TOP business groups in the country are pressing the government to seek a deferment of the tariff-elimination scheme scheduled in January 2010 under the Asean Free Trade Area (Afta) for up to five years as the uncompetitive Philippine industries need more time to shape up, especially after the devastation caused by typhoons Ondoy and Pepeng.

The Federation of Philippine Industries (FPI) said with the damage wrought by the twin typhoons, the country can actually invoke Article 23 of the Asean Trade in Goods Agreement (Atiga), which allows a member-state to suspend its tariff-elimination commitment due to emergency or exceptional events.

 “We are in a state of calamity and the reconstruction takes time. The local industries need ample time to recover to be more competitive,” Jose Sereno, FPI international trade committee chairman, told the BusinessMirror.

Article 23 of the Atiga states that “in exceptional circumstances, where a member-state faces unforeseen difficulties in implementing its tariff commitments, that member-state may temporarily modify or suspend a concession contained in its schedules.”

Last Thursday Sen. Loren Legarda, who chairs the Senate’s economic affairs committee, announced the holding of hearings into what has been described as a unilateral move by the Department of Trade and Industry to sign the Atiga in February 2009, without letting this pass through the Senate, as all international agreements do.

The Atiga consolidates all the protocols and agreements reached by the 10-member Asean in pursuit of the Afta-Common Effective Preferential Tariff scheme.

Sereno said the FPI is seeking a five-year reprieve from the intra-Asean tariff elimination.

PCCI, MBC weigh in

Edgardo Lacson, president of the Philippine Chamber of Commerce and Industry (PCCI), said even before the typhoon, the different sectors in the country were already struggling to be competitive due to high operating costs in the country, compounded by the impact of the global crisis.

He said sensitive industries such as rice, sugar, corn and livestock need protection up to 2015, while the other sectors should be allowed the benefits of graduated tariff elimination instead of total elimination.

Alberto Lim, executive director of the Makati Business Club, said it would probably take two years under a new government leadership to make the country’s cost and business environment conducive to business.

“Our costs will not go down and our infrastructure will not improve with so much corruption happening in the present government. Under a new government, we would probably need two years for the costs to adjust,” Lim said.

He said the suspension of the tariff elimination should not take long because it is an important aspect of the Asean economic integration.

While protecting the local industries would help save jobs, he said this will also rob the consumers of the opportunity of getting their hands on cheaper products from abroad.

Dee: Suspension unlikely

Donald Dee, special trade envoy and PCCI chairman emeritus, said it is unlikely that the implementation of the tariff elimination will be suspended because the Asean cannot just change its trading rules that easily.

 With this, Dee said it would be better if the country would just speed up mechanisms to make the local sectors more competitive.

 “I don’t think it will be suspended, so we just have to think of ways to help them survive. That should be our priority,” Dee said.

 About 80 percent of the country’s tariff lines are already zero. By January, another 16 percent of the tariffs should also be eliminated. The rest will take longer as they are on the sensitive list.