The Philippines has initiated negotiations with Japan to delay tariff elimination until 2013 on locally produced automotive parts and components and tariffs on completely built up (CBU) vehicles of sports utility vehicles (SUVs) or vehicles with engine displacement of 3 liters c.c. and above.

Trade and Industry undersecretary and Board of Investments managing head Elmer C. Hernandez said the government has already informed Japan for a negotiation on the tariff elimination provision on the automotive sectors, which is covered under the Japan Philippines Economic Partnership Agreement (JPEPA).

The Philippines has a commitment under the JPEPA to inform Japan of plans to amend Executive Order 262, which provides tariff protection on a list of locally produced automotive parts. There is also a provision for tariff protection on parts that shall be produced in the future.

The economic treaty provides that both countries must eliminate tariffs on car parts by 2010. However, an annex to the agreement specifically states that the schedule for lifting tariffs on those listed under EO 262 can be delayed until January 1, 2013 as long as negotiations are initiated in 2009.

EO 262, signed in December 2003, had slapped tariffs ranging from 10%-30% on roughly 50 types of car parts.

“Under JPEPA, our commitment is if ever we amend EO 262 this must be made according to the normal procedure and the Philippines should notify Japan of the amendment and when public hearing is going to be conducted they should also be informed to give them the chance to present their side,” Hernandez said.

The same commitment was made by the Philippines under the JPEPA with regards to CBU tariff elimination. Under the treaty, customs duty on CBU packs with cylinder capacity greater than 3000 above must also be free or reduced to zero starting January 1, 2010 from the 30 percent duty from the date the JPEPA treaty was enforced.

But should the Philippines decide to delay tariff cuts, it has to inform Japan and initiate a negotiation in 2009 otherwise tariffs shall go down to zero by 2010.

“We have already informed Japan we want to negotiate,” Hernandez said noting that the local industry has already made its position to delay the tariff elimination up to 2013.