Tariff deadlock said not to affect ASEAN free trade

Tariff deadlock said not to affect ASEAN free trade

JAKARTA (JP): The insistence of Indonesia and the Philippines
on pushing back the deadline for the reduction of tariffs on
sensitive farm products will not damage the spirit of free trade
in the Association of Southeast Asian Nations (ASEAN), officials
said yesterday.

ASEAN Secretary General Dato' Ajit Singh said that waiting to
phase out the tariffs on sensitive products like rice and sugar
is not a big issue in ASEAN because they represent less than 1
percent of all tariffs in the region.

"That's peanuts compared with the ASEAN Free Trade Area (AFTA)
as a whole," said Singh at a meeting of senior ASEAN officials.

Senior officials from the seven members of ASEAN -- Brunei,
Indonesia, Malaysia, the Philippines, Singapore, Thailand and
Vietnam -- ended their two-day closed-door meeting yesterday,
preparing the way for an AFTA Council meeting today and a
ministerial meeting tomorrow.

Unprocessed agricultural products in ASEAN make up 261 tariff
lines, or 0.5 percent of the total of more than 47,000 tariff
lines in the region.

In terms of trade value, unprocessed agriculture products
represent only 0.05 percent of the total intra-ASEAN trade in
AFTA goods. "They are also not heavily traded items in the
ASEAN," Singh said.

"My point is that we have to put all these issues into the
proper perspective. If you are looking at this from the AFTA
point of view, I would say that (backtracking on) these sensitive
items is not a big issue for ASEAN," he said.

At the senior officials meeting, Indonesia and the Philippines
refused to accept the 2010 deadline adopted last year by the AFTA
Council for including unprocessed agricultural products on the
tariff liberalization agenda under the Common Effective
Preferential Tariff (CEPT) scheme.

Indonesia proposed phasing in its highly-sensitive farm
products, notably rice and sugar, into the CEPT on Jan. 1, 2010,
and ending the process in 2020.

Thailand, which has a relatively developed agro-industry, said
that Indonesia and the Philippines could undermine the spirit of
trade liberalization in the region.

The issue is expected to be brought up again at today's AFTA
Council meeting.

"It is common for every country to express its position," said
Anang Fuad Rivai, director general of international trade at
Indonesia's Ministry of Industry and Trade.

Anang, who chaired the meeting, noted that the topic of
unprocessed agriculture products was only one of many issues
prepared for the AFTA Council meeting and the ministerial
meeting.

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

Smooth

Singh said he believed that today's AFTA Council meeting will
proceed smoothly because the member countries have been making
progress in AFTA.

"To say that AFTA is going to stumble because of this is not
correct at all," he remarked.

The meeting will hear reports from the chairman of the senior
economic officials meeting and reports from the chairman of the
fourth meeting of ASEAN directors general of customs. The meeting
will then review the progress already made by each member country
towards the creation of a free trade area by 2003.

According to a study by the ASEAN Secretariat, inter-ASEAN
trade of both CEPT and non-CEPT products grew nearly 17 percent
to US$66.5 billion last year from $56.6 billion in 1994.

The countries which experienced the highest growth of intra-
ASEAN trade during the 1994-1995 period were the Philippines at
64 percent and Malaysia at 20 percent.

In absolute terms, the member countries which experienced the
highest growth of intra-ASEAN trade in the same period were
Singapore with $3.6 billion and Malaysia with $3 billion.

Meanwhile, Indonesia's international trade with other ASEAN
members grew 9 percent to $6 billion last year from $5.5 billion
in 1994.

Most inter-ASEAN export growth came from four major sectors:
mechanical and electrical appliances, with $5.5 billion or 65.7
percent of growth; plastics, with $1.2 billion or 11.23 percent;
chemical products, with $0.73 billion or 6.8 percent; and base
metals and articles, with $0.68 billion or 6.35 percent.

These four sectors accounted for 80 percent of total intra-
ASEAN trade last year. (rid)