Advantages of Early Harvest Plan to the Philippines
To boost the operation of China-ASEAN Overall Economic Cooperation Framework Agreement, China and ASEAN countries except the Philippines began to practice the Early Harvest Plan with the aim to reduce tariffs against agricultural products including live animals, meats and their offal, fish, dairy, live plants, vegetables, fruits, nuts, and even coconut oil, palm oil, and plant oil, etc.
1. The Schedule of Early Harvest Plan
The foundation of China and ASEAN Free Trade Area has received universal applause from ASEAN countries and nine of them except the Philippines have signed the Plan with China.
Accordingly, among the so-called Old ASEAN Countries(Malaysia, Singapore, Indonesia, the Philippines, Thailand and Brunei) and China, the MFN tariff rates above 15% are scheduled to be cut down to 10% as of January, 2004, to 5% as of January, 2005, to zero as of January, 2006; the MFN tariff rates between 5-15% are scheduled to be reduced to 5% as of January, 2004, to zero as of January, 2005; the MFN rates below 5% are reduced to zero as of January, 2004.
Among the other four new member countries in ASEAN (Vietnam, Laos, Myanmar and Cambodia) and China, the MFN tariff rates above 30% are scheduled to be reduced to 20% as of January, 2004, later on, 5 per centum will annually be cut down till to zero; the MFN tariff rates between 15-30% from Vietnam are scheduled to be reduced to 10% as of January 2004, 5% as of January, 2006, zero as of January, 2008, while from other three countries 10% as of 2006, 5% as of 2008; the MFN tariff rates below 15% from Vietnam are scheduled to be cut down to 5% as of January, 2004, zero as of 2006, while from the other three countries to 5% as of January 2006, zero as of 2008.
2. Philippine Advantages on Exportation of Agricultural Products
From the trait between China and the Philippines and between China and the ASEAN, we consider the Early Harvest Plan as an advantage to Philippine exportation of agricultural products, expanding agricultural product trade between both sides and the rapid growth of standard of living of the Philippine farmers.
Advantages of Fruit Exported to China. China, with a population of 1.3 billion, is the biggest buyer of tropic fruits, while the Philippines is the biggest tropic fruit supplier for China. In 2003, the Philippines exported 300 thousand metric tons of fruits to mainland China, with the share of 30% of China fruit import, valued at USD 82 million. Among these fruits, banana has occupied 89% of China banana importation, other fruits such as mango, papaya, pineapple are marketable in China. Presently, the MFN tariff rates of mango, papaya and pineapple are 16%, 15.2%, 27% respectively. So far, if the Philippines accept the Plan and enjoy the benefit from the tariff reduction and final tariff cancellation, the fruit export to China will step into a new era. Otherwise, the Philippine fruits will be elbowed out of China’s market by Vietnam, Thailand, Malaysia and other countries.
Advantages of Coconut Product Exported to China. It is known to all that the Philippines is one of the biggest coconut producer, with an area of more than 3.1 million ha., occupying 26% of farmlands, supporting 3.5 million families. Coconut products such as coconut oil, coco peat, copra are the Philippines’ most important export products, composing 30% of all agricultural product export. Recently, China demands a considerable volume of coconut oil. Only in 2003, import of coconut oil reached 60 thousand metric tons, increasing 68% year by year. Now, China is studying the possibilities of coconut fiber and peat for combating land degradation and desertification. If successful, China will buy those products in volume quantities. As for tariff rates for those items, coconut oil is 10%, fiber is 5%. After the foundation of China-ASEAN Free Trade Area, the tariff rates will be cut down to zero, which will be the most advantage for the exportation of coconut products to China. On the other side, late joining in the Early Harvest Plan means great pressure to those products exported to China. Due to the different tariff, China will import from Vietnam, Indonesia and other ASEAN countries.
Advantages of Marine Products Exported to China. China is a large producer as well as a large consumer of marine products. It imports $2.5 billion of those products annually, but only small amount came from the Philippines. According to statistics of China, China imported $5.74 million marine products from the Philippines in 2003. Presently, the MFN tariff rates of tuna, frozen shrimp, frozen crab, canned fish are 12-14%, 20%, 20%,17.2% respectively. Reducing the tariffs by entering the Plan will be beneficial for the Philippines.
3. Early Harvest Plan has no harmful effect to Philippines’ Agricultural Products.
Entering Early Harvest Plan has no harmful effect to the Philippines’s agricultural products, for the following reasons:
China and the Philippines agricultural import and export meet each other requirement. The trade volume between the two sides can explain this; the main Agricultural products of the Philippine export to China are fruits (banana, mongo, and papaya), occupying 63.5%, coconut oil 24%, and raw rubber 6.3%, aquatic products 4.3%. Meanwhile, the Philippine import from China are grain 29.5%, fruits and vegetables 28.6%, aquatic products 8.4%, tobacco 6.1%, beverage 4.7%, meal 3.4%. Philippine imported from China generally cannot be produced by the Philippines itself, or the production cannot satisfy the market.
