Unless a major breakthrough is made, no major cuts on rice tariffs is expected next year after the Philippines and Thailand failed to strike a compromise. Trade Secretary Peter B. Favila announced recently to the media that an agreement had yet to be reached with Thailand and that another round of talks is scheduled next month in Manila. Thai Commerce Minister Porntiva Nakasai, meanwhile, said tariff cuts for all other goods might be delayed.
Leaders from the two countries and eight other members of the Association of Southeast Asian Nations (ASEAN) attending an annual summit in Hua Hin, Thailand were to push for continued progress in forging a single market by 2015, largely through the ASEAN Free Trade Area (AFTA) scheme.javascript:void(0)
The Philippines had asked to delay a tariff cut for sugar due next year, something Thailand was reportedly amenable to as long as a favorable ending rate for rice — a 'highly sensitive good' — was declared in exchange.
Thailand is among the Philippines’ top sources of the two agricultural commodities. The local sugar industry has tagged Thailand as a competitor.
Under the ASEAN free trade pact, sugar tariffs are scheduled to drop to 0-5 percent from 28 percent in 2010. For rice, the Philippines must "phase in" its tariffs to the reduction initiative, also by 2010.
The Philippines has taken the stance of keeping rice tariffs at 40 percent and then lowering it to 35 percent by 2015, Trade Assistant Secretary Ramon Vicente T. Kabigting said in a telephone interview on 25 October 2009 with BusinessWorld.
"There are certain ASEAN members saying that rice should fall to 20 percent but we do not recognize this," he said, citing protocols signed in 1999 and 2007 which merely require a member state to declare its preferred tariff for highly sensitive goods.
Given the deadlock, the two countries are negotiating on market access instead.
"We’re trying to negotiate a volume access under internationally practiced conditions," Mr. Kabigting said, explaining that this means the Philippines will not be required to buy from Thailand if there is no domestic rice shortage or if prices from other sellers are lower.
He declined to specify the Philippines’ proposed quota but reports have said that Manila had offered an assured 50,000-ton duty-free rice purchase to Thailand, which has demanded 360,000 tons instead.
"The rice issue is being tied to the ASEAN Trade in Goods Agreement [Atiga]," Mr. Kabigting said, referring to the pact which compiles all agreements governing the AFTA.
"Atiga is an explicit statement of what tariff reductions to apply to what goods in what year ... Because of the rice issue, leaders are saying [Thailand and the Philippines] must agree on the rice tariff so they can declare [lower tariffs for other goods]," he said.
On Sunday, Mr. Favila said in a telephone interview: "[Rice] is still subject to ongoing negotiations ... [The 2010 deadline for tariff cuts on other goods] is the commitment of member states. But we will have to wait for what our leaders have to say."
Ms. Porntiva said: "They have shown their readiness to talk ... and we will reschedule a meeting."
A declaration from ASEAN heads of state released on 24 October 2009, Saturday, noted that "the realization of the ASEAN Free Trade Area on 1 January 2010 is well on track."
It was generally mum on the rice issue, only making references that the group "urges Member States to resolve the differences at the earliest opportunity."
The statement went on to report that members were looking to put up an "infrastructure development fund" to improve trade links.
The summit also saw the inauguration of the ASEAN Intergovernmental Commission on Human Rights.
Renewed calls were also made for economic ministers to submit feedback on a proposal to expand the free trade area to include China, Japan, Korea, India, Australia and New Zealand.
Leaders from the two countries and eight other members of the Association of Southeast Asian Nations (ASEAN) attending an annual summit in Hua Hin, Thailand were to push for continued progress in forging a single market by 2015, largely through the ASEAN Free Trade Area (AFTA) scheme.javascript:void(0)
The Philippines had asked to delay a tariff cut for sugar due next year, something Thailand was reportedly amenable to as long as a favorable ending rate for rice — a 'highly sensitive good' — was declared in exchange.
Thailand is among the Philippines’ top sources of the two agricultural commodities. The local sugar industry has tagged Thailand as a competitor.
Under the ASEAN free trade pact, sugar tariffs are scheduled to drop to 0-5 percent from 28 percent in 2010. For rice, the Philippines must "phase in" its tariffs to the reduction initiative, also by 2010.
The Philippines has taken the stance of keeping rice tariffs at 40 percent and then lowering it to 35 percent by 2015, Trade Assistant Secretary Ramon Vicente T. Kabigting said in a telephone interview on 25 October 2009 with BusinessWorld.
"There are certain ASEAN members saying that rice should fall to 20 percent but we do not recognize this," he said, citing protocols signed in 1999 and 2007 which merely require a member state to declare its preferred tariff for highly sensitive goods.
Given the deadlock, the two countries are negotiating on market access instead.
"We’re trying to negotiate a volume access under internationally practiced conditions," Mr. Kabigting said, explaining that this means the Philippines will not be required to buy from Thailand if there is no domestic rice shortage or if prices from other sellers are lower.
He declined to specify the Philippines’ proposed quota but reports have said that Manila had offered an assured 50,000-ton duty-free rice purchase to Thailand, which has demanded 360,000 tons instead.
"The rice issue is being tied to the ASEAN Trade in Goods Agreement [Atiga]," Mr. Kabigting said, referring to the pact which compiles all agreements governing the AFTA.
"Atiga is an explicit statement of what tariff reductions to apply to what goods in what year ... Because of the rice issue, leaders are saying [Thailand and the Philippines] must agree on the rice tariff so they can declare [lower tariffs for other goods]," he said.
On Sunday, Mr. Favila said in a telephone interview: "[Rice] is still subject to ongoing negotiations ... [The 2010 deadline for tariff cuts on other goods] is the commitment of member states. But we will have to wait for what our leaders have to say."
Ms. Porntiva said: "They have shown their readiness to talk ... and we will reschedule a meeting."
A declaration from ASEAN heads of state released on 24 October 2009, Saturday, noted that "the realization of the ASEAN Free Trade Area on 1 January 2010 is well on track."
It was generally mum on the rice issue, only making references that the group "urges Member States to resolve the differences at the earliest opportunity."
The statement went on to report that members were looking to put up an "infrastructure development fund" to improve trade links.
The summit also saw the inauguration of the ASEAN Intergovernmental Commission on Human Rights.
Renewed calls were also made for economic ministers to submit feedback on a proposal to expand the free trade area to include China, Japan, Korea, India, Australia and New Zealand.
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