 1. Contracts for the supply of materials, goods
and commodities to government-owned or -
Investments controlled corporation, company, agency or
municipal corporation
3.21 In theory, investment agreements such as JPEPA are 2. Project Proponent and Facility Operator of a
expected to increase investment since it provides BOT project requiring a public utilities franchise
greater certainty and confidence for foreign investors. 3. Contracts for the construction and repair of
But the record has been so far spotty. Annual Japanese locally funded public works except
FDI to Singapore during 1999-2002 averaged US$477 infrastructure/development projects; and
million, three times higher compared to US$153 projects which are foreign funded or assisted
million during 2003-2006. Japan and Singapore signed and required to undergo international
a free trade agreement in November 2002. It clearly competitive bidding
shows that where the FDI goes depends on more 4. Private recruitment, whether for local or
fundamental factors such as low cost of production, overseas employment
5. Financing companies regulated by the
large market size and access to natural resources.
Securities and Exchange Commission (SEC)
6. Investment houses regulated by the SEC
3.22 The downside of JPEPA is the explicit prohibition on
7. Sauna and steam bathhouses, massage clinics
performance requirements. Under JPEPA, there is a and other like activities
provision on the performance requirement (Article 8. All forms of gambling, e.g. race-track operation
93). Simply put, it means that neither party can impose 9. Private security agencies
or enforce as a condition for investment activities 10. Ownership, operation, and management of
requirements such as research and development (R&D) cockpits
requirement, technology transfer and hiring and * 6th FINL as of 2004.
appointment of nationals as executives, managers, or
board member. This provision effectively ties the hand
of and reduces the policy space available for Trade in Goods
succeeding policymakers without getting any
substantial benefit in return. Thus, this provision may 3.24 Displacement of affected local industries. The domestic
prove to be disadvantageous to a developing country industries would experience stiff competition from the
like the Philippines because the country might be stuck onslaught of cheaper imports. Those hardest hit would
in low value-added manufacturing activities and be the sensitive sectors and industries (i.e. automotive
hence, fail to move to higher value-added activities. industry) unless safeguards are put in place or they
At present, the comparative advantage of the Philippine are excluded from FTA negotiations. The auto industry
electronics industry lies mainly in low value-added is characterized by low value-added activities (i.e.
activities (e.g. assembly operations) and less on assembly operations). The auto industry estimates that
production of electronic products. there would be 77,000 workers who would be
displaced if JPEPA takes into effect.
3.23 Furthermore, the Philippines publishes regularly a
Foreign Investment Negative List (FINL), a list of 3.25 Foregone government revenues. Another important
economic activities which limits foreign ownership issue with any FTA is the foregone revenues due to the
and participation due to mandates of the Constitution removal of tariffs. The Tariff Commission estimates
and domestic laws. However, there are items in the Php3.69 billion to Php4.15 billion foregone revenues
FINL which are not specifically included as exceptions for the first year of implementation of the JPEPA (Table
for Japanese investments. Some economic sectors not 13).
listed in the 6th FINL are listed in JPEPA. For instance,
no foreign vessels are allowed to transport passengers
or cargo between ports or places within the Philippine
8
 Table 13. Estimated Foregone Revenues from zero within six years from date of entry into
JPEPA force.
Cate go r y Es tim ate d Re ve n ue For e go ne (b illion Ph P)
