Asean nixes RP bid to re-classify sugar as highly sensitive product

MANILA, Philippines - The Philippines was unable to convince its Association of Southeast Asian Nations (ASEAN) neighbors to re-classify sugar and include it in the highly sensitive list, a ranking government official said.

In an interview, Department of Trade and Industry (DTI) Secretary Peter B. Favila said since they failed to re-classify sugar, they are now looking a middle ground or a compromise agreement.

In spite of this, Favila said they will not commit zero tariffs without prior consultation.

Earlier, local players in the sugar industry called on the government to exempt sugar from the compulsory tariff reduction program under the ASEAN Free Trade Agreement (AFTA) which seeks to eliminate all tariffs on imported sugar by 2010.

Sugar Regulatory Administration head Lito Coscolluela said Philippine sugar producers are fighting for their life amid the bleak trends worldwide.

He noted that the  the industry leaders have been working on three scenarios, namely seeking a reclassification of RP sugar from “sensitive” to “highly sensitive” category to be able to qualify for exemption from AFTA tariff reduction program, productivity improvement, and generation of alternative products from sugar.

Coscolluela stressed that the move for reclassification is aimed at protecting the local industry against the possible influx of cheap sugar imports.

He said the SRA is leading the negotiations with AFTA right now, but admitted that chances remain bleak.

In 2001, tariff on sugar imports were at 60 percent. Last year it was at 38 percent.

The Philippines must submit a resolution of the sugar issue to the ASEAN as part of the agreement during the ongoing meeting of senior trade officials.

Likewise, the price of sugar will not go up in the coming months in spite of the economic crisis as the industry has assured a steady supply.

In an interview, Central Azucarera Don Pedro Inc. (CADP) executive chairman Pedro Roxas said sugar prices will remain steady until June.

“We don’t expect any shortage. The supply is enough at the moment.”

As such, he said they do not expect any spikes in the price of sugar.

This is despite the expected drop in the production of sugar this year. According to Roxas, the amount of sugar being produced in the country will go down by 10 percent.

The industry produced 2.4 million tons of sugar last year. The expected production this year will only be 2.2 million tons, Roxas said. 

“The production is below original targets.”