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NEWS UPDATES 7 January 2010

Thailand, Philippines to settle rice tariff issue

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Thailand and the Philippines will seek to resolve their differences on the issue of the tariff reduction on rice traded under a free-trade scheme among Southeast Asian countries when senior officials from the Association of Southeast Asian Nations (Asean) meet in Danang, Vietnam, this month, Business Mirror reported, quoting Philippine Agriculture Undersecretary Segfredo Serrano.

Serrano said the issue of the tariff reduction on rice traded under the Asean Free Trade Area (Afta) will “definitely” be raised during the Senior Officials’ Meeting which will be held sometime this month.

“[The rice tariff issue] will surely be taken up during the meeting in Danang, Vietnam,” he said in a telephone interview.

Serrano also said the Philippines is not budging on the issue of the rate of tariff reduction for rice. In October, Agriculture Secretary Arthur Yap said the Philippines could not agree to bring down tariffs below 35 percent for rice by 2015.

Sources privy to the negotiations said a draft memorandum of understanding (MOU) between the Philippines and Thailand are currently in the works. The MOU indicates that the ending tariff rate for rice by 2015 will be at 35 percent.

Currently, the in-quota tariff on rice stands at 40 percent while the volume of rice entering the Philippines outside of the quota or out-quota tariff is at 50 percent. Starting January 1, the Philippines and five other Asean member-countries (Asean-6) removed tariffs on 7,881 tariff lines.

This brought the total tariff lines traded under the Common Effective Preferential Tariffs for Afta (Afta-CEPT) to 54,547 or 99.11 percent. With the reduction, the average tariff rate for Asean-6 will further decrease to 0.05 percent in 2010, from 0.79 percent in 2009.

Citing rice as a highly sensitive commodity to the Philippines, Manila said it could not yet bring down tariffs on rice and invoked a special protocol on rice and sugar signed by Asean member-countries in 2007.

Earlier, Thailand threatened to delay the full implementation of the Asean Trade in Goods Agreement (Atiga) if the Philippines will not change its mind on the reduction on tariffs on rice. Atiga’s goal is to create a single market and production base with free flow of goods by 2015. In August 2007, ministers signed the Atiga to enhance the Afta-CEPT and make it more comprehensive.

In October, Yap said the Philippines is willing to purchase 200,000 MT of rice from Thailand through a government-to-government negotiation as a concession to move forward the Atiga this year. The volume of rice will come in at an in-quota tariff rate of 40 percent.

Figures from Asean show that intra-Asean import value of commodities for these 7,881 tariff lines amounted to $22.66 billion, or 11.84 percent of Asean-6 import value within Asean.


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