AFTA Council fails to resolve rice liberalization problems

JAKARTA (JP): Trade ministers from the seven members of the Association of Southeast Asian Nations (ASEAN) failed yesterday to find common ground on the timetable for the liberalization of sensitive farm products.

The ministers, who met here for the 10th ASEAN Free Trade Area (AFTA) Council meeting, decided instead to assign the ASEAN Secretariat to find an acceptable compromise on the thorny issue.

"We have agreed to assign the task to the ASEAN Secretariat of formulating the modalities," Indonesian Minister of Industry and Trade Tunky Ariwibowo told journalists after the Afta Council meeting.

He explained that the council would decide on how and when the sensitive farm products should be liberalized, based on the modalities to be formulated by the ASEAN Secretariat.

The AFTA Council is the body charged with overseeing the creation of free trade among ASEAN members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam -- by 2003.

Officials said that yesterday's meeting ended with no agreement on the subject of liberalizing the sensitive farm products because Indonesia and the Philippines continued to hold out on the issue.

Indonesia, supported by the Philippines, has demanded that ASEAN push back by 10 years a 2010 deadline for integrating rice and sugar into the ASEAN free-trade agenda.

Philippine Trade and Industry Secretary Cesar B. Bautista said Manila's concern was only trade in rice, which he called a "highly sensitive" product that should not be treated like any other agricultural commodity.

The most insistent on opening up the rice trade is Thailand, the world's largest rice producer and exporter. Thai Deputy Minister of Commerce Amnuay Yossuck, however, said that he was satisfied with the results of yesterday's meeting.

The inclusion of farm products in the tariff reduction scheme has posed a major challenge for ASEAN, since a majority in the group are farm producers and their respective governments are faced with internal political pressures to provide sustained protection to farmers.

Barring trade-driven Singapore and oil-rich Brunei, all ASEAN countries are rice producers, and rice is a major staple of the diets for most people in ASEAN.

ASEAN Secretary-General Ajit Singh said the deadlock on rice would not hurt the spirit of regional free trade because commodities such as rice and sugar accounted for less than 1 percent of total trade between ASEAN members.

According figures released by the AFTA Council yesterday, intra-ASEAN exports of all goods grew by 19.7 percent to US$468.8 billion last year from $57.4 billion in 1994.

Satisfaction

Singapore Trade and Industry Minister Yeo Cheow Tong said his country was satisfied with the progress towards AFTA, which would lower tariffs to a level of zero to 5 percent by the year 2003.

He noted that 88 percent of all products traded between ASEAN members would have tariffs lowered to zero to 5 percent by 2000, three years ahead of schedule.

Supporting Yeo's view, Malaysian Minister of International Trade and Industry Rafidah Aziz said that AFTA would be able to meet its target date for tariff cuts by 2003, and even by 2000, given the motivation by individual countries to go for liberalization unilaterally.

"All the basic things that we had to do to realize AFTA have been done. And from now on, it needs only fine tuning on different things," she said.

The AFTA Council mandated yesterday that all customs surcharges of products to be liberalized be eliminated by the end of this year and non-tariff barriers be eliminated within five years from the phase-in date.

The council agreed to adopt standards for 10 new animal vaccines and a standard for good manufacturing practices for animal vaccines. The council also agreed to expand the list of products for the harmonization of sanitary and phytosanitary standards.

The council mandated that more products in the manufacturing sector be prioritized for the harmonization of product standards to enhance intra-ASEAN trade.

"Through this way, technical standards will not be used as instruments for non-tariff barriers," Tunky said.

The council also agreed that textiles and textile products could be subjected to an alternative rule of origin in order to qualify for free-trade concessions. (rid)