Thailand seeks compensation for 10% petrochem tariff of RP

Thailand is pressing its demand for compensation from the Philippines in exchange for allowing the latter to maintain a 10 percent tariff wall on petrochemical products under the ASEAN Free Trade. Agreement/Common Effective Preferential Tariff (AFTA/CEPT) scheme.

This was revealed by both Trade and Industry Secretary Manuel Roxas II and Economic Planning Secretary Romulo Neri following a meeting of the Cabinet-level Tariff and Related Matters (TRM) committee.

Singapore, Roxas and Neri said, is also seeking some compensation, while Malaysia has, so far, not indicated if it will follow suit.

According to Neri, Thailand’s request for compensation was couched in "stronger terms," while Singapore was "a little more flexible."

Malaysia, as indicated by its Trade Minister Rafidah Aziz during her recent visit to the country, is not intent on seeking any compensation.

Thailand, Singapore and Malaysia are the three petrochem producing countries to be affected by the Philippines’s decision to maintain tariff protection for its still struggling petrochemical industry.

Under the AFTA/CEPT which took effect this year, participating ASEAN countries are supposed to lower their tariff rates to a range of zero to five percent to allow for a free flow of goods among the members.

However, individual countries can put certain products in a sensitive list and maintain a tariff wall for two years.

In exchange, the country requesting the exemption must compensate its ASEAN neighbor which would be affected by the failure to open up the specific market.

Roxas revealed that Thailand and Singapore are seeking compensation based on estimates of lost sales.

The Philippines, Roxas said, has received their offers and "we will study the data underlying their proposals."

The Philippines has met with Singapore twice and only once with Thailand.

The next round of talks, Roxas said, would be during the next ASEAN meeting scheduled in Cambodia this month.