3.28 Further, a negotiation on market access for Philippine
FOREX: US$1.00 = FOREX: US$1.00 = raw sugar to Japan was postponed to a later date.
Ph P55.0855 Php 49.00 Certain agricultural products (e.g. rice, wheat, milk,
2007 2007 - 2010 2007 2007 - 2010 herring, sardine, and mackerel) that are considered
sensitive Japanese products are also excluded from
A 2.872 11.488 2.555 10.219
JPEPA.
B 1.277 7.404 1.136 6.586
Total 4.149 18.892 3.690 16.805 3.29 Also, foreign firm’s access to the Japanese market is
Note: based on 2005 RP imports from Japan and 2007-2010 MFN difficult and costly as the distribution system remains
tariffs; categories R (renegotiation), S (special tariff treatment) complex, multilayered, nontransparent and dominated
and X (exclusion) are excluded.
Source: Philippine Tariff Commission
by exclusivity among producers, wholesalers and
retailers8. As such, only big farming conglomerates
3.26 Other estimates range from P3 billion5 to P9 billion6, like Dole Philippines and some Japanese-managed
or roughly 2.5% to 7.4% of total customs duties farms can successfully export Philippine agricultural
collection in 2004. goods to Japan. For nonfood consumer goods,
establishing a market in Japan is costly to small-scale
3.27 Trade deficit. The country’s trade balance with Japan Filipino exporters as these require regular attendance
posted a US$648 million surplus in 2006 from a deficit in trade fairs and exhibits as well as frequent visits to
of US$865 million in 2005 (Table 14). This reflects the shops and markets in and out of Japan. Moreover,
faster growth of Philippine exports to than imports there are nontariff barriers such as the stringent SPS
from Japan. However, with JPEPA the trade balance conditions and quarantine regulations of Japan.
with Japan may likely worsen. This may arise because
some of the country’s top exports to Japan will only 3.30 Environmental Implications. Under JPEPA, the
get gradual tariff elimination such as: Philippines would allow duty-free entry for many
scrap and waste from Japan once JPEPA enters into
· Yellowfin tunas – tariff will be eliminated/ force (Annex 4). Some of these waste products are
reduced to zero within six years from date of considered to be toxic and hazardous.
entry into force. Environmentalists are concerned that removing the
· Fresh banana – tariff will be eliminated/ tariffs on these wastes will allow the entry of these
reduced to zero within 11 years from date of toxic and hazardous products.
entry into force. 3.31 The government, on the other hand, says that there
· Dried pineapples – tariff will be eliminated/ are existing laws that will prevent the entry of such
reduced to zero within 11 years from date of hazardous products in the Philippines. Under RA
entry into force. 6969 (“Toxic Substances and Hazardous and
· Cathodes and sections of cathodes of refined Nuclear Wastes Control Act of 1990”), the entry,
copper7 – tariff will be eliminated/reduced to even in transit, as well as the keeping or storage and
disposal of hazardous and nuclear wastes into the
Table 14. Philippine Trade Balance country for whatever purpose are prohibited. In
with Japan: 2002-2006 addition, RA 4653 prohibits the entry of worn
(in thousand US$) clothing and used rags. Violations of these laws
Ye a r Ex ports Im ports Ba la nce entail imprisonment and fines, depending on the
type of violators. For RA 6969, individual violators
2002 5,293,291 7,550,869 -2,257,578
face an imprisonment of six months and one day to
2003 5,768,050 7,860,331 -2,092,281 six years and one day and a fine ranging from
2004 7,982,486 7,673,875 308,611 Php600 to Php4,000; a corporation may be slapped
2005 7,206,071 8,071,080 -865,009 an additional fine of five hundred thousand pesos
2006 7,917,821 7,270,236 647,585
for exemplary damages; and a foreign firm will be
barred entry into the country as well as a revocation
Source: National Statistics Office. 2006 Philippine Statistical
Yearbook.
of its license to do business in the Philippines.

