WORLD TRADE  
ORGANIZATION  WT/REG257/M/1 
18 June 2010 
 (10-3359) 
Committee on Regional Trade Agreements 
Fifty-seventh Session  
 
 
 
CONSIDERATION OF THE ECONOMIC PARTNERSHIP AGREEMENT  
BETWEEN JAPAN AND THE PHILIPPINES  
GOODS AND SERVICES 
 
Note on the Meeting of 14 June 2010  
 
Chairman:  Mr A. Suescum (Panama) 
  
1. The meeting was convened in document WTO/AIR/3553/Rev.1, dated 4 June 2010. 
2. Under Agenda Item C.II of its 57
th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) considered the Economic Partnership Agreement (EPA) between Japan and the Philippines (hereinafter the 'Agreement'), goods and services.  
3. The Chairman
 noted that the Agreement had entere d into force on 11 December 2008 and had 
been notified by the Parties to the WTO on 11 December 2008 under Article XXIV:7(a) of the 
GATT 1994 and the Understanding on the Interpre tation of Article XXIV of GATT 1994 as an 
Agreement establishing a free trade area (document WT/REG257/N/1) and under GATS 
Article V:7(a) as an Agreement providing for the liber alization of trade in services within the meaning 
of GATS Article V (document S/C/N/470).  The text of the Agreement was available, together with 
its Annexes, on the Parties' official websites.  The Factual Presentation on the goods and services 
aspects (document WT/REG257/1, dated 19 March 2010) had been prepared by the Secretariat on its 
own responsibility in full consultation with the Part ies, in accordance with paragraph 7(b) of the 
Transparency Mechanism (TM) fo r Regional Trade Agreements (doc ument WT/L/671).  In addition, 
written questions and replies on the Agreement had been recently distributed in document 
WT/REG257/2, dated 8 June 2010.  He proposed to organize the consideration of the Agreement by 
first asking the Parties and then other Members for general comments.  The Committee would then 
turn to the specifics of the Agreement using th e Factual Presentation to guide the debate.  He 
proposed to go through the Factual Presentation secti on by section, and then look at the questions and 
replies document.  
4. The representative of Japan  thanked the Committee for th e opportunity to present the 
Agreement for consideration by WTO Members.   The Economic Partnership Agreement (EPA) 
encompassed a wide range of areas beyond trade in  goods and services, for example, investment, 
movement of natural persons, intellectual pr operty, competition, improvement of business 
environment and cooperation.  The Agreement wa s the ninth EPA concluded by Japan, following 
those with Singapore, Mexico, Malaysia, Chile, Th ailand, Indonesia, Brunei and ASEAN.  Its key 
objectives were to liberalize and facilitate trade and in vestment and to cooperate  in capacity-building.  
The Agreement was expected to strengthen the economic relations between the Parties.  The 
Philippines was one of Japan’s major trading partners  and a host country to its investment.  In 2004, 
the Philippines was the 15th and 13th trading partner for Japan's exports  and imports, respectively.  The 
Parties had decided to negotiate the EPA for the pur pose of further strengthening such economic ties.  
In her delegation's view, the conclusion of the EPA with the Philippines, one of the core countries of WT/REG257/M/1 
Page 2  
 
