Japan and the Philippines have agreed to a comprehensive free trade agreement (FTA) that contains provisions for Filipino workers -- especially nurses -- to pursue employment and training in Asia's largest economy.

The accord, signed on 9 September in Helsinki, had been held up for almost two years by disagreements over auto and steel tariffs, foreign investment rules, and the number of Filipino temporary workers Tokyo was willing to admit.

Under the agreement, a certain number of Filipino nurses and caregivers will be permitted to go to Japan for work, professional education, or language training for different fixed durations up to four years, provided that they are deemed sufficiently proficient in Japanese. Although the FTA text contains no specific figures, Japanese press reports indicate that Tokyo has agreed to accept 400-500 nurses and caregivers annually when the pact comes into force next year, a number that could rise in the future.

Japan has one of the world's most rapidly aging societies, thanks to low birth rates and levels of immigration. The USD 10.7 billion in remittances sent home by the 8 million Filipinos who work abroad -- almost a tenth of the population -- are one of their country's most important sources of revenue.

Over the next four years, the FTA will eliminate tariffs on more than 90 percent of bilateral goods trade. The Philippines will be able to retain some tariffs on Japanese automobiles. Japan agreed to increased access for some Filipino exports to its heavily-protected agricultural market, through lower tariffs and expanded import quotas. These include bananas, chicken, ice cream, molasses, and pork products. Rice and sugar, however, have been excluded.

Notably, the treaty's chapter on investment rules did not include finalised provisions for arbitrating investor-state disputes. International arbitration for such disputes has been a hallmark of Japan's recent bilateral trade and investment pacts. However, Manila has found international arbitration under its own bilateral investment treaties to be punishingly expensive, and did not want it to be part of the new agreement.

The FTA text can be found at: http://www.mofa.go.jp/region/asia-paci/philippine/epa0609/index.html.

"Tokyo concessions bared," MANILA STANDARD, 13 September 2006; "Japan to set upper limits in accepting Philippine nurses under FTA," KYODO NEWS, 31 August 2006; "Japan, RP sign trade pact, allowing flow of Filipino nurses," AGENCE FRANCE PRESSE, 10 September 2006; "Philippine FTA to reshape health care," JAPAN TIMES, 13 September 2006; "Japan and the Philippines leave dispute settlement mechanism unresolved in EPA," INVESTMENT TREATY NEWS, 20 September 2006.

SOUTH AFRICAN IMPORT QUOTAS ON CHINESE CLOTHING SPLIT RETAILERS, UNIONS

South Africa's decision to impose import quotas on Chinese textiles and clothing has ignited a firestorm of controversy, pitting trade unions and the government against retailers.

On 1 September, Trade and Industry Minister Mandisi Mpahlwa announced a quota-based import licence system for some 31 (of a total of 36) categories of Chinese clothing and textiles in the government gazette. The measures were set to enter into force on 28 September and expire at the end of 2008. The government is aiming to reduce Chinese imports by about one-third. South Africa's International Trade Administration Commission described the restrictions as "emanating from" a June memorandum of understanding on textile trade between the two governments. WTO rules ban most quantitative trade restrictions, but China's accession terms allowed other Members to legally limit Chinese textile imports.

The South African clothing industry has shed tens of thousands of jobs since the end of quotas on international textiles trade in 2005, which opened the door to cheap imports, especially from China.

The ruling African National Congress' decision was welcomed by union groups, including the influential Congress of South African Trade Unions (COSATU), as did some church groups and the Communist party. Some manufacturers said that it would boost employment in the struggling sector.

However, the move was immediately panned by clothing retailers such as Woolworths, Truworths, and Mr Price, who claimed that it would push up clothing costs by some 20-25 percent, and simply drive purchasers to third countries. They also said that it may leave store shelves empty, since South African domestic capacity might not be able to immediately make up the shortfall.

Opposition party Democratic Alliance said that the move was taken without sufficient consultation with stakeholders, or consideration of its effects. Even the Clothing Trade Council, a clothing manufacturers' group which supports quotas in principle, complained that the government had acted precipitously and would cause disruption to the industry.

The government announced on 14 September that the implementation of the import restrictions would be pushed back to 1 January 2007, to give importers and the industry more time to adjust.

ICTSD reporting; "DTI and Retailers Clash Over Quotas," SUNDAY TIMES (Johannesburg), 10 September 2006; "As Mpahlwa Rides Roughshod Over Retailers, Who Knows What's Next?", BUSINESS DAY, 11 September 2006; "Textile restrictions could mean empty shelves," CAPE TIMES, 4 September 2006; "S Africa delays date for China import quotas," REUTERS, 14 September 2006; "Retailers Want Import Quotas to Be Scrapped," 7 September 2006; "South Africans air mixed reactions to textile deal with China," XINHUA, 5 September 2006.