logo logo

Sino-Asean free trade pact a bane to RP, says Ibon

Sino-Asean free trade pact a bane to RP, says Ibon


13 November 2004

DAVAO CITY — An economic research group warned an upcoming free trade agreement between China and the Association of Southeast Nations will have adverse effects on the country’s economy

The China-ASEAN Free Trade Area (CAFTA) will not increase the market share of Philippine products and services in China as President Gloria Macapagal Arroyo would like the public to believe, Ibon Foundation said in a statement.

"Given China’s success in the export of labor-intensive manufacturers, China is actually a threat to many developing countries, including the Philippines," Ibon said.

The Cafta will be signed at the China-Asean leaders’ summit in Laos this month. It seeks to establish a free trade area with the six founding members of the Asean by 2010, and the newer members by 2015.

The founding members of Asean are Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand. Cambodia, Laos, Myanmar (Burma) and
Vietnam joined later.

Under the agreement, tariff cuts will start next year. Goods sold between Asean and China will have zero import tariffs by 2010 under the "normal track I scheme."

The agreement is expected to increase trade between China and Asean members, which has reportedly grown by 15 percent over the last decade. "But whether the Philippines can compete in this potential market is doubtful," Ibon said.

The group warned that the deluge of cheap imports from China may prove Cafta to be "more disastrous rather than beneficial for Philippine agriculture and industries."

The top merchandise imports of the Philippines from China are electrical machinery, apparatus and appliances, which accounted for 6.3 percentage points in the country’s imports in the second quarter of 2004.

Under the World Trade Organization and the Asian Free Trade Agreement, cheap imported vegetables from China and other countries like the United States flooded the local market, from 42,000 metric tons in 1995 to 115,000 MT in 2000, Ibon said.

Ibon instead urged the government to "rethink its support" for Cafta. "With the plight of the local producers in mind, the Arroyo government should not sign the agreement," it added.