  ASEAN, would create a positive and demonstrative im pact on other economies, particularly those in 
East Asia, and help further devel op and enhance the economic integrati on in the region as a whole.  In 
December 2003, at the Japan-Philippines Summit mee ting in Tokyo, the leaders of the Parties had 
decided to start the negotiations.  The first round of  negotiations had been held in February 2004 in 
Manila;  in November 2004, the Parties had comp leted negotiations on the major elements of the 
Agreement, to be followed by the finalization of the legal texts.  The EPA had been signed on 
9 September 2006 in Helsinki, and had entered into force on 11 December 2008.   
5. Japan considered the EPA a comprehensive Agreement with a high level of tariff 
liberalization.  In ten years, it would eliminate up to 94% of tariffs in terms of bilateral trade from 
2003.  Therefore, the Agreement met  the GATT Arti cle XXIV requirement.  On trade in services, the 
EPA provided for national treatment for a broad rang e of sectors and sub-sectors, and it was therefore 
compatible with GATS Article V.   With regard to the economic effects of the EPA, the bilateral trade 
volume had decreased from 1,907 billion JPY (US$20 billion) in 2008 to 1,365 billion JPY  (US$14 billion) in 2009.  The reason for such a decrease was not clear, and it was too early to 
evaluate the effects of the Agreement.  Nonethel ess, the EPA was expected to be a solid foundation 
for the increase of trade and investment between the Parties, by strengthe ning economic partnership 
through various means provided in the Agreement.  One of the major characteristics of the Agreement 
was the establishment of the Joint Committee and el even sub-committees in order to ensure the  
effective implementation and operation of the Agreement. After the entry into force, 
five sub-committees had been held, namely:  the sub-committees on Trade in Goods, Trade in 
Services, Movement of Natural Persons, Cooperation,  and Improvement of the Business Environment.  
Under the Chapter on Cooperation, the Agreement pr ovided for cooperation in ten different fields.  
The Parties had started discussions, within the sub-committee on Cooperation, to formulate and 
implement specific cooperation projects with a view to  realizing mutual benef its and facilitate trade 
and investment liberalization.  She noted that th e Agreement had laid a solid foundation for further 
growth in bilateral trade and investment, as well as strengthening economic ties between the Parties.  
She was pleased to respond to any questions Memb ers might have and looked forward to a fruitful 
discussion in the Committee. 
6. The representative of the Philippines
 thanked Members for the interest shown in the 
Agreement.  Japan was the Philippi nes' largest trading partner with in the East Asia region and had 
sustained its position as its second largest global trad ing partner, with an average of 15% and 18% 
share of the Philippines’ total global exports and im ports, respectively.  When negotiations formally 
began in 2004, the Philip pines ranked as Japan’s 15th largest trading partner, and was an important 
export base for Japanese companies operating in the As ian market.  The economies of the Parties were 
considered to be complementary, with the Ph ilippines exporting mostly electronic products, wood-
based furniture, fresh and processed bananas and pi neapples, and some mineral products, while Japan 
specialized in high-technology and industrial pr oducts.  In terms of investment, Japan had 
correspondingly been one of the Philippines' largest s ources of foreign direct investment (FDI), with a 
22% share of its total FDI in 2000-2009.  The EPA  was intended to further bolster existing economic 
links and deepen cooperation between the Parties.   The EPA would rest on three key pillars:  
liberalization, facilitation, and coope ration.  He remarked that approximately 90.9% of tariff lines and 
91.2% of imports by value from the Philippines w ould be duty-free under the Agreement.  In addition 
to the 3,714 tariff lines that enjoyed duty-free tr eatment on an MFN basis, 4,326 tariff lines from the 
Philippines would be duty-free by the end of the impl ementation period.  Benefits were expected to 
accrue from greater market access in lowering tariffs and from the improvement in the investment climate.  Studies had suggested that such benefits  could range from 1.7% to 3.3% if FDI inflows 
leading to capital accumulation as well as productivity ga ins materialized.  For trade in services, the 
Agreement covered commitments that were  markedly beyond Philippines’ Uruguay Round 
commitments, including openings in environmental and tourism accommodation facilities services.  
The Agreement also had a chapter on the movement of natural persons (Chapter 9), with provisions 
on business visitors, intra-corporate transferees, investors and other professional service providers  WT/REG257/M/1 
 Page 3 
 
