Philippines wary about ASEAN trade proposal

Philippines wary about ASEAN trade proposal

MANILA (Dow Jones): The Philippine Department of Agriculture is wary over a proposal by the Association of Southeast Asian Nations (ASEAN) to include Australia and New Zealand in the ASEAN Free Trade Agreement.

Philippine Agriculture Undersecretary Arsenio Balisacan said although the Philippines is expected to gain huge foreign investments by opening up its market to Australia and New Zealand, the Philippine agriculture sector may also suffer from unrestrained entry of foreign farm imports.

In a position paper issued to the press Friday, Balisacan said "we would like to approach this proposal with extreme caution, from the point of view of the agriculture sector."

Balisacan was reacting to the ASEAN Economic Ministers' proposal to expand the AFTA by including Australia and New Zealand in the region's free trade zone. Through the AFTA, ASEAN governments have vowed to reduce tariff rates for both industrial and farm products to 0 percent-5 percent by the year 2010.

A study by the Australia-based Center for International Economics said that including Australia and New Zealand will bring $25.6 billion more to the Asean's overall gross domestic product. This is due to foreign investments, which will create more jobs, spur small and medium enterprises and boost exports in the region.

The proposal will be discussed at next month's Asean meeting in Thailand. Philippine agriculture officials are expected to express reservations against the proposal.

Balisacan said the proposed free trade zone will displace a lot of Filipino farm workers and kill local agribusiness industries that can't cope with foreign competition. He said it is difficult for local farmers to compete with the "modernized, mechanized and highly developed" agriculture sectors in Australia and New Zealand.

He also doubted that Australia, although willing to slash tariff rates, will also eliminate other non-tariff trade barriers like invoking sanitary and phytosanitary regulations.

"We should also be reminded that tariffs are not the issue between Asean and Australian agricultural trade," he said, adding that non-tariff issues such as sanitary and phytosanitary measures are more of a priority.

Balisacan pointed to an earlier trade rift with Australia, when Philippine agriculture officials had to resort to reducing cattle imports because Australia had banned Philippine mangoes, pineapples and bananas, saying they were unfit for consumption.

The trade dispute, which lasted from February to June, ended when the Australian government agreed to test Philippine fruits so they could enter the Australian market.