APTA tariff concessions from next month

by Surekha Galagoda

Tariff concessions agreed during the third round of negotiations under the Asia Pacific Trade Agreement (APTA) formerly known as the Bangkok agreement will be implemented next month. The members of APTA are Bangladesh, China, India, Republic of Korea, Laos and Sri Lanka.

The objectives of the APTA are to promote economic development through a continuous process of trade expansion among the developing member countries of ESCAP and to further enhance international economic cooperation through the adoption of mutually beneficial trade liberalisation measures consistent with their present and future development and trade needs.

Deputy Director Department of Commerce V. S. Sidath Kumar said that Sri Lanka being a founder member of the Bangkok Agreement has profited from continuous active participation. Speaking of the benefits of entering into the APTA agreement, he said that Sri Lanka can tap a potential market of 2.5 billion people, export items to India under duty concessions which were otherwise on the negative list under the Indo-Sri Lanka Free Trade Agreement such as natural rubber and desiccated coconut, import raw materials at low cost for value addition and a wider product coverage.

He said that Sri Lanka will be an active participant in operation and expansion of APTA especially in relation to the wider product coverage, deeper tariff cuts and greater market access. APTA member countries cover a total population of about 2.5 billion people. Therefore it is a vast potential market to increase the level of intra-regional trade flows among the member countries. Up to now three rounds of negotiations have been held and the third round of negotiations offer a maximum of 50 percent Margin of Preference(MOP) on existing tariffs among member countries resulting in deeper tariff cuts and a wider product range.

Sri Lanka's export items to the member countries of APTA such as desiccated coconut, coconut fibre, copra, coconut oil, natural rubber, tea, cloves and crude glycerin benefit under the preferential concessions. The consolidated national lists of the member countries have offered concessions on items of export interest to Sri Lanka.

In addition to these products are spices (pepper, nutmeg, maize), cashew nuts, essential oils, natural graphite, activated carbon, rubber products (tyres, gloves, mats, rings) floor tiles, ceramic tableware/kitchenware, glassware, semi precious stones, gem and jewellery, stuffed toys, brooms and brushes, cut flowers, footwear, biscuits, chocolates, apparel, fresh fruits and juices, wooden furniture, mattresses, electric lamps, ornamental fish, fresh/frozen fish and fishery products.

The APTA will pave the way for promotion of investments and joint ventures in Sri Lanka on projects such as manufacture of microwave ovens, fans, computers, electronic/video games, telecommunication apparatus, motorcycles, marble, copper items, aluminium products, telephone sets, garments and footwear utilising the cumulative rules and origin (60%) and export these products to the member countries. The domestic value addition has been revised downward to 45% from a level 50% for developing member countries.

The first round of negotiations was completed in 1979, the second round in 1985 and the third round in 2004.

The third round of negotiations was aimed at offering a maximum of 50% Margin of Preference (MOP) on tariffs in respect of agreed items taking into account 2001 as the base year. The lists of concessions agreed upon by the member countries during the third round of negotiations have been integrated with the previous rounds of negotiations into single (consolidated) lists of concessions. The consolidated national lists of concessions which are attached to the Asia Pacific Trade Agreement will come into force on July 1, 2006.

The Bangkok Agreement is one of