 
  supplying advanced or specialized skills.  In his delegation's view, the Agreement would facilitate the 
entry of Filipino nurses and caregivers into Japan.   
7. Beyond market access, the EPA emphasized cooperation in a wide range of areas, including, 
among others:  human resource development, energy  and environment, science and technology, trade 
and investment promotion, small and medium en terprise, tourism, transportation, and road 
development.  The EPA was considered as a dynamic agreement with provisions for improvements 
embodied in the creation of the various subcomm ittees.  The EPA could provide opportunities and 
advantages that might serve as catalyst for sustaini ng the Philippines' growth.  He attached great 
importance on transparency, one of the most important pillars of the WTO, and looked forward to a fruitful discussion in the Committee.  He expressed hi s appreciation to the Secretariat for the Factual 
Presentation and the coordination work, as well as to the delegation of Japan and WTO Members 
throughout the consideration exercise. 
8. The representative of Australia
 had a question on the goods part of the Factual Presentation, 
where it was said that Japan would eliminate 90.9% of tariffs over a 15-year period, whereas the Philippines would eliminate 98.6% of tariffs over a ten-year implementation period.  She asked for 
clarification on the asymmetric commitments under the Agreement and on the reason why Japan had 
excluded, or had a longer implementation period fo r products such as minerals, chemicals, and 
plastics.  She further noticed that Japan had excluded 35% of agricultural tariff lines under the 
Agreement and, thus, she questioned the compatibi lity of the Agreement with the requirements of 
GATT Article XXIV.  
9. The representative of the United States
 thanked the Parties and the Secretariat for the 
information provided on the Agreement and the Pa rties' views on their economic expectations.  
According to paragraphs 19 and 20 and Tables AI.1 and AI.2 (pages 11- 12 and 47-48, respectively) of 
the Factual Presentation, Japan would eliminate duti es on 90.9% of all tariff lines, covering 91.2% of 
imports from the Philippines under the Agreement.  Although 97% of Japan's non-agricultural tariffs 
would become duty-free, only 64.8% of its agricultural tariff lines would be duty-free under the 
Agreement.  In comparison, the Philippines woul d eliminate tariffs on 98.6% of all tariff lines, 
covering 97.1% of imports from Japan under the Ag reement.  Of these, 98.5% of non-agricultural 
lines and 99.2% of agricultural lines would be duty-free under the Agreement.  She was compelled to note, as for other agreements considered in the Committee, Japan's disproportionate liberalization 
between its industrial and agricultural sectors.  The Agreement was all the more disappointing 
because a developed country would eliminate tariffs on significantly fewer lines and lower trade 
volumes than a developing country partner.  This  was made all the worse by Japan’s refusal to 
eliminate tariffs on more than 64.8% of agricultu ral duties compared to the Philippines' figure of 
99.2%.  She reiterated that the selective coverage  of agricultural goods did indeed create adverse 
effects on the trade of other Members and the contin ued, systematic protection of Japan’s agricultural 
sector through its FTAs made multilateral liberali zation more difficult.  The representative of 
the Philippines
 replied that while Japan w ould retain duties on a large proportion of its agricultural 
tariff lines, it had committed to reduce tariffs on over nearly 60% of the Philippines' agricultural 
exports by value.  Japan had also agreed to renego tiate on further agricultural products of interest for 
the Philippines.  In total, the Philippines products  would enjoy duty-free or reduced tariffs on about 
87% of its total agricultural exports, whereas a furt her 6% would enjoy duty-free or reduced tariffs 
under tariff rates quotas applied by Japan.  The representative of the United States  replied that in order 
to be covered under GATT Ar ticle XXIV, tariffs on the products need ed to be eliminated.  Reductions 
were simply discriminatory and did not fall w ithin the scope of GATT Article XXIV as such. 
10. The representative of the European Union  thanked the Parties fo r the description of the 
Agreement and the Secretariat for the Factual Prese ntation.  She highlighted, as had previously the 
delegations of Australia and the United States, the disproportionate liberalization commitments 
between Japan and the Philippines under the Agreemen t.  She asked Japan to elaborate in detail, WT/REG257/M/1 
Page 4  
 