7
This refers to cathodes and sections of cathodes of refined copper not
5
Philippine Institute for Development Studies (PIDS). “The Japan- more than 500 yen/kg; otherwise, the tariff will be eliminated from date
Philippines Economic Partnership Agreement (JPEPA): Some Questions of entry into force.
and Answers”. 8
Tan, Rosalina, “Can the Japan-Philippines Economic Partnership (JPEPA)
6
Estimate by IBON Foundation as cited in PIDS’ “The Japan-Philippines benefit Philippine consumer goods exporters?” PIDS Policy Notes, April
Economic Partnership Agreement (JPEPA): Some Questions and Answers”. 2005.
9
3.32 Violations of RA 4653, on the other hand, involves the monthly salary of US$3,359; in UK, US$2,052; Saudi
penalty of fine of not less than Php200 nor more than Arabia (US$506); and other Middle Eastern countries
Php20,000 and imprisonment of not less than 2 years (US$959)9.
nor more than 5 years. Foreigners face an immediate
deportation and foreign firms face cancellation of On Other Provisions
their license and permanent disqualification to do
business in the Philippines. Moreover, both Japan and 3.38 The concurrence of the Philippines to the ‘Singapore
the Philippines are signatories to the Basel Convention issues’ effectively ties its hands on the said issues on
which requires the parties to make prior notice and future bilateral and multilateral free trade talks. It
consent before governments allow the export and also weakens the developing countries’ stance on such
import of hazardous wastes. Therefore, the tariffs are issues, which it could have used as a bargaining chip
redundant given these domestic laws. for better concessions from the developed countries.
3.33 In July 1992, a total of 122 40-foot container vans The Philippines is an active member of the Group of
from Japan were seized from the Port of Manila. The 77, a coalition of 130 developing states which
vans were declared to contain waste paper for articulate and promote their collective economic
recycling but they actually contained hazardous, interests and enhance their joint negotiating capacity
infectious, and toxic trash: intravenous injections, on major international economic issues.
used adult and baby diapers, used sanitary napkins,
discarded intravenous syringes, dextrose, garments, 3.39 JPEPA has provision on mutual recognition of each
and bandages. The Japanese government was forced others’ standards and assessment procedures. A sub-
to send back the waste shipments. In November 2006, committee will be formed to implement this provision.
a group of farmers claimed that an 84-hectare landfill But for the Philippines to benefit from this,
in Barangay Sapang, Ternate, Cavite has been prepared particularly for the agri exporters, the country has to
to receive Japan’s wastes such as old appliances and invest in upgrading its facilities, especially to meet
electronic products. the stringent Japanese SPS requirements. Whether the
source of financing would come from Japanese grants
3.34 Some groups of lawyers, on the other hand, claim that remain unlikely given the historical trend of
the treaty, when approved by the Senate, may increasing share of loans than grants to total Japanese
supersede these laws. official development assistance (ODA)10. Thus, some
sectors worry that this provision would not be
3.35 In 22 May 2007, the Philippine Foreign Affairs advantageous to the Philippines, but instead pose as
Secretary wrote a side-letter to the Foreign Minister an added burden since this basically implies more
of Japan that seeks to clarify this issue. The said letter borrowings for the country.
asked for Japan’s confirmation on the Philippines’
understanding that “JPEPA does not prevent the
adoption or enforcement of such measures (exporting IV. RECOMMENDATIONS
toxic wastes to the Philippines) under existing and
future national laws, rules and regulations of the 4.0 Certain ambiguities in JPEPA must be clarified. Will
Philippines and Japan.” The following day, the Foreign JPEPA supersede RA 6969 and RA 4653? Does the non-
Minister of Japan gave its confirmation on this issue. inclusion in JPEPA of certain areas under the country’s
FINL mean that Japanese nationals can invest in these
3.36 On the other hand, some wastes (e.g. used car restricted areas such as government procurement?
batteries) are used as industrial inputs, and imports These issues must be addressed.
should be allowed according to some sectors. There
should be a clearer indication which of these products 4.1 Also, there is the ASEAN-Japan FTA which is expected
is used as inputs. to be signed in November 2007 during the 13th ASEAN
Summit. What is the impact of this ASEAN-wide treaty
Movement of Filipino Professionals with Japan on JPEPA? Are the two FTAs alternatives to
each other?
3.37 Whether Japan would be an attractive market for
Filipino nurses and caregivers remains unclear given 4.2 Moreover, the government must provide support
stringent Japanese requirements (e.g. language services (e.g. on SPS requirements) to Filipino
proficiency) and the existence of other more lucrative exporters (e.g. agricultural exporters) for them to fully
markets for nurses such as US and UK. In 2006, the
9
Tan, Edita, Policies and Institutions for Training and Skills Development of
average monthly salary for Japanese nurses is
Migration Labor, International Organization for Migration. Switzerland,
estimated at US$1,643 (Y193,924) which may not be 2004.
high enough to entice Filipino nurses considering 10
Tadem, Ed, “Official Development Assistance Issues” as presented to the
Japan’s high cost of living. Nurses working in US get a JPEPA Forum titled “JPEPA: Alternative Perspectives from Impacted Sec-
tors” sponsored by the Office of Sen. Pia Cayetano, 14 August 2007.
10
 maximize the potential of increased market access to Books/Journals/Yearbooks
Japan.
Cororaton, Cesar, Philippine-Japan Bilateral Agreements: Analysis
4.3 A further investigation is also recommended to of Possible Effects on Unemployment, Distribution and Poverty
include more recent data, particularly on estimates in the Philippines Using CGE-Microsimulation Approach,
on foregone revenues, and other concerns of the Philippine Institute of Development Studies, January 2004.
impacted sectors. Government agencies, which are by
nature of their functions and mandates collectors and Hernandez, Joel, Bilateral Investment Treaties (BITs) of the
repository of data pertinent to trade, tariff and Philippines and Dispute Settlement Mechanisms, Term Paper,
government revenues, should share and disseminate School of Economics, University of the Philippines-Diliman,
these data to other government agencies to assist 2006.
further in policy studies.
Intal, Ponciano, Jr. and Joel Hernandez, Integrative Report on
*** “Production Networks, Industrial Adjustments, Institutions,
Policies, and Regional Cooperation”, Angelo King Institute for
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(ICTSD) and International Institute for Sustainable
Agreement Between the Republic of the Philippines and Japan Development (IISD), The Singapore Issues: Investment,
for an Economic Partnership Competition Policy, Transparency in Government Procurement
and Trade Facilitation , Doha Round Briefing Series,
Annex 1 referred to in Chapter 2 – Schedules in relation to Article Developments Since the Fourth WTO Ministerial Conference,
18 Vol. 1 No.6 of 13, February 2003.

