Thailand has threatened not to ratify the Asean Trade in Goods Agreement (Atiga) at the Asean summit this weekend if it cannot get a fair deal from the Philippines on rice.

Nuntawan Sakuntanaga, director-general of the Trade Negotiations Department, said Thailand will press Manila to cut import tariffs on rice and raise rice import quotas in compensation for the latter's failure to honour the Asean Free Trade Agreement (Afta).

The six founding members of Asean are supposed to bring down their common effective preferential tariffs (CEPT) to between zero to 5% for all products, including those previously deferred under sensitive and highly sensitive lists at the start of next year. The Philippines' rice import tariffs should be cut to 20% from 40% by Jan 1, 2010.

But Manila is insisting that rice is classified under a "highly sensitive list" that allows import tariffs to stay at 35%. This comes even as Indonesia, which wants to keep sugar and rice on its sensitive list, has agreed to cut tariffs on rice to 25% from 40% in 2015, and sugar to 5-10% in 2015 from 30-40% now. Malaysia is also committed to cutting rice tariffs to 20% from 40% next year.

The Philippines is instead proposing to give Thailand a quota of 50,000 tonnes of tariff-free rice annually to compensate for not meeting the tariff target, but the Thai government reportedly demanded up to 360,000 tonnes and that the grains should include premium grade.

Atiga is an amendment to the Afta CEPT scheme. Afta CEPT focused on tariff reductions or elimination, but Atiga comprises both tariff and non-tariff elements, including trade discipline on sanitary and phytosanitary measures, customs procedures and trade facilitation, among others. The refinements are part of the effort to create a broader Asean Economic Community by 2015.

However, Mrs Nuntawan said both countries have two months left for negotiation before the deadline if a rice deal is not completed at the summit.

She also insisted the Asean free trade pact would not be affected, as everything has already been agreed upon under the Afta CEPT scheme.

In a bid to shore up rice prices, the government pledged yesterday to allocate 20 billion baht to buy two million tonnes of paddy from farmers.

According to Deputy Prime Minister Korbsak Sabhavasu, who chaired the National Rice Policy Committee's meeting yesterday, spending was necessary as a short-term measure to boost falling paddy prices, even though the government has already introduced an insurance programme.

The Public Warehouse Organisation and the Marketing Organisation for Farmers have been directed to handle the purchase. The buying measure would run for six months.

The committee also directed the Foreign Trade Department yesterday to speed up negotiating with seven rice-buying nations including Indonesia, Malaysia, the Philippines, Timor, Brunei, and Iran in order to sell rice stocks for government-to-government deals within four months. It expects a G-to-G contract worth 950,000 tonnes and a deal with private exporters for three million tonnes.

Source: Bangkok Post