  without arguing as usual that it reflected the "results of negotiations", on the ra tionale behind its lower 
ambition.  Secondly, she remarked that most of the products excluded from the Agreement pertained 
to the agricultural sector;  she th erefore asked Japan to list the ag ricultural products and processed 
agricultural products, possibly by HS chapter, that would remain dutiable at the end of the implementation period.  Finally, she asked the Secretar iat to explain the calculation of the coverage of 
the Agreement presented in the Factual Presentation,  since the Parties' market access commitments 
had been calculated using different reference pe riods – for Japan, 2004-2006, and for the Philippines 
2005-2007.  The representative of Japan
 replied that the asymmetrical  liberalization commitments 
reflected in fact the results of negotiations.  The EPA  was not only for trade liberalization, but also for 
trade promotion and facilitation, and aside from the be nefits that would derive from the Agreement in 
terms of market access concessions made by Japan, the Philippines would expect to benefit from 
technical cooperation and capacity-building activities.   The latter would address gaps in capacity and 
were expected to contribute positively to the Parties.   With respect to agricultural products that would 
remain dutiable at the end of the implementation period, these included rice, wheat, bovine animals (boneless), dairy products, and sago starch.  The representative of the European Union
 thanked the 
Parties for their answers and asked  them to submit them in writing.  The representative of the 
Secretariat  explained that the use of different referenc e periods was due to a change in nomenclature 
from HS 2002 to HS 2007.  Members were frequently unable to provide the Secretariat with data over 
the entire reference period either in one nomenclature or  the other.  In some cases, the Secretariat had 
tried to deal with this issue by doing the calculati ons itself, but this was rather burdensome and very 
often needed to be verified;  consequently, the tim e period taken for the process was too long.  In the 
case of the Japan-Philippines Agreement, the Secret ariat had decided to use a different reference 
period;  that was HS 2002 for Japan and HS 2007 fo r the Philippines where the data had been actually 
available.  
11. The representative of the European Union  asked the Parties how the Agreement integrated 
and promoted internationally rec ognized labour and environmental st andards and to elaborate further 
on the provisions included in Articles 102 and 103 of the Agreement.  Particularly on Article 103, she 
asked why the Parties had not included a direct refe rence to the underlying ILO Conventions and the 
1998 ILO Declaration.  The representative of the Philippines  replied that Article 11 of the Agreement 
reaffirmed the Parties' commitments under internati onal treaties to which they were a party.  In 
addition, Article 103 contained a reference to internat ional labour standards.  The representative of the 
European Union  said that the reply provided by the Philippines' delegation did not answer the 
question why the Parties had not included in the Agreement a direct refere nce to the underlying ILO 
Conventions and the 1998 ILO Declaration.   The representative of the Philippines  pointed out that 
Article 103 explicitly stated that: "The Parties recognize that it is inappropriate to encourage 
investment by weakening or reducing the protections afforded in domestic labour laws. Accordingly, 
each Party shall strive to ensure that it does not waiv e or otherwise derogate from, or offer to waive or 
otherwise derogate from, such laws in a ma nner that weakens or reduces adherence to the 
internationally recognized labour right s referred to in paragraph 2".  He added that the Philippines had 
signed and ratified all internationa l conventions on labour rights.  
12. The representative of New Zealand  shared the concerns and questions raised by previous 
speakers.  In her delegation's perspective, liber alization should not be di sproportionately accorded 
across sectors in a way that had the po tential to create trade distortions.  
13. The representative of Australia  referred to Paragraph 59 of the Factual Presentation which 
outlined exceptions to investment liberalization.  In this respect, she ask ed the Parties for an 
explanation of the reasons for such a broad excep tion and to indicate what benefits the Parties 
expected from the Agreement in relation to i nvestment.  The representative of the Philippines  noted 
that the exceptions to investment liberalization were a function of the "negative-list approach" 
adopted under the investment chapter.  The Ph ilippines had comprehensively listed all existing 
constitutional and statutory limitations .  The Agreement provided for a stable regulatory environment  WT/REG257/M/1 
 Page 5 
 
