Thailand calls for sugar tariff cut

Thailand calls for sugar tariff cut

Dow Jones, Bangkok

Thailand's Commerce Minister Adisai Bodharamik has sent a letter to the trade ministers of Indonesia and the Philippines, asking them to consider setting a lower import tariff on sugar from the Association of Southeast Asian Nations, compared with sugar from non-ASEAN countries, according to a statement from the Department of Business Economics Thursday.

The department operates under the Commerce Ministry.

Following the ASEAN Free Trade Agreement Council's decision last September allowing a delay in cutting sugar import tariffs for the Philippines and Indonesia, Thailand was concerned that it would lose some export opportunities to the two countries. Thailand is Asia's largest sugar exporter.

A lower import tariff on sugar from ASEAN countries would maintain the competitiveness of Thai sugar exports to these two countries, Chutima Bunyapraphatara, the department's deputy director-general, said earlier.

Under the original plan, Indonesia and the Philippines were supposed to start reducing tariffs on imports of sugar by 2002, but this hasn't happened.

According to the AFTA Council, the Philippines was allowed to place sugar on AFTA's sensitive list for imports, and Indonesia was permitted to include sugar on its highly sensitive list. As a result, the Philippines was allowed to freeze the sugar import tariff rate at 50 percent for several more years before a phased reduction beginning in 2004 to a maximum of 5 percent in 2010. Indonesia, meanwhile, will start lowering the tariff in 2005, and the final tariff rate will be allowed to exceed 5 percent.

During the two-day meeting of Asean senior economic officials Jan. 31 to Feb. 1 in Bangkok, Thai officials encouraged senior officials from Indonesia and the Philippines to set a lower sugar import tariff from ASEAN nations, the statement said.

However, the setting of the import tariff is "a sensitive issue in terms of politic concern," and the Indonesian and Philippine officials "have no mandate to make any decision," it said.

Indonesia currently imposes a 20 percent-25 percent import tariff on sugar for all nations, while the Philippines applies a rate of 65 percent.