RP may cite 10-X principle in seeking a delay in the implementation of CEPT

The Philippine Government may avail itself of the 10-x principle in seeking a delay in the implementation of the Common Effective Preferential Tariff (CEPT) and ASEAN Free Trade Agreement (AFTA).

The 10-X principle allows an ASEAN member country to seek the exclusion of an industry from coverage of the CEPT-AFTA.

During the last Senior Economic Officials Meeting (SEOM), Malaysia proposed that the 10-X principle be not limited to services but should include trade in goods.

The 10-X principle is considered a better option in avoiding implementation of the CEPT-AFTA rather than availing of the other protocols which would involve compensating other ASEAN countries affected by the non-inclusion of certain industries from the CEPT-AFTA.

The CEPT-AFTA is scheduled to take effect by January next year.

Under the agreement, ASEAN member countries would lower their prevailing tariff rates to between zero and five percent, allowing for a free flow of goods and services within an ASEAN free trade area.

In the case of the Philippines, several key industries have been clamoring for a delay in the implementation of the CEPT-AFTA, saying they need more time to be competitive.

Among those which have sought reconsideration are the petrochemical, rubber, textile, paper and automotive industries.

The petrochemical industry, for instance, argues that it has not yet been able to fully integrate due to the delay in the setting up of a vital naphtha cracker plant.

On the other hand, the downstream plastics industry is against a delay in the implementation of the CEPT-AFTA.

The Philippine Plastics Industry Association, Inc. argues that delaying the CEPT-AFTA would result in the extension of the current tariff distortion between finished plastics product, at five percent, and 15 percent on the raw materials resins.

Invoking the 10-X principle has been prompted by the strong lobby of various affected industries with the government.

President Arroyo issued recently a directive ordering the Tariff Commission and the National Economic and Development Authority (NEDA) to review the requests of various industries seeking further tariff protection. –Marianne Go