CEPT to drop to 5% on Petrochemical products in Philippines

30-May-05

The Common Effective Preferential Tariff (CEPT) rates on petrochemical products in Philippines will be slashed further from 7-10% to five% starting July. The tariffs will revert to the current levels upon completion of the naphtha cracker planned by JG Summit Petrochemical Corp. The tariff cut would allow the processing segment to expand operations. CEPT rates are imposed on goods and services traded among members of Association of Southeast Asian Nations (ASEAN). Under the CEPT scheme of ASEAN Free Trade Area arrangement, tariffs on almost all products traded in the region have been slashed to 0-5% in 2003. The Philippine government has, however, after invoking a protocol in the CEPT agreement, decided to delay the tariff cuts on certain petrochemical products to protect the domestic industry. Domestic plastics associations have asked the government to extend the EO 161 tariff cover until 2010 to ensure the viability of the establishment of the naphtha cracker of JG Summit Petrochemical Corp. The Philippine Plastic Industry Association (PPIA) has also expressed its support for the proposed naphtha cracker. However, it has agreed to the tariff cover for petrochemical manufacturers only when the naphtha cracker becomes operational sometime in 2008.