Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts

Vol. VI, No. 38      Oct. 29 -Nov. 4, 2006      Quezon City, Philippines

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RP Stands to Lose P9 B a Year in Tariff Revenues under JPEPA

The country stands to lose more than P9 billion annually in tariff revenues under the Japan-Philippines Economic Partnership Agreement (JPEPA). Meanwhile, the gains to Philippine exports that government economic managers claim will happen under JPEPA are similarly overstated. Some 80% of Philippine exports to Japan already enter tariff-free and will not be affected by the free trade pact.

BY IBON FOUNDATION

Posted by Bulatlat

The country stands to lose more than P9 billion annually in tariff revenues under the Japan-Philippines Economic Partnership Agreement (JPEPA).

According to Sonny Africa, IBON research head, the annual value of the country's imports from Japan averaged some $6.74 billion from 2000-2004. Most of these are electronics parts and components that are imported duty-free under government incentive schemes. Other products are levied tariffs ranging from 1 percent to 30 percent. Given the distribution of these products in the various tariff brackets, Africa estimated foregone tariff revenues of some P9.44 billion. (See Table)

Meanwhile, the gains to Philippine exports that government economic managers claim will happen under JPEPA are similarly overstated. Some 80 percent of Philippine exports to Japan already enter tariff-free and will not be affected by the free trade pact. (See Table)

Table

Tariff Rates

RP Exports to Japan

RP Imports from Japan

(%)

(% share)

(% share)

Import Value (US$M)

Tariff Revenues (US$ M)

Tariff Revenues (PhP M)

0

79

51

3,437.4

0

0.0

1 3

3.4

32.5

2,190.5

65.715

3,285.8

4 5

4.1

2.9

195.5

9.773

488.7

6 10

1.4

10.2

687.5

68.748

3,437.4

11 15

1.4

2

134.8

20.22

1,011.0

16 20

6.1

0.6

40.4

8.088

404.4

21 25

0.1

0

0.0

0

0.0

28 30

0.1

     0.8

53.9

16.176

808.8

Total

95.6

100

6,740.0

188.72

9,436.0

But Africa points out that these exports are mainly electronic parts and components which are merely assembled here from inputs imported from abroad. Thus, the major gainers from the JPEPA are actually Japanese corporations, such as those engaged in the manufacture of cars and automotive parts, which benefit from lower production cost because of reduced duties on imported raw materials and parts.

Philippine exports which would enjoy reduced tariffs under the Agreement are fresh bananas (6.5 percent of Philippine exports to Japan), frozen shrimps and prawns (1.3 percent), builder's joinery and carpentry of wood (1 percent), fresh pineapple (0.9 percent), other light oils and preparations (0.6 percent), men's or boys' suits of wool or fine animal hair, sacks and bags for the conveyance or packing (of polymers of ethylene), coconut (copra) oil and its fractions (not chemically modified), and men's or boys' trousers, etc. of cotton.

However, the benefits of tariff reduction for these products would accrue mainly to big foreign and transnational agri-business enterprises. Local peasants would be unable to take advantage of supposed export opportunities due to the lack of government support in terms of infrastructure, credit, extension and post-harvest facilities, Africa said. Posted by Bulatlat

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.

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