Ford Motor Group in the Philippines has put up strong pressure against the government against signing a free trade pact with Japan that will put its assembly and exports programme at a disadvantage over Japanese assemblers, according to the Manila Bulletin Online.

The report said Board of Investments official Elmer Hernandez has been meeting with local Ford officials, who reiterated that their position be considered in the ongoing Japan-Philippines Economic Partnership Agreement (JPEPA) negotiations.

But Hernandez reportedly said the concern of the American car maker was understandable because they have an aggressive exports programme for the country. So far, the Ford Group is the only volume exporter of completely built-up cars assembled at its Sta. Rosa Plant.

It is also the lone participant in the Board of Investments' Automotive Exports Program (AEP), which grants tax incentives to CBU exports that meet the specific volume requirements.

Hernandez said that Ford Philippines will roll out its first 400 units of the Focus for export to Thailand in September. This is on top of existing CBU exports of the Escape, Tribute and Lynx to Thailand and Indonesia.

"I think Ford is ready to take on the JPEPA challenge for as long as the zero import tariff will apply in 2010... and not go through a phased reduction," Hernandez said, according to the report.

So far, the Philippines and Japanese negotiating teams have agreed that tariffs for vehicles with three to four litre engines will have to undergo 'sudden death', or zero tariff, by 2010.

At present, CBU tariffs on cars with 2.1 litre or larger engines are pegged at 35% while vehicles with 1.3- to two-litre engines pay a 30% tariff.

"What we have not agreed upon yet is the tariffs on below-three-litre cars and that is the problem," Hernandez said.

Cars with engines under three litres account for the bulk of domestic car sales in the Philippines. Local assemblers, mostly Japanese, are also concentrating on this market segment.

The negotiations are supposed to be concluded in September and the agreement signed by December this year, the Manila Bulletin Online said.