Free Trade Agreement between Japan and Philippines: What it is and What it Means for the Economy
On November 15, 2020, Japan and the Philippines signed a Free Trade Agreement, aiming to strengthen economic ties between the two countries. This FTA is Japan`s first with a Southeast Asian country and will offer a new growth potential to both nations.
What is the Free Trade Agreement?
A Free Trade Agreement is a binding agreement between two or more countries that eliminates tariffs and quotas on trade between them. It means that goods and services can be traded without any restrictions, fostering the flow of investments and promoting economic growth.
The Japan-Philippines FTA covers a wide range of fields, including goods, services, investment, and intellectual property. Tariffs on more than 99% of Japan`s exports to the Philippines will be removed within ten years, while the remaining tariffs will be eliminated within 15 years. The Philippines will also remove tariffs on 94% of its exports to Japan within ten years.
The agreement will create new opportunities for businesses in both countries, helping them to expand their operations and increase their competitiveness. It will also encourage the transfer of technology and knowledge across borders, which will promote innovation and improve the quality of products and services.
What are the Benefits of the Free Trade Agreement?
The FTA between Japan and the Philippines will bring significant benefits to both countries. Here are some of the key advantages:
1. Economic growth: The FTA will stimulate economic growth in both countries by increasing trade, investment, and job opportunities. It is estimated that the agreement will boost Japan`s GDP by around 0.02%, and the Philippines` GDP by around 1.3%.
2. Enhanced trade relations: The FTA will strengthen the trade relations between Japan and the Philippines. It will provide greater market access for Japanese and Filipino goods and services, while removing obstacles to trade.
3. Lower prices for consumers: With the elimination of tariffs, consumers in both countries will benefit from lower prices for imported goods and services. This will increase their purchasing power and improve their standard of living.
4. Increased competitiveness: The FTA will help businesses in both countries become more competitive by providing access to new markets, technologies, and resources. This will enable them to expand their operations and increase their productivity.
5. Improved Intellectual Property protection: The FTA will provide a more robust Intellectual Property protection framework, which is important for businesses that rely on innovation. It will safeguard their intellectual property rights, promote innovation, and enable the development of new technologies.
The Free Trade Agreement between Japan and the Philippines is an important milestone for both countries. It will strengthen their economic partnership, promote growth and development, and create new opportunities for businesses and consumers. With the elimination of tariffs and the removal of trade barriers, the FTA will help to deepen the integration of the two economies, enhance their competitiveness, and promote innovation. Overall, the FTA represents a win-win situation for both countries, and it is expected to contribute to the long-term growth and prosperity of the Asia-Pacific region.