Tariffs elimination eyed for 85% of goods between Asean, 6 trading partners
BORACAY, Aklan, Philippines – The Regional Comprehensive Economic Partnership (RCEP) may see the elimination of tariffs for as much as 85 percent of goods across the 10 member states of the Association of Southeast Asian Nations and its six trading partners, a development that is expected to further open new and bigger markets for the Philippines.
This was one of the proposals floated in the ongoing RCEP negotiations, Philippine Tariff Commission chair Edgardo B. Abon said on the sidelines of the Asia Pacific Economic Cooperation (Apec) meeting here.
The RCEP is a proposed free trade agreement between Asean and its six free trade agreement (FTA) partners namely China, Australia, China, India, Japan, South Korea and New Zealand. This group of nations reportedly accounted for 40 percent of the world’s trade and has a combined GDP of around $17 trillion.
Abon explained that the proposal floated would eliminate 65 percent of the tariff lines upon signing of the RCEP and its entry into force. An additional 20 percent of tariff lines will be reduced to zero over a 10-year phase out period, which would mean that a total of 85 percent of tariffs would be eliminated under the agreement.
Most of the tariff lines across Asean economies have been reduced to zero but tariff elimination under the various FTAs signed by the Asean as a bloc with its six trade partners has remained marginal, Abon said.
Since January 2010, most of the import duties in Asean have already been reduced to 0 percent. More specifically, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand have eliminated import duties on 99.65 percent of trade tariff lines, while the four other member states of the Asean, Cambodia, Lao PDR, Myanmar and Viet Nam, have 98.86 percent of their traded tariff lines reduced to 0- 5 percent.
“This is just the start of consultations and this time, it will be a series of consultations whenever there are developments that will arise in the course of the negotiations. (The comments and output) will be reported to the Tariff and Related Matters (TRM) Committee so we will know how we can position ourselves in the RCEP negotiations,” Abon added.
The Asean and its six FTA partners were looking to sign the RCEP by the end of 2015.
Trade Secretary Gregory L. Domingo earlier said the RCEP would be crucial, particularly for the Philippines, because the two of the country’s biggest trading partners, namely China and Japan, would participate in the agreement.
“[The RCEP is beneficial] to the extent that we can get better two-way flows in both trade in goods and trade in services, and to the extent that we can encourage better investment regime. If more investments come from these partners, that will be good for us. The RCEP just kind of integrates the Asean and its +1 partners, into one economic regime,” Domingo had explained.
The goal of the RCEP is to “create a comprehensive trade agreement that will facilitate economic integration among all the countries involved. The main negotiating issues involved are trade in goods and services, investment, economic and technical cooperation and dispute settlement.”
Potential benefits of the RCEP include a simplified FTA with standardized rules of origin regulations. It also seeks to regulate common incentives, which will thus allow businesses to make easier use of tax incentives available throughout the different countries without having to check back with each individual country regarding specific regulations. This means that the RCEP has been envisioned to provide benefits that go beyond the existing +1 agreements of the Asean with its six trading partners.
“It was clear among everyone that the RCEP has to be something more than what we see in the current +1 agreements, otherwise, it doesn’t make sense to create a bigger agreement if we can’t get more than what the existing agreements are providing. What we have to watch out for are the incremental things we can get and have to give,” Domingo earlier said. SFM/ABC
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