Asean scraps duties on 8,000 products

01/03/2010
By Ronnel Domingo
Philippine Daily Inquirer

SIX MEMBERS OF THE Association of Southeast Asian Nations, including the Philippines, took a step closer to the establishment of a single market in the region as they stopped collecting import duties on thousands of products shipped across their borders.

The Philippines, Indonesia, Thailand, Malaysia, Singapore and Brunei scrapped collections on 7,881 tariff lines starting Jan. 1.

According to the Asean Secretariat, affected tariff lines include final consumer products such as air conditioners, chili, fish and soya sauces, as well as intermediate materials, such as motorcycle parts and motor car cylinders.

Other products include mechanical appliances and prepared foodstuff, as well as those belonging to the iron and steel, plastics, machinery, chemicals, paper, cement, ceramic and glass sectors.

With the latest move, a total of 54,457 tariff lines may be transported across the six country’s borders at zero tariff.

The number represents 99.11 percent of all tariff lines listed under the Common Effective Preferential Tariffs for the Asean Free Trade Area.

The CEPT-AFTA provides for the gradual reduction in tariffs of these products, which started in 1993.

With the latest round of tariff reduction, the average tariff rate for the six countries—referred to as the Asean 6—is expected to further decrease from 0.79 percent in 2009 to 0.05 percent this year.

The remaining four Asean countries that are not affected in the tariff reduction—Cambodia, Laos, Myanmar (Burma) and Vietnam—have been given leeway and need not break down trade barriers right away since they are newer members and have less developed economies.

Under the CEPT-AFTA schedule for tariff reduction, the four countries may undertake similar moves by 2015.

Latest data from the Asean Secretariat showed that in 2008, intra-Asean import value of commodities covered by the 7,881 tariff lines amounted to $22.66 billion, or about 12 percent of the Asean-6’s total imports from within Asean.

Asean Secretary General Surin Pitsuwan said in a statement that the recent move would serve as a catalyst for the development of a single market and production base described in an agreement as the Asean Economic Community (AEC) blueprint.

The actual impact and how much this final installment will translate into savings for consumers will depend on the market dynamics of the respective Asean-6 countries, Surin said.

China-ASEAN FTA to greatly benefit Cambodia and region: officials

By Zhang Ruiling and Lei Bosong

PHNOM PENH, Dec. 27 (Xinhua) -- Cambodian government officials expressed their belief that the establishment of the China-ASEAN free trade area (FTA) on Jan. 1 will be sure to promote the development of trade and economic cooperation of the region and benefit greatly the country and the people.

"We are looking forward to and paid great attentions to the building of the China-ASEAN Free Trade Area scheduled on Jan. 1, 2010," Keat Chhon, minister of economy and finance, told Xinhua recently.

"Cambodia is a open country and our National Assembly has already approved the agreement of the China-ASEAN FTA," said Keat Chhon at the 4th annual Export-Import and One Province, One Product Exhibition in Phnom Penh.

The China-ASEAN FTA will open up a more extensive and smooth way for Cambodia to develop international trade and economic relations and to make the country a more attractive place to invest, he said.

In November 2002, leaders of China and the 10 member countries of the Association of Southeast Asian Nations (ASEAN) formally signed the Framework Agreement on Comprehensive Economic Co-operation between China and the ASEAN in Phnom Penh, marking the beginning of the construction process of a China-ASEAN free trade area. As enshrined in the agreement, China-ASEAN FTA will be completed in 2010.

The free trade agreement will lift tariffs on most commodities between China and ASEAN countries.

Commerce Minister Cham Prasidh also said that "with FRA, the market in China will be widely open, and Cambodia has a lot of agricultural products to export and right now China may have more money than the U.S. to buy the goods."

Cambodia enjoys excellent geographic position and has a political stability, as well as preferential policies for foreign direct investment, the minister said. So he hopes the duty-free status for goods will attract and encourage more Chinese investorsto invest in Cambodia, helping Cambodia expand manufacturing. At the same time, investors in Cambodia can produce and export large numbers of high quality products not only to China but also to more than 560 million people in the ASEAN regional markets.

Moreover, agro-industries, agriculture and manufacturing are among several areas that Cambodia is encouraging businesses to invest in, Prasidh said.

The bilateral trade between China and ASEAN member countries keeps rising greatly at present, ASEAN would become one of China's top trade partners in 2010 when the China-ASEAN FTA is in place.

The China-ASEAN FTA will become the world's most populous free trade area, with a total population of 1.9 billion, and will be a new engine to drive the growth of the world economy, observers here said.

"Cambodia is a potential exporting country in the region," stressed Cham Prasidh.