 
  for Japanese investors, and Japan had been one of its  top five traditional source of investments.  The 
representative of Japan  added that the exceptions to invest ment liberalization under the Agreement 
had been the results of negotiations.  In he r view, the Agreement provided for "WTO-plus" 
commitments in the investment sector. 
14. The representative of the European Union  asked the Parties to clarify whether the Agreement 
allowed for the protection of the Parties' respec tive geographical indications, and if so, how.  The 
representative of Japan , also on behalf of the Philippines, re plied that the Agreement did not contain 
any particular provisions on geographical indications.  
15. The representative of the United States  pointed out that several questions on the service 
aspects of the Agreement posed by the United States had not been answered by the Parties or had 
received a cursory response.  The questions had alre ady been provided in writing and included in the 
Questions and Answers document (WT/REG/257/2).  For questions 1 and 6, no response had been 
provided by the Parties and she hoped to receive them  in the meeting.  For question 10(b), the Parties 
had replied that "it would be appreciated if speci fic cases are cited where commitments are less than 
those provided to all WTO Members":  in her view, this did not qualify as an answer.  For question 
10(a), she pointed out that the “specific cases” were cited in Table IV.5 of the Factual Presentation:  
for example, in courier services, the Philippines' commitments under the EPA were defined as “more 
restricted” compared to its GATS commitments.  Th e same Table also noted that the Philippines had 
undertaken no commitments in the EPA on "other t ourism services", even though this sub-sector was 
scheduled in the Philippines’ GATS commitments.  The same was true of several sub-sectors in 
transport services, according to Table IV.5.  For qu estion 10(b), the "specifi c case" was identified in 
the question itself, where it referred specifically to data and message management services.  She 
hoped to get responses from the Parties in the meeti ng.  With respect to question 11, she remarked 
that the Factual Presentation stated that, in the EPA , the Philippines incorporated "the reference paper 
of the GATS on basic telecommunications servi ces," not the Philippines Reference Paper on 
Regulatory Principles.  She wondered whether the Factual Presentation was inaccurate in its 
description of the Philippines’ commitments under the EPA with respect to this issue.  Finally, she 
noted that the response to question 11(b) was also rather cursory.  In her delegation's view, most 
countries, including the United States, had imposed universal service obligations on operators, but 
regulators had found ways to reconcile such obligat ions with cost-based interconnection, in view of 
the importance of facilitating a competitive mark et and enhancing the overall health of the 
telecommunications sector.  Indeed, the majority  of countries with telecommunications trade 
commitments had undertaken such an important obligation.  The United States' question for 
Philippines was not whether they considered the pr ovision of cost-based interconnection difficult, but 
rather whether the Philippines' law or regulati on expressly precluded the application of cost-based 
interconnection.  If this was the case, she was intere sted to learn about the specific law or regulation 
that precluded such application.  She hoped that th e Philippines could provide such information, since 
the United States' services experts had found the repli es provided inadequate.  With the extra officials 
from the Philippines present, she hoped to obtain a more appropriate answer.  The representative of 
the Philippines  replied that in question 10(a), and the specific example of "courier services" in Table 
IV.5 of the Factual Presentation,  it was said that more restrictive limitations applied compared to 
GATS, the Parties had reviewed the EPA's schedul e on courier services, and "certain constitutional 
requirements and limitations" that appeared in the Agreement were reflected in the horizontal 
limitations inscribed in the GATS Schedule.  With respect to "tourism services" and various transport 
services marked as "not scheduled" in Table IV.5, whereas they were scheduled under the GATS, the 
Agreement had only focused on sectors where there were new or improved commitments with respect to its GATS Schedule;  the schedule did not contain those sectors that would remain nearly the same as in the GATS. For question 11, he affirmed th at the Agreement incorporated the Philippines 
Reference Paper on Regulatory Principles in Telecomm unications Services.  On question 6, he replied 
that the chapters on trade in services (Chapter 7)  and investment (Chapter 8) were stand-alone 
chapters:  services sectors or sub-sectors were not c overed by Chapter 8.  A more detailed answer on WT/REG257/M/1 
Page 6  
 
  question 6 and a response to question 1 would be prov ided in writing.  On cost-based interconnection, 
he confirmed that certain regulati ons did make it difficult to provide such services;  the Philippines 
would follow up on such regulations and would provide more detailed information in the written 
replies.   
16. The representative of Japan
 further clarified, with respect to question 6 by the United States, 
that Annex 7 of the Agreement provided for more  favourable treatment than Annex 6 for services 
suppliers and investors.  In acco rdance with Article 87.3 of the Agreement, Chapter 7 and Annex 6 
should prevail.  She hoped that such an answer helped clarify the response to question 6.  On 
questions 10 and 11, Japan shared the Philippines'  responses.  She added that it was too early to 
evaluate the effects of the Agreement on liberalizati on in services, since it had been into force for one 
and a half years;  however, Japan expected the Ag reement to stimulate bilateral trade in services 
through the reduction or elimination of restrictions  and regulations in each mode of supply.  The 
representative of the United States  thanked the delegations of Japan and the Philippines for their 
initial answers, and hoped that the remaining ques tions would be responded to in writing.  She 
remarked that the Factual Presentation had wrongly stated that the Agreement incorporated the 
Reference Paper of the GATS and it should be corrected accordingly.    
17. The Chairman  noted that the consideration of the goods and services aspects of the Economic 
Partnership Agreement between Japan and the Phil ippines had allowed the Committee to clarify a 
number of questions and oral discussion of the Ag reement could be concluded in accordance with 
paragraph 11 of the Transparency Mechanism.  If any delegations wished to ask follow-up questions 
they were invited to forward submissions in  writing to the Secretariat by 21 June 2010  and the Parties 
were asked to submit replies  in writing by no later than 5 July 20 10.  In accordance with paragraph 13 
of the Transparency Mechanism all written submis sions, as well as minutes of this meeting would be 
circulated promptly, in all WTO official la nguages, and would be made available on the 
WTO website. 
18. The Committee took note  of the comments made. 
__________