RP not ready to compensate S’pore

The Philippines is still not prepared to agree to Singapore’s demand for compensation for possible losses as a result of the Philippines invoking an ASEAN protocol to exclude its petrochemical industry from lowered tariffs under the ASEAN Free Trade Area Common Effective Preferential Tariff (AFTA-CEPT) scheme.

According to government sources, the Philippines has to move very carefully on the Singapore compensation demand as the Philippines-Singapore case will set a precedent for all future compensation claims under the AFTA-CEPT exclusion protocol.

The AFTA protocol allows ASEAN member countries to seek exclusion of any particular product industry from coverage of the CEPT.

However, In doing so, the country invoking the protocol must also agree to compensate any affected country which is considered a primary producer of the product.

In the case of the petrochemical sector, the countries affected are Singapore, Malaysia and Thailand.

The protocol was drawn up following an earlier move by Malaysia which sought exemption of its auto industry. At the time, none of the affected ASEAN countries sought any compensation from Malaysia.

The Philippines is awarethat if it agrees to compensate Singapore either in the form of an outright payment or tariff concession for some petrochemical products, it will set the precedent for all future compensation demands.

It may even lead to more demands for compensation from any ASEAN country which may claim to be adversely affected by any more delays in the lowering of tariffs under the AFTA-CEPT scheme.

At the same time, sources said, the Philippines has to tread very carefully with Singapore to prevent an outright retaliation by or trade war with Singapore.

Singapore had reportedly asked for around $8 million in compensation, but the Philippines was able to bring down the amount to $3 million.

A draft agreement had been reached and was supposed to be scheduled for signing this month.