Byline: BERNIE CAHILES-MAGKILAT

Despite reservations of other ASEAN countries and the local downstream industries, the Philippines has gone ahead reducing to zero tariffs on all electronics items by 2007 including downstream electronics products such as home appliances.

Ramon

Vicente Kabigting, director of the Bureau of International Trade Revenue (BITR), said the Philippines has adopted such aggressive tariff cut program on electronics being the country coordinator in this particular sector, which is one of the 11 priority sectors identified for the accelerated economic integration of the ASEAN region.

ASEAN Economic Ministers are holding a two-day retreat next week (May 15-16) in Boracay to review the progress on the Priority Integration Program.

Under the ASEAN Sectoral Agreement for Electronics, tariffs for electronics products must be eliminated by 2007 for the ASEAN 6 and by the year 2012 for the CLMV (Cambodia, Laos, Myanmar and Vietnam).

"The Philippines is quite strong and we did not hesitate to liberalize the electronics sector. We have gone zero," Kabigting said.

Normally, a country leader for each of the 11 priority sectors for integration takes a bolder step than others to show an example.

Electronics is the country's number one exports accounting for over 70 percent of the total exports.

The Philippines did not even exercise an option to retain 15 percent of the entire product universe thrown into the electronics basket for zero tariff cuts by 2007 into its negative list, Kabigting said.

"The product universe include some downstream consumer products (appliances), upstream (gold and copper etc.) and midstream products (chips)," Kabigting said.

On the other hand, Kabigting admitted that other countries do not want to include the downstream industries while others even want to slowdown.

For instance, Indonesia wanted to include in the product universe both upstream and downstream but this was not accepted by the ASEAN, which are acting on consensus.

Indonesia even urged for the expansion of the list to include pumps, which use chips for agricultural equipment applications.

Malaysia , on the other hand, has opposed the inclusion of downstream industries.

Earlier, domestic home appliance makers had pleaded to the government to exclude 13 locally manufactured items including karaoke, refrigerators and flat iron, from among the electronics products from the accelerated ASEAN sectoral integration that will eliminate tariffs by 2007.

In a letter to Trade and Industry Secretary Peter B. Favila, the Philippine Appliance Industry Association Inc. (PAIAI) identified these products as karaokes, colored TV, refrigerators, upright freezers, washing machines, window airconditioner, split type airconditioners, packaged airconditioners, electric fans, flat irons, oven toasters, stoves and ranges.

"We request that these appliance products should not be included among the electronics products for integration and subsequent tariff elimination by the year 2007," said PAIAI president Fernanditas T. Malit and chairman Raul Joseph A. Concepcion.

The local manufacturers have requested that the 13 items be placed under the negative list in the ASEAN Priority Integration Program, which was a result of the November 2004 ASEAN Summit wherein members agreed to implement the ASEAN Sectoral Integration Protocols, which legally bind them to

undertake accelerated integration measures in 11 priority sectors.

Of the 11 priority sectors, 7 are product sectors, which account for 54 percent of all intra-ASEAN trade, and four are services.

The remaining 10 priority sectors include electronics, E-ASEAN (electronic commerce/usage/connectivity among ASEAN countries), health care, woodbased products, automotives, rubberbased products, textiles and apparel, agri-based products, fisheries, air travel, and tourism.

As country coordinator, the Philippines spearheaded the formulation of the Electronics Road Map and committed to fast-track tariff elimination of more than 1,000 electronics and ICT products.(BCM)