ASEAN agrees to liberalize farm trade by 2010
By Vincent Lingga
SINGAPORE(JP): The Association of Southeast Asian Nations (ASEAN) agreed yesterday to liberalize farm trade by 2010, seven years after the full implementation of its free trade area, but sticky issues remain concerning tariff levels.
"Yes, we have agreed to include all unprocessed agricultural products in the ASEAN Free Trade Area (AFTA) scheme by the year 2010, with the understanding that the tariffs will be discussed by senior officials," Indonesia's Minister of Industry and Trade Tunky Ariwibowo announced yesterday.
Malaysian Minister of International Trade and Industry Rafidah Aziz, however, hinted that the final tariffs on farm commodities would most likely be more than 5 percent.
Under AFTA, which will operate fully in 2003, tariffs will range from zero to 5 percent, except for what is classified as sensitive items and therefore temporarily excluded.
Tunky and the other ASEAN economics ministers held a joint news conference on Sentosa Island yesterday at the end of their one-day meeting held to assess the gradual implementation of AFTA.
The joint press statement issued at the end of the 9th AFTA Council's meeting made no mention of farm trade but classified agricultural commodities as goods handled by state enterprises.
"We now put farm commodities under goods handled by state enterprises because most of them are managed by state companies or agencies," Rafidah said.
Indonesia created a hitch at the preparatory meetings for the ASEAN summit in Bangkok last December by asking for indefinite protection for farm products such as rice, sugar, clove, garlic, soybean, wheat and flour.
The meeting on the Singapore resort island of Sentosa, which was chaired by Brunei's Minister of Industry and Primary Resources Pehin Dato Abdul Rahman Taib, was also attended by Singapore's Minister of Trade and Industry Yeo Cheow Tong, Thailand's Minister of Finance Surakiart Sathirathai, Philippine Undersecretary for Trade and Industry Cesar Bautista and Vietnam's Minister of Trade Le Van Triet.
The ministers said they were satisfied with the significant progress made in intra-ASEAN trade under the Common Effective Preferential Tariff scheme (CEPT), the gradual tariff reduction scheme to implement the free trade area.
"Intra-ASEAN exports of products granted preferential tariffs (under CEPT) grew by 20.9 percent last year and total intra-ASEAN exports expanded by 16.2 percent," the ministers announced.
The statement showed that total intra-ASEAN exports increased from US$60.27 billion in 1994 to $70.03 billion in 1995. The share of Common Effective Preferential Tariff goods of total exports rose from $49.05 billion or 24.99 percent to $59.32 billion. However percentage wise, the share rose only from 24.99 percent to 25.35 percent.
ASEAN countries' total foreign trade was estimated at more than $650 billion in 1995.
Except Brunei and Vietnam which joined ASEAN only last year, all other member countries posted high-growth rates in their exports to each other.
Indonesia posted the lowest growth in intra-ASEAN exports with only 9.43 percent, compared to the Philippines' 65.69 percent, Malaysia's 22.84 percent, Singapore's 14.89 percent and Thailand's 11.30 percent.
All the other ministers expressed satisfaction with the robust growth in their intra-ASEAN exports but Tunky, acknowledging Indonesia's unimpressive performance, conceded "yes we have to work harder".
The ministers said they were pleased to note that the tariff reductions for most manufactured goods have been accelerated so that by the year 2000, about 88 percent of those items will bear tariffs of 5 percent or less.
The ministers said they also look further into accelerating tariff reductions to the zero to 5 percent range for machinery, electrical appliances, base metals and metal articles and plastics which together account for 60 percent of intra-ASEAN imports.
The ministers also noted with satisfaction the progress in the formulation of a dispute settlement mechanism and hoped that a protocol on the mechanism could be signed in October.
The ministers are to meet again on Sentosa Island today under what they call an informal gathering to discuss various other economic cooperation programs.
They are scheduled to sign this evening a new agreement on ASEAN Industrial Cooperation to replace the previous one which is considered too bureaucratic to attract private investors' participation.
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