Annex 2 referred to in Chapter 3 – Product Specific Rules Kawasaki, Kenichi, Impact of FTAs in Asia, REITI Discussion Paper
Series 03-E-018, Research Institute of Economy, Trade and
Annex 3 referred to in Chapter 3 – Minimum Data Requirement Industry, September 2003.
for Certificate of Origin National Statistical Coordinating Board, 3rd Quarter 2006
Foreign Direct Investment (FDI) – Highlights.
Annex 4 referred to in Chapter 6 – Sectoral Annex in relation to
Article 61 National Statistical Coordinating Board, 2005 Philippine
Statistical Yearbook.
Annex 5 referred to in Chapter 7 – Financial Services
National Statistics Office, 2005 Foreign Trade Statistics of the
Annex 6 referred to Chapter 7 – Schedule of Specific Philippines.
Commitments and List of Most-Favored-
Nation Treatment Exemptions National Statistics Office, 2004 Foreign Trade Statistics of the
Philippines.
Annex 7 referred to in Chapter 8 – Reservations for Existing and
Future Measures Philippine Institute of Development Studies, Japan-Philippines
Economic Partnership Agreement (JPEPA): A Second Look, 19
Annex 8 referred to in Chapter 9 – Specific Commitments for the January 2007.
Movement of Natural Persons
___________, The Japan-Philippines Economic Partnership
Implementing Agreement Between the Government of the Agreement (JPEPA): Some Questions and Answers, January
Republic of the Philippines and the Government of Japan 2007.
Pursuant to Article 12 of the Agreement Between the Republic
of the Philippines and Japan for an Economic Partnership Philippine Overseas Employment Office, The New Japanese
Immigration Requirements for Entry of Foreign Overseas
Joint Statement on the Occasion of the Signing of the Agreement Performing Artists, POEA Market Update, 2005.
between Japan and the Republic of the Philippines for an
Economic Partnership Sakakibara, Eisuke and Yamakawa, Sharon, “Trade and Foreign
Direct Investment: A Role for Regionalism” in Shahid Yusuf, M.
Anjum Altaf, and Kaoru Nabeshima, eds. Global Change and
East Asian Policy Initiative. World Bank and Oxford University
Press, New York, 2004.

