The Philippine government has formally informed the AFTA council of its decision to invoke the protocol delaying the lowering of tariff rates for certain petrochemical products.
Singapore is the primary country expected to be affected by the Philippine move.
In invoking the the protocol, the Philippines now has to conduct bilateral consultations with ASEAN member countries which may be adversely affected by the delay in the lowering of tariff.
A country invoking the protocol must be prepared to offer some compensation to the affected ASEAN member country.
The compensation may involve importing or lowering tariffs faster for some products of the affected country.
Under the AFTA scheme which has taken effect this year, ASEAN member countries are supposed to lower their tariff rates to zero to five percent to promote more inter-regional trade.
However, ASEAN member countries can opt to avail of a protocol that would allow them to delay the lowering of tariff for certain products which the member country deem needs continued protection.
The Philippine government, which is trying to support a full integration of its petrochemical industry, has decided to seek more time for local petrochemical firms to be competitive and go ahead with a planned naphtha cracker plant.
The Philippine government must also issue an Executive Order specifically setting the tariffs for specific petrochemical products that would not be subject to the AFTA-Common Effective Preferential Tariffs (CEPT).
Out of 16 affected petrochemical products, specifically resins, government would maintain tariff rates ranging from seven to 10 percent for 11 items.