The imported agricultural products from China only can occupy low percentage against all the same imported from other countries. Annually, Philippine imported volume of agricultural products. Most of the imported products were from the other countries. Only few, and are in great demand imported from China.
Some sensitive products can be place in the exemption list. According to the provision of the Early Harvest, some sensitive products can be place in the exemption list after a period of time brought into the Plan. Each country has its own disadvantage in some field of products. The Plan has the provision to protect this in order to avoid the other country’s impact. For Philippines, sensitive agricultural products are meats and vegetables.
4. Advanced Management and production improvement are the two key factors to strengthen the competition of the Philippines’ agricultural products.
Protection can only be a short time. A longtime protection will lead to low competitive ability. Eventually, the agriculture and enterprises will grow slowly and become weak point of the country. Positive measures should be taken, such as strengthen the supervision of Custom, avoid impact by smuggling, encourage the agriculture production, reduce the production cost, enhancing the competitive ability.
Strengthen the supervision of Customs to combat smuggling. Strengthening the supervision of Customs and prohibiting of smuggled products are the best way to protect one country’s products. Too much smuggling will not only result a great loss to the country’s normal revenue but also heavily affected the market that leads to negative impact to one country’s products and the development of its agriculture and industry.
Encourage farmer’s production and strengthen the competition of Philippine agricultural products. The Philippines has rich resources, and has good environment for crops. The main reasons for low competition of partly agricultural products are low output, high cost. If the Government takes positive measures to encourage the production, such as to promote and implement some high technology, the competition of the agricultural products will boost. On the aspect of fowls and animals raising, the forage cost occupy 60-70% of the total cost. If the output of corn were increased, the price of the forage will be lower and the cost of raising will be lowered substantially. At that point of time, the competition will be stronger but at present, the average output of corn in the whole Philippines is only 1.8 metric tons per hectare while in China is 7-9 tones per hectare. It is not very difficult to reach 6-7 tones per hectare for the Philippines by adopting crossbreeding of corn and promoting new advanced management technology. The farmers’ income will increase by a big margin. The present wholesale price of corn is about P10-11 per kg. As forage to raise pig, the cost of the forage per kg of pork is more than P30, this too high price lead to the low competition.
In the aspect of vegetable production, there is also great potential to increase the output and reduce the cost. For example, in China, the output of cucumber is 50-60 metric tons per hectare. In greenhouse, it can reach 200 tons per hectare. In the greenhouse, the output of tomato, sweet pepper is 200 and 100 metric tons per hectare respectively. This shows the great effect of high advanced technology. As long as the Philippine Government takes positive measures to encourage the production, effective promotion of advanced technology, help the farmers adopt high and practical technology, the output will increase substantially. The competition of the agricultural products will grow rapidly. This is beneficial not only for the farmers but also for the domestic consumers.
1. The Schedule of Early Harvest Plan
The foundation of China and ASEAN Free Trade Area has received universal applause from ASEAN countries and nine of them except the Philippines have signed the Plan with China.
Accordingly, among the so-called Old ASEAN Countries(Malaysia, Singapore, Indonesia, the Philippines, Thailand and Brunei) and China, the MFN tariff rates above 15% are scheduled to be cut down to 10% as of January, 2004, to 5% as of January, 2005, to zero as of January, 2006; the MFN tariff rates between 5-15% are scheduled to be reduced to 5% as of January, 2004, to zero as of January, 2005; the MFN rates below 5% are reduced to zero as of January, 2004.
Among the other four new member countries in ASEAN (Vietnam, Laos, Myanmar and Cambodia) and China, the MFN tariff rates above 30% are scheduled to be reduced to 20% as of January, 2004, later on, 5 per centum will annually be cut down till to zero; the MFN tariff rates between 15-30% from Vietnam are scheduled to be reduced to 10% as of January 2004, 5% as of January, 2006, zero as of January, 2008, while from other three countries 10% as of 2006, 5% as of 2008; the MFN tariff rates below 15% from Vietnam are scheduled to be cut down to 5% as of January, 2004, zero as of 2006, while from the other three countries to 5% as of January 2006, zero as of 2008.
2. Philippine Advantages on Exportation of Agricultural Products
From the trait between China and the Philippines and between China and the ASEAN, we consider the Early Harvest Plan as an advantage to Philippine exportation of agricultural products, expanding agricultural product trade between both sides and the rapid growth of standard of living of the Philippine farmers.
Advantages of Fruit Exported to China. China, with a population of 1.3 billion, is the biggest buyer of tropic fruits, while the Philippines is the biggest tropic fruit supplier for China. In 2003, the Philippines exported 300 thousand metric tons of fruits to mainland China, with the share of 30% of China fruit import, valued at USD 82 million. Among these fruits, banana has occupied 89% of China banana importation, other fruits such as mango, papaya, pineapple are marketable in China. Presently, the MFN tariff rates of mango, papaya and pineapple are 16%, 15.2%, 27% respectively. So far, if the Philippines accept the Plan and enjoy the benefit from the tariff reduction and final tariff cancellation, the fruit export to China will step into a new era. Otherwise, the Philippine fruits will be elbowed out of China’s market by Vietnam, Thailand, Malaysia and other countries.