11
Tan, Edita, Policies and Institutions for Training and Skills Philippine Tariff Commission. Issues on the Japan-Philippines
Development of Migration Labor, International Organization Economic Partnership Agreement (JPEPA). Edgardo Abon.
for Migration. Switzerland, 2004. Philippine Institute for Development Studies (PIDS) Round
Table Discussion. 19 January 2007.
Tan, Rosalina, Can the Japan-Philippines Economic Partnership
Agreement (JPEPA) benefit Philippine consumer goods Republic Act 6969, An Act to Control Toxic Substances and
exporters?, Philippine Institute of Development Studies, April Hazardous and Nuclear Wastes, Providing for Violations
2005. Thereof, and for Other Purposes, 26 October 1990.

World Trade Organization, Trade Policy Review: The Philippines, Republic Act 4653, An Act Prohibiting the Commercial Importation
Trade Policy Review Body. WT/TPR/S/149. Switzerland, 2005. of Textile Articles Commonly Known as Used Clothing and Rags,
17 June 1966.
Yap, Josef and et.al. Assessing the Japan-Philippines Economic
Partnership Agreement (JPEPA), Philippine Institute of Tadem, Ed, Official Development Assistance Issues as presented
Development Studies (PIDS), December 2006. to the JPEPA Forum titled “JPEPA: Alternative Perspectives from
Impacted Sectors” sponsored by the Office of Sen. Pia
Cayetano, 14 August 2007.
News articles

BizNews Asia, Philippines, Japan enter new era of partnership Web Articles
with JPEPA, 18-25 September 2006
DOLE, Gov’t cites bright demand for Pinoy ship officers, seafarers,
Business World, Japan shipping firms eye 10,000 seafarers, 02 04 November 2006.
November 2006.
DOLE, No hiring yet of Pinoy nurses, caregivers for Japan, 16
Business World, RP-Japan pact to benefit agriculture, Beverly October 2005.
Natividad, 13 September 2006
Philippine Information Agency, Training standards for seafarers
Business World Online, RP-Japan deal faulted, Felipe Salvosa strengthened, 13 August 2005.
II, Vol. 21 No. 12, 13 August 2007.

Business World, Japan shipping firms eye 10,000 seafarers, 02 Websites

November 2006.
www.bilaterals.org. Compilation of news articles related to
Manila Times, No to Filipino nurses, Cheryl Arcibal, 27 November bilateral, regional, and multilateral
2006. free trade negotiations and agreements.

Philippine Daily Inquirer, JPEPA Timeline, Lawrence de Guzman. www.g77.org. The official website of the Group of 77 at the United
25 October 2006. Nations.

Philippine Daily Inquirer, JPEPA could spur growth, cut poverty, www.jetro.go.jp/en/stats/statistics. The official website of the
Josef Yap, Erlinda Medalla, and Rafaelita Aldaba. 18 Japan External Trade
November 2006. Organization

Philippine Daily Inquirer, Graying Japan opens doors to RP nurses, www.jisf.org.jp. The official website of the Japan Iron and Steel
caregivers, AFP. 04 January 2007. Foundation.

