RP, China agree on terms of early harvest program

The Philippines and China have finally agreed to compromise on the terms of an early harvest program under the ASEAN-Free Trade Agreement (FTA) with China.

The full implementation of the ASEAN-China FTA is scheduled for 2010 with the Philippines, Cambodia, Laos, Myanmar and Vietnam joining only in 2012.

The early harvest program involves the earlier opening up of markets for a specified number of items.

Most of the ASEAN members have already reached an agreement with China for the early harvest program to be implemented this year with the Philippines and CLMV still holding out.

Under the compromise, the Philippines will agree to offer 208 or 50 percent of its tariff lines under Chapter 1 to 8 covering agricultural products plus the inclusion of some manufactured items.

The Philippines indicated that it will now be willing to join the early harvest program by Jan. 1, 2005.

The breakthrough was reached following negotiations conducted during the recent State Visit of President Arroyo to China early this month.

China had been chiding the Philippines on its low offer of initially only 177 tariff lines, pointing out that nine other ASEAN members had offered 90 percent of their tariff lines on Chapter 1 to 8.

The limitation of the early harvest to Chapters 1 to 8 of the Chinese Tariff Code, meaning agriculture, presented a disadvantage to the Philippines with China further refusing to allow the inclusion of some manufactured items .

However, during the State Visit, Trade and Industry Secretary Cesar V. Purisima said that China finally relented so that the Philippines can accede to the early harvest program.

Aside from the early harvest program, Purisima said, there was also discussion of the reduction of tariff rates to between zero to five percent by 2007 with China insisting that the reduction be applied to 60 percent of the tariff lines and the Philippines only willing to apply it on 50 percent of tariff lines.

The Philippines eventually relented and agreed to apply it to 60 percent of tariff lines.

The third issue taken up was to limit the exclusion items to only 10 percent of tariff lines.

The Philippines had offered an exclusion list covering 577 tariff lines which would be over the 10 percent limit.

Purisima said that the Philippines decided to back down and limit it to 10 percent following the concession given by China on the early harvest.