Gov’t keeps high tariff on sugar under CEPT scheme

The government is keeping the high tariff walls on sugar under the Common Effective Preferential Tariff (CEPT) scheme of the ASEAN Free Trade Area (AFTA).

Malacanang issued yesterday Executive Order (EO) 230 which formalized the transfer of raw and refined sugar from its CEPT temporary exclusion list to sensitive list, a move approved by the ASEAN (Association of southeast Asian Nations) Ministers in 2001.

Under EO 230 signed by President Arroyo, sugar tariff will be reduced by two percent to 48 percent from 50 percent last year. The new rates will apply this year.

The modified rates will be imposed, following the decision last May of the Tariff and Related Matters Committee to grant the tariff concession on imports of raw and refined sugar to ASEAN members, in exchange for the Philippines’ request to transfer the commodities to the sensitive list.

Had the Philippines not gotten the approval of the ASEAN, the import tariff for sugar would have gone down to zero to five percent last January from the current or existing 50 percent.

The government batted for the continued protection of the domestic sugar industry and pushed to move the sector to the highly lists of the CEPT, the main vehicle in the implementation of the ASEAN Free Trade Area.

If the AFTA Council denied the Philippines’ petition, Thailand, a principal sugar supplier, will largely benefit from lower Philippine tariffs on sugar.

Thailand supported the Philippines’ position, but asked that it be allowed to export at least 200,000 metric tons of rice to the country this year.

The country’s decision to maintain high tariffs on sugar for several more years before phasing it down to a maximum of five percent in 2010 is intended to buy more time for the sector to shape up and be more competitive in the global arena.

Aside from sidetracking the reduction of tariffs under the CEPT, the government is also seeking to raise the bound rate for sugar to 80 percent from the current 65 percent.

Under the World Trade Organization (WTO) tariff schedule, the bound rate will go down to 50 percent from 65 percent.

"By moving the tariff rate to 80 percent, this will allow us to keep it as 65 percent when the time to reduce it to 65 percent is due," Trade and Industry Secretary Manuel Roxas II said.