w w w. w t o . o r g /e n g l i s h / t h e w t o _ e / w h a t i s _ e / t i f _ e /
Other Publications agrm10_e.htm#govt. The official site of the World Trade
Organization – On Government Procurement
Department of Trade and Industry. Briefer on Japan-Philippines
Economic Partnership Agreement This paper was prepared by Jamie Lyn V. Duque and
Joel C. Hernandez of the Macro and Microeconomics Group
with support from Sector Head Ma. Cristina R. Pardalis with
Executive Order No. 389, Promulgating the Sixth Regular Foreign direct supervision and guidance from Director Merwin H.
Investment Negative List, 30 Salazar and overall guidance of Officer-in-Charge, Executive
November 2004 Director Ronald R. Golding.
The views and opinions expressed herein are those of
Executive Order No.139, Fifth Regular Foreign Investment the SEPO and do not necessarily reflect those of the Senate,
Negative List, 22 October 2002. of its leadership, or of its individual members.
12
 Annex 1. List of Exceptions for Japanese Investors under JPEPA
Reservations on Existing Measures
Put limits on foreign equity
1. Ownership of private lands
2. Lease of private land
3. Ownership of condominiums
4. Small-scale mining
5. Projects covered by Mineral Production Sharing Agreement (MPSA), Co-Production Agreement (CPA),
or Joint Venture Agreement (JVA)
6. Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
7. Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct
employees with paid-in equity capital of less than the equivalent of US$100,000
8. Participation in geothermal energy, methane and natural gas
9. Participation in atomic energy facility
10. Participation in rice and corn industry
Reserved for Filipino nationals
1. Cooperatives
2. Corporate secretary shall be a resident and citizen of the Philippines.
3. Exploration and development of water resources
4. Transport of passengers or cargo between ports or places within the Philippine territorial waters
Others
1. Ownership of all lands of the public domain and natural resources are owned by the State.
2. Export requirement for firms with more than 40% foreign equity to qualify for BOI incentives. Foreign
equity is allowed up to 100% if an enterprise exports at least 60% of its total production output.
3. Divestment requirement for firms registered under the Investment Priorities Plan to which BOI incentives
are granted
4. Qualification for BOI incentives for iron and steel firms with maximum of 65% foreign equity (Measures
relating to this reservation shall be terminated by the end of 2006.)
5. Suspension of nationality requirement for ASEAN nationals, projects, and investment
6. Corporate treasurer shall be a resident of the Philippines.
Reservations on Future Measures
Put limits on foreign equity
1. Deep-sea fishing
2. Lease of public lands (agricultural and foreshore lands)
3. Lease of forest or timber lands
4. Rattan plantation lease
5. Special land use permit/lease
6. Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring PNP clearance
(e.g. firearms, gunpowder, dynamite)
7. Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring DND clearance
(e.g. guns and ammunitions, military ordnance and components, military communications equipment)
8. Manufacture of dangerous drugs
Reserved for Filipino nationals
1. Small-scale utilization of marine resources
2. Agrarian reform beneficiaries
3. Manufacture of firecrackers and other pyrotechnic devices
Others
1. Prohibition of importation, manufacture, distribution, sales and display of toy firearms and explosives

13
 Annex 2. Philippine Imports with “A” Tariff Rating under JPEPA
Description Items
Nuclear reactors, • nuclear reactors
boilers, machinery • producer gas or water gas generators
and mechanical • steam turbines
appliances and • aircraft engines
parts thereof • marine propulsion engines
• hydraulic turbines
• turbo-jets
• air or vacuum pumps
• window or wall type airconditioning machines of an output exceeding 21.10
kW
• household-type refrigerators and freezers with compression-type of a
capacity of more than 13 cu feet
• furnace burners for liquid fuel
• instantaneous or storage water heaters
• ship’s derricks
• forklift trucks
• lifts, escalators, and conveyors
• harvesting or thrashing machinery
• milking machines and dairy machinery
• brewery machinery
• poultry incubators and brooders
• machinery for making paper
• bookbinding machinery
• phototype-setting and composing machines
• printing machinery
• machines for preparing textile fibres
• weaving machines
• knitting machines
• sewing machines
• machinery for making or repairing footwear
• shearing machines
• calculators and cash registers
• automatic data processing machines and other office machines
• machines for assembling electric or electronic lamps
• machinery for the manufacture of rubber or plastics
Electrical machinery • motors and generators
and equipment and • electromagnets
parts thereof; sound • food grinders and mixers
recorders and • shavers and hair clippers
reproducers, • industrial or laboratory electric furnaces and ovens
television image • soldering irons and guns
and sound • hair dryers
recorders and
• telephone sets and videophones
reproducers, parts
• coin- or disc-operated record-players
and accessories
• magnetic tapes and discs
• radar apparatus
• LCD or LED indicator panels and colour plasma TVs
• electronic integrated circuits and microassemblies
• carbon electrodes, carbon brushes and lamp carbons.
Vehicles other than • motorcycles with reciprocating internal combustion piston engine of a cylinder
railway or tramway capacity exceeding 250cc
rolling stock • baby carriages
• trailers and semi-trailers of the caravan type
• aircrafts
• cruise ships, warships and inflatable rafts
Textile articles • special woven fabrics
• lace
• tapestries
• embroidery
• wool
• cotton

