RP to renege on Asean tariff pledge

THE Philippines will back out of its commitment to Asean Free Trade Area (AFTA) partners to bring down trade barriers for domestic rice and sugar by next year.

Trade Secretary Peter Favila said the government will invoke a special protocol under the AFTA-Common Effective Preferential Tariff (AFTA-CEPT) to shield the two industries from competition in 2010 when import duties should go down to zero.

Under the AFTA-CEPT schedule, member-countries like the Philippines should eliminate tariffs on all products, including sensitive items.

“In this forthcoming Asean Economic Ministers Meeting, I have to again make our position clear—that there will be some challenges we have to face [in implementing the AFTA-CEPT], particularly on sensitive products. The Philippines will invoke some Asean protocols for sensitive products,” Favila told reporters on Tuesday night.

Favila and his counterparts from the other Association of Southeast Asian Nations member-states will meet in Bangkok, Thailand starting today until August 16.

“The local industries had taken a position asking the government to make representations for possible deferment of the AFTA-CEPT. I had expressed this as well in previous pool-aside meetings [with other Asean trade ministers], but member-states are still of the view that we should go ahead with all these agreements,” the Philippine trade chief said.

He said the Philippines “has to make a very difficult call,” as he acknowledged that while the country has to protect its local industries, “compensation comes into play” with noncompliance to the trade agreement.

“We have to strike a balance and see what compensation we have to subject ourselves to, as we invoke the special protocol for our rice and sugar sectors,” he said.

The Philippines in 2003 invoked this protocol to exempt its petrochemical industry from the Asean trade liberalization program, for which Manila compensated Singapore.

Favila said the global economic crisis has made it more difficult for the country’s rice and sugar industries to be ready for a zero-tariff regime next year.

He said the domestic rice sector has asked for the extension of the end date for the transfer of the grain from the Highly Sensitive List to the Inclusion List.

At a Tariff Commission hearing held in June on the beginning rate, end rate and end date for rice under AFTA-CEPT, farmers’ groups had said they want another five years before rice could be moved to the Inclusion List.

“The government should establish a strong and competitive rice industry before opening up the local market to competing rice from Asean countries. Let’s talk about the inclusion of rice in the AFTA-CEPT after the government has successfully achieved its rice self-sufficiency target by 2013,” they had said in a statement.

Tariff on rice stands at 40 percent. It is the only product in the Philippines’ Highly Sensitive List.

Favila said the local sugar industry also has been lobbying that the commodity be transferred to the Highly Sensitive List from the Sensitive List.

However, Asean member-states indicated that they are not amenable to the transfer as there is no provision in any Asean agreements that will allow that, he said.

While sugar is in the Sensitive List with a 38-percent tariff, its duty should have been slashed to 28 percent this year before the reduction next year, but sugar farmers have petitioned the retention of the current duty until next year.

The CEPT scheme, which is the main implementing mechanism of the AFTA, requires that duties on products traded within the region be slashed to between 0 percent and 5 percent by January 1, 2010, for Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Cambodia, Laos, Myan­mar and Vietnam are scheduled to do the same come 2015. –Ben Arnold O. de Vera, Reporter, Manila Times