RP, Thailand to sign sugar pact

The Philippines is set to sign a bilateral agreement with Thailand which will allow the former to retain higher tariff rates on imported sugar.

Sugar Regulatory Administration (SRA) head James Ledesma said the signing is likely to take place next month when both governments have firmed up their respective positions.

Ledesma said the agreement essentially covers the concession given by the Philippine government to Thailand to import a substantial volume of Thai rice this year in exchange for the postponement of a bold cut in sugar tariff that should have started on Jan. 1, 2003.

Under the Association of Southeast Asian Nations Free Trade Area-Common Effective Preferential Treatment, the Philippine government committed sugar as one of the commodities whose tariff will be lowered to zero to five percent from the current 50 to 60 percent.

The Philippines however, was able to persuade the AFTA council of which Thailand is a member, to defer the reduction of sugar tariffs to 2010 because the local sugar industry in unprepared to open up the domestic market.

The domestic sugar industry said a drastic reduction in tariffs will mean flooding the country with sugar imports at dumped prices.

The deferment of the tariff reduction until 2010 is meant to give sugar producers enough time to implement safety net measures and strengthen the industry to survive competition.

Thailand, a big sugar producer in the region, is also one of the world’s major price exporters.

Aside from giving preference to Thai rice, the SRA is also firming up the exact volume of sugar that will be imported from Thailand this year as part of the concession package that Manila is giving to Bangkok for the retention of the sugar tariff.

Sources said Manila is only willing to import about 100,000 metric tons (MT) of rice from Bangkok because it does not want to be caught in a situation that its hands will be tied to just a single supplier.

Earlier, DA Assistant Secretary Segfredo Serrano expressed reluctance to source the country’s rice import requirements from Thailand.

Serrano explained that even if Thailand has been a steady supplier of the country’s rice import requirements, purchases were sealed under conditions that provided enough elbow room for the Philippine government to negotiate for better terms.

"We did this because Thailand is not exactly the cheapest source of the staple," said Serrano.

Last year, the Philippines imported 1.14 million of MT of rice. The bulk of the imports or about 590,000 MT was bought from India due to its more competitive price and counter-trade offers.