14
 Annex 3. Philippine Exports with “A” Tariff Rating Under JPEPA
Description Items
• nuclear reactors
Nuclear reactors, boilers, machinery and
• producer gas or water gas generators
mechanical appliances and parts thereof
• steam turbines
• marine propulsion engines
• hydraulic turbines
• turbo-jets
• air or vacuum pumps
• harvesting or thrashing machinery
• milking machines and dairy machinery
• brewery machinery
• poultry incubators and brooders
• machinery for making paper
• bookbinding machinery
• phototype-setting and composing machines
• printing machinery
• weaving machines
• machines for assembling electric or electronic
lamps
• electronic integrated circuits and
Electrical machinery and equipment and parts
microassemblies
thereof; sound recorders and reproducers,
• LCD or LED indicator panels and colour
television image and sound recorders and
plasma TVs
reproducers, parts and accessories
• motors and generators
• electro-magnets
• food grinders and mixers
• shavers and hair clippers
• industrial or laboratory electric furnaces and
ovens
• soldering irons and guns
• telephone sets and videophones
• magnetic tapes and discs
• radar apparatus
• motor vehicles
Vehicles other than railway or tramway rolling
• baby carriages
stock
• trailers and semi-trailers aircrafts
• cruise ships, warships and inflatable rafts
• special woven fabrics (e.g. knitted & crocheted
Textile articles
fabrics)
• lace
• tapestries
• embroidery
• wool
• cotton
• flax
• other vegetable textile fibres
• sewing thread of man-made filaments like
nylon, polyesters
• sulphur
Inorganic chemicals & pharmaceutical products
• carbon
• alkali
• mercury
• iron oxides
• medicaments
• wadding, gauze, bandages and similar articles
• tortoise-shell, worked ivory, bone, horn
Miscellaneous manufactured articles
• brooms and brushes
• hand sieves and hand riddles
• buttons, press-fasteners and snap-fasteners
• slide fasteners and parts thereof
• ballpoint pens

15
 Annex 4. Philippine MFN and JPEPA Tariff Rates on Wastes
Tariff Item No. Description JPEPA rate MFN rate
1522.00 00 Degras; residues from the treatment of fatty 0% 3%
substances or animal or vegetable waxes
23.01 Flours, meals and pellets, of meat, or of fish or 0% 1%
other aquatic invertebrates, unfit for human
consumption; greaves
23.02 Bran, sharps and other residues from the sifting, B10 3% - 10%
milling or other working cereals or of leguminous
plants
23.03 Residues of starch manufacture and other wastes 0% 1% - 3%
of sugar manufacture, brewing or distilling dregs
and waste
23.06 Oil-cake and other solid residues from the 0% - B10 3% - 15%
extraction of vegetable fats or oils
23.08 Vegetable materials and vegetable waste 0% 3%
24.01 Unmanufactured tobacco; tobacco refuse B10 7%
2620.60 00 Ash and residues containing arsenic, mercury, 0 0.03
thallium or their mixtures
2621.10 00 Ash and residues from the incineration of 0 0.03
municipal waste
3006.8 Waste pharmaceuticals 0 0.2
38.25 (and its Residual products of the chemical or allied 0 0.3
subheadings) industries
3825.10 00 Municipal waste 0 0.3
3825.20 00 Sewage sludge 0 0.3
3825.30 10 Clinical wastes 0 0.3
3825.30 90 Other clinical waste 0 0.3
3825.4100, Waste organic solvents – halogenated, and others 0 0.3
3825.4900
3825.5 Wastes of metal pickling liquors, hydraulic fluids, 0 0.3
brake fluids and anti-freeze fluids
3825.6100, Other wastes from other chemical or allied 0 0.3
3825.6900 industries
3915.10 00 Waste, parings and scraps of polymers of ethylene 0% 5%