"As Cambodia is located in the center of the region, it provides favorable conditions for investors in exporting their products to 310 million people in the Greater Mekong Sub-region and 560 million people in ASEAN as well as other countries around the world where Cambodia got the MFN and GSP," he said.

To open their markets to each other, both consumers and businesses from China and ASEAN are increasingly feeling the benefits of a free trade area, he said. Due to tariff reduction, consumers can consume each other's products more cheaper, and enterprises can import duty-free products for their products and thus lower production costs, improving product competitiveness, gain greater market development, he added.

The building of the China-ASEAN FTA will not only have a great impetus for the trade and economic cooperation between China and ASEAN, but also will play a key role in promoting the region's economic growth as well as the capacity to resist such attacks as that from the world financial crisis, the minister said.

Asean rift on rice, sugar

August 15, 2009
By Petchanet Pratruangkrai
The Nation

Other Asean countries have pressured Indonesia, Malaysia and the Philippines for a reduction in their tariffs on highly sensitive products, including rice and sugar, under the Asean Free Trade Agreement (Afta).

They fear that failure to do so will affect progress towards the goal of an Asean Economic Community.

The move came after the three countries' failure to fulfil Afta commitments for substantive reductions in tariffs, thus potentially prolonging the process of integration under a single market.

A senior Commerce Ministry source said yesterday that during the current Asean Economic Ministers Meeting, there had been a call from other member countries for Indonesia, Malaysia and the Philippines to fulfil the grouping's commitment to bring down import tariffs on rice and sugar.

"Other Asean members fear that the breaking of the commitment will create conflict among Asean countries. They would focus on seeking compensation in solving disputes between each other, if the three nations did not follow through on the commitment," said the source.

Under Afta, the three countries have kept rice and sugar on lists of highly sensitive products, maintaining high tariffs on those items.

Indonesia has only committed to cutting its tariff for rice to 25 per cent in 2015, and the tariff on sugar from 30-40 per cent to 5-10 per cent in the same year.

Malaysia has only committed to lowering its tariff for rice from 40 per cent to 20 per cent next year, while the Philippines has retained a high import duty of 40 per cent on rice import under the World Trade Organisation. The latter has also restricted its import quota to 350,000 tonnes a year.

Thailand, Singapore and Brunei, meanwhile, have committed to bringing down tariffs to between zero and 5 per cent for highly sensitive products next year, while Laos, Burma, Cambodia, and Vietnam will delay tariff reductions on seven highly sensitive products for a further five years.

According to a Commerce Ministry report, Thailand will suffer the most if Malaysia, Indonesia and the Philippines do not further reduce their import duties on rice and sugar. Sugar exports to Indonesia would be especially affected.

Illegally imported rice from Cambodia find its way into Thai government's subsidy program: The Nation

Call for agency to police rice imports

March 16, 2009
By ACHARA PONGVUTITHAM
The Nation

The Thai Rice Exporters' Association and the Board of Trade of Thailand (BoT) will soon propose that the Commerce Ministry set up a Public Warehouse Organisation as an "import agency" to oversee rice imports once the Asean Free Trade Area (Afta) eliminates all import tariffs.

The proposal is aimed at preventing illegal imports of rice from other Asean countries with the aim of benefiting from Thailand's price-intervention programme.

Currently, both legally and illegally imported rice - the latter mainly from Cambodia - finds its way into the government's subsidy programme.

Thai rice exporters fear that the zero-tariff agreement under Afta will lead to an increase in the amount of illegally imported rice benefitting from the subsidy programme, which would directly affect Thai farmers. For this reason, they seek the creation of import-oversight agency with the power to set up stringent import restrictions and inspect all imported rice.

A source from the BoT said the agency would inspect every shipment of imported rice to prevent unscrupulous dealers from benefiting illegally from the government's rice-pledging programme.

The agency would allow rice to be imported only as a raw material for use in manufacturing - not to be sold as a crop, the source said.

"To protect our farmers, we should not approve rice imports for any other purpose," the source added.

In addition, the agency should be empowered to determine who is allowed to import rice, and in what quantities, the source said.

The source also said the government should consider changing its crop-subsidy programme to give farmers direct cash payments to cover the difference between the pledging price and the market price.

"This would not only directly assist farmers but also reduce the government's loss from its huge stockpile every year," the source said.

However, if the government must implement a price-intervention programme, it should do so based on a fair price that does not lead to market distortions, as is the case now, the source said.

The government's rice price-intervention policy has prompted some Thai rice traders to illegally take advantage of the scheme by importing rice from neighbouring countries such as Cambodia. This illegally imported rice has been substituted for Thai rice in the rice-pledging programme.