Manila wants to delay Asean tariff reduction

SOUTHEAST Asian nations should delay eliminating their import duties at the end of the year to shield their economies from the global recession, Trade Secretary Peter Favila said yesterday.

Eliminating the duties at the end of 2009 is a condition for integrating Southeast Asia’s economies under the Asean Free Trade Agreement or AFTA, but that could further hurt their economies, he told reporters.

“The global meltdown and further liberalization is like a double whammy to industries even if the agreements are deemed to be mutually beneficial,” Favila said.

“It is not merely us delaying AFTA, but Asean as a body delaying it.”

Eighty percent of the Philippines’ tariffs with the Asean are already between zero and 5 percent. The remaining 20 percent—reserved for critical commodities like rice—will be affected by the full implementation of AFTA next January.

Asean rules require a member to compensate another if it continues to impose the same tariffs in violation of the group’s agreement. But Philippine industries claim that removing the tariffs will expose them to severe competition at a time when the economy is hurting.

Still, if the Asean ever collectively decided to “stop the clock” on their integration, the Philippines could avoid compensating Asean members if it chose not to cut the remaining tariffs as it had committed under AFTA’s common effective preferential tariff plan.

“I am also looking at what the other Asean countries are doing,” Favila said.

“I suppose they are facing the same problems. I would rather the Asean leaders talked about it.’’

Favila said he already had presented the Philippines’ position in informal talks with his counterparts, but the final decision lay with the leaders of the Association of Southeast Asian Nations.

‘‘I am looking at how we could work out an arrangement where we don’t unduly hurt [our] industries [but] strike a balance between that and our commitments to AFTA,’’ he said, adding he had been meeting with industry leaders to discuss how to ease the impact of further trade liberalization.

‘‘The President asked me to present a report to the Cabinet [this week] as to the preparedness of local industries and what measures the government can put in place to help them,’’ Favila said.

He said the Arroyo administration had already committed to help industries survive the influx of imports from other Asean countries with the lifting of tariff barriers.

But he said it was important to identify which industries would be badly hurt and which ones were better equipped to compete.

‘‘Rather than merely prescribing the pill, we are looking at working out a mechanism with the industries to enable them to survive further liberalization,’’ Favila said. –Elaine Ramos Alanguilan, Manila Standard Today