3915.20 00. Waste, parings and scraps of polymers of styrene 0% 5%

3915.30 00 Waste, parings and scraps of polymers of vinyl 0% 1%

chloride
3915.90 00 Waste, parings and scraps of other plastics 0% 5%
4004.00 00 Waste, parings & scraps of rubber 0% 3%
4017 Hard rubber in all forms, including waste and 0% 5%
scraps
4115.2 Parings and other wastes of leather, not suitable B5 7%
for the manufacture of leather articles
4401.3 Sawdust and wood wastes and scraps 0% 3%
4707.9 Other pulps of fibres from recovered (waste and 0% 1%
scrap) paper or of other fibrous cellulosic material,
including unsorted wastes and scraps
50.03 Silk wastes 0% 1%
51.03 Wastes of wool or of fine or coarse animal hair 0% 1%
52.02 Cotton wastes 0% 3%
55.05 Wastes of man-made fibres (synthetic and artificial 0% 3%
fibres)
6309 Worn clothing and other worn articles 0% 20%
6310 Used or new rags, scrap twine, cordage, rope and 0% 20%
cables and worn out articles of twine, cordage,
rope or cables, of textile materials
7204.1 Wastes and scraps of cast iron 0% 0%
7204.21 Wastes and scraps of stainless steel 0% 3%
7204.29 Wastes and scraps of other alloy steel 0% 3%
7204.3 Wastes and scraps of tinned iron or steel 0% 3%
7204.41 Turnings, shavings, chips, milling wastes, 0% 3%
sawdust, filings
7204.49 Other wastes and scraps 0% 3%
7204.5 Remelting scrap ingots 0% 3%
74.04 Copper wastes and scraps 0% 3%
7802 Lead wastes and scraps 0% 3%
7902 Zinc wastes and scraps 0% 3%
8002 Tin wastes and scraps 0% 3%
9101.97 00 Tungsten wastes and scraps 0% 3%
8102.97 00 Molybdenum wastes and scraps 0% 3%
8103.30 00 Tantalum wastes and scraps 0% 3%
8104.20 00 Magnesium wastes and scraps 0% 3%
8105.30 00 Cobalt wastes and scraps 0% 1%
8106.00 00 Bismuth and articles thereof, including wastes and 0% 3%
scraps
8107.30 00 Cadmium wastes and scraps 0% 3%
8108.30 00 Titanium wastes and scraps 0% 3%
8109.30 00 Zirconium wastes and scraps 0% 3%
8110.20 00 Antimony wastes and scraps 0% 1%
8111.00 00 Manganese and articles thereof, including wastes 0% 3%
and scraps
8112.13 00 Beryllium wastes and scraps 0% 3%
8112.22 00 Chromium wastes and scraps 0% 3%
8112.52 00 Thallium wastes and scraps 0% 3%
8113.00 00 Cermets and articles thereof, including wastes and 0% 3%
scraps
8548.10 10 Wastes and scraps of primary cells, primary 0% 3%
batteries and electric accumulators; spent primary
cells, spent primary batteries and spent primary
accumulators; electrical parts of machinery or
apparatus

16