ASEAN agrees to liberalize farm trade by 2010

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.

Photo -- Page 10