Gradual tariff reduction for sugar proposed

THE Philippines is proposing a gradual reduction in sugar tariffs in Southeast Asia as a “middle ground” between Filipino farmers’ plea for protection and the country’s commitment to bring down trade barriers, Trade Secretary Peter Favila said over the weekend.

He said the government was looking at a “graduated schedule in sugar tariffs using the country’s policy space under [the Asean Free Trade Agreement].”

Sugar is included in the Philippines’ list of sensitive products, but sugar producers want it elevated to the highly-sensitive list to have a higher tariff cover beyond 2010, when the tariff is brought down dramatically from 28 percent now and 38 percent in 2008.

The Philippine Sugar Alliance last year petitioned to retain the 38-percent tariff up to 2010, saying that would ensure the sugar industry’s viability. That rate has been carried over to this year as a result of that petition.

The tariffs on products under the highly-sensitive list are assured of protection up to 2010, when other tariffs in the region should range from zero to 5 percent. Rice is the only product in the Philippines’ highly-sensitive list.

“Sugar is currently in the sensitive list, and we are looking at a graduated tariff reduction as a middle ground,” Favila said.

“I have told the industry that we cannot just put sugar in the highly-sensitive list and expect other Asean countries to just accept it without asking for any compensation. We have to negotiate.”

Favila said the Philippines could use non-tariff barriers to shield itself from the entry of cheap imports, but those should be in accordance with World Trade Organization rules.

And any Asean member deviating from its schedule for bringing down tariffs must compensate members who would be affected by any delay in the schedule.

“We will only know which countries will ask for compensation probably in the first or second quarter of 2010,” Favila said.

Meanwhile, Favila said the government would determine by the end of the month whether or not it would allow zero duty on wheat to make bread prices more affordable, and on cement to bring down construction costs. –Elaine Ramos Alanguilan, Manila Standard Today