Philippines - New Tariff laws

01 Jan 2010

Malacañang  has formally ordered tariffs on Southeast Asian imports to be slashed further by January 1, dispelling earlier fears that the Philippines might not implement a regional trade pact on time.
Executive Order 850, published yesterday, will bring down tariffs of nearly all remaining goods sourced from the 10 member states of the Association of Southeast Asian Nations (ASEAN) to 0% by the start of the new year.
The document, in effect, ensures the Philippines is on track in implementing the ASEAN Free Trade in Goods Agreement (ATIGA), even as tariff cuts for rice have yet to be resolved with Thailand.
"We acknowledge there is tremendous pressure to slow down the tariff reduction, but all ASEAN members have resolved that we will indeed adhere to 2010 commitments," Trade Assistant Secretary Ramon Vicente T. Kabigting said in a telephone interview yesterday.
"Rice tariff lines, however, are not in the order... When we enter Jan. 1, we will hold tariffs for rice," Mr. Kabigting said.
This comes as Thailand has yet to agree to the Philippines’ proposal to exempt its local rice industry from liberalization until 2015.
"We have sent our draft memorandum of agreement which covers the concession that we give them (Thailand) a certain level and form of access to our rice market next year," Mr. Kabigting said, declining to elaborate.
The Philippines had offered an assured purchase order of duty-free rice on the condition that Thai prices are competitive and there is actual demand. In exchange, the Philippines hopes to keep tariffs at 40% before bringing the rate down to 35% in 2015.
"Whether they agree or not, we are not budging on those tariffs. But we remain cooperative," Mr. Kabigting said.
"On the whole, I am pretty [confident it will be resolved]. I suppose we will discuss the issue on the side of the ASEAN senior economic officials meeting in mid-January."
Despite this holdup, tariffs on 1,500 goods -- consisting about 17% of tariff lines -- will go down to 0%, as scheduled under EO 850. These include, among others: automotives and parts, certain fruits, vegetables, coffee beans, tobacco, spirits, processed meat, chemicals, fuel, as well as steel and plywood.
Tariffs on sensitive crops like corn, grains, cassava, poultry and swine -- representing 76 tariff lines or 0.9% of the total -- will meanwhile fall to 5%, as directed by earlier orders.
Also with Australia, NZ
Also yesterday, EO 851 was published to implement a separate trade deal the regional bloc had brokered with Australia and New Zealand.
The Philippines will start cutting tariffs on imports from the two Asia-Pacific economies next year, with the end of eliminating duties on 96% of goods by 2020.
No order, however, was issued to implement the trade pact between ASEAN and India which likewise had a January deadline. "We’ve already told India we won’t be ready by January because of line-by-line [review of tariffs]. But even India and several ASEAN members [will be delayed]," Mr. Kabigting said.
Tariff cuts under this deal, however, will likely take place within the first quarter of 2010, he said.



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