A source, however, said that Japan is crafting a compromise that could move the Philippines to reconsider its position.
"We are standing pat and the proposed compromise is still subject to discussion," a highly-placed official said.
Japanese and Philippine negotiators met in Japan two weeks ago to discuss the Philippine position on automotive, which was both a position of the Philippine government and the private sector.
"The automotive sector is the last thorny issue in the negotiations," an official said as the Japanese have already agreed in principle to the "unrestricted movement of natural persons" provision subject to certain safeguards.
The domestic automotive industry will have to be consulted next week.
The government and the domestic automotive industry’s position calls for: No zero tariff by 2010 on auto categories as tariffs have to be renegotiated in 2009 and a commitment from each Japanese car company to assemble 2 completely knocked down (CKD) models in the country.
Specifically, the unified Philippine position is to renegotiate all automotive tariffs by 2009.
This means that automotive tariffs for completely built-up packs with engine sizes of below 3 liters will follow the 1-3-3-3 percentage points tariff reduction for a total of 10 percent tariff cuts on the fourth year of the JPEPA using as basis the current 30 percent most favored nation tariff on CBU imports.
Originally, the Philippines has agreed to a sudden death by 2010 for CBUs at below 3 liters.
But this time, the Philippines would like to renegotiate the automotive tariffs by 2009.
The same position has been adopted for CBUs with engine sizes of 3 liters and above.
The previous position was to maintain the automotive tariffs and sudden death or zero rate by 2010.
In addition, Japanese car companies must retain two CKD model for local assembly to ensure their continued assembly operations in the country even beyond 2010.
The Philippine position is comparable to what Thailand got from its bilateral FTA with Japan.
"We have been espousing that we should get no less than what Thailand got," said Trade and Industry Undersecretary Elmer C. Hernandez said noting that Thailand has already "recovered from the ashes" of the devastating Asian financial crisis with sales hitting a million units while the Philippines got stuck with 90,000 units a year sales a far cry from its 160,000 level in 1997.
But Hernandez said the proposed JPEPA is not a template of the JapanThailand FTA.
"There is no template to FTAs otherwise we would just be filling in the blanks. We are just benchmarking with what other countries have gotten because each country has different conditions," he said.
By benchmarking, Hernandez said, we would be able to compare and push for a similar if not better treatment.
"That is just being fair," Hernandez said.
