RP, S’pore reach accord on petrochem issue

The Philippine and Singaporean governments finally broke the impasse on the contentious issue involving the latter’s deviation from the intra-ASEAN tariff schedule for the petrochemical sector.

Trade and Industry Secretary Manuel Roxas II said a compromise was reached during the recent meeting of the ASEAN Economic Ministers in Cambodia.

"We have already signed a protocol agreement since we agreed to compensate Singapore in the form of further tariff cuts on imported products that are not produced locally," Roxas said.

"One of the terms of the signed agreement would be to calculate what were the additional payments that were made because of the higher tariffs. And also, we will find other products that Singapore sells to us which are not produced here and there is no competition whose tariffs we can bring down to offset the additional payments," he added.

The initial compensation estimate that covers 11 petrochemical products ranges from $3 million to $5 million which will be paid over a three-year period.

Last December, the Philippines invoked a protocol that allows member-countries to temporarily delay or suspend its tariff concession on specific products.

Under the ASEAN Free Trade Area-Common Effective Preferential Tariff (AFTA-CEPT) scheme, tariff on all products being trade in the region were reduced to a range of zero to five percent effective last January.

The Philippines called for the exemption of 11 petrochemical products from the regionwide tariff reduction program this year and in 2004.

Singapore and Thailand, however, want to be compensated by the Philippine government in exchange for their approval to exempt the local petrochemical sector from the scheduled tariff cut.

The two countries are major producers of petrochemical products in the region.

Philippine negotiators earlier succeeded in reducing to $5.7 million the $8.8-million compensation being sought by Singapore, leaving just $3.1 million in unsettled claims.

The government was reluctant to settle because no ASEAN member has ever paid any compensation.