Advantages of Coconut Product Exported to China. It is known to all that the Philippines is one of the biggest coconut producer, with an area of more than 3.1 million ha., occupying 26% of farmlands, supporting 3.5 million families. Coconut products such as coconut oil, coco peat, copra are the Philippines’ most important export products, composing 30% of all agricultural product export. Recently, China demands a considerable volume of coconut oil. Only in 2003, import of coconut oil reached 60 thousand metric tons, increasing 68% year by year. Now, China is studying the possibilities of coconut fiber and peat for combating land degradation and desertification. If successful, China will buy those products in volume quantities. As for tariff rates for those items, coconut oil is 10%, fiber is 5%. After the foundation of China-ASEAN Free Trade Area, the tariff rates will be cut down to zero, which will be the most advantage for the exportation of coconut products to China. On the other side, late joining in the Early Harvest Plan means great pressure to those products exported to China. Due to the different tariff, China will import from Vietnam, Indonesia and other ASEAN countries.
Advantages of Marine Products Exported to China. China is a large producer as well as a large consumer of marine products. It imports $2.5 billion of those products annually, but only small amount came from the Philippines. According to statistics of China, China imported $5.74 million marine products from the Philippines in 2003. Presently, the MFN tariff rates of tuna, frozen shrimp, frozen crab, canned fish are 12-14%, 20%, 20%,17.2% respectively. Reducing the tariffs by entering the Plan will be beneficial for the Philippines.
3. Early Harvest Plan has no harmful effect to Philippines’ Agricultural Products.
Entering Early Harvest Plan has no harmful effect to the Philippines’s agricultural products, for the following reasons:
China and the Philippines agricultural import and export meet each other requirement. The trade volume between the two sides can explain this; the main Agricultural products of the Philippine export to China are fruits (banana, mongo, and papaya), occupying 63.5%, coconut oil 24%, and raw rubber 6.3%, aquatic products 4.3%. Meanwhile, the Philippine import from China are grain 29.5%, fruits and vegetables 28.6%, aquatic products 8.4%, tobacco 6.1%, beverage 4.7%, meal 3.4%. Philippine imported from China generally cannot be produced by the Philippines itself, or the production cannot satisfy the market.
The imported agricultural products from China only can occupy low percentage against all the same imported from other countries. Annually, Philippine imported volume of agricultural products. Most of the imported products were from the other countries. Only few, and are in great demand imported from China.
Some sensitive products can be place in the exemption list. According to the provision of the Early Harvest, some sensitive products can be place in the exemption list after a period of time brought into the Plan. Each country has its own disadvantage in some field of products. The Plan has the provision to protect this in order to avoid the other country’s impact. For Philippines, sensitive agricultural products are meats and vegetables.
4. Advanced Management and production improvement are the two key factors to strengthen the competition of the Philippines’ agricultural products.
Protection can only be a short time. A longtime protection will lead to low competitive ability. Eventually, the agriculture and enterprises will grow slowly and become weak point of the country. Positive measures should be taken, such as strengthen the supervision of Custom, avoid impact by smuggling, encourage the agriculture production, reduce the production cost, enhancing the competitive ability.
Strengthen the supervision of Customs to combat smuggling. Strengthening the supervision of Customs and prohibiting of smuggled products are the best way to protect one country’s products. Too much smuggling will not only result a great loss to the country’s normal revenue but also heavily affected the market that leads to negative impact to one country’s products and the development of its agriculture and industry.
Encourage farmer’s production and strengthen the competition of Philippine agricultural products. The Philippines has rich resources, and has good environment for crops. The main reasons for low competition of partly agricultural products are low output, high cost. If the Government takes positive measures to encourage the production, such as to promote and implement some high technology, the competition of the agricultural products will boost. On the aspect of fowls and animals raising, the forage cost occupy 60-70% of the total cost. If the output of corn were increased, the price of the forage will be lower and the cost of raising will be lowered substantially. At that point of time, the competition will be stronger but at present, the average output of corn in the whole Philippines is only 1.8 metric tons per hectare while in China is 7-9 tones per hectare. It is not very difficult to reach 6-7 tones per hectare for the Philippines by adopting crossbreeding of corn and promoting new advanced management technology. The farmers’ income will increase by a big margin. The present wholesale price of corn is about P10-11 per kg. As forage to raise pig, the cost of the forage per kg of pork is more than P30, this too high price lead to the low competition.
In the aspect of vegetable production, there is also great potential to increase the output and reduce the cost. For example, in China, the output of cucumber is 50-60 metric tons per hectare. In greenhouse, it can reach 200 tons per hectare. In the greenhouse, the output of tomato, sweet pepper is 200 and 100 metric tons per hectare respectively. This shows the great effect of high advanced technology. As long as the Philippine Government takes positive measures to encourage the production, effective promotion of advanced technology, help the farmers adopt high and practical technology, the output will increase substantially. The competition of the agricultural products will grow rapidly. This is beneficial not only for the farmers but also for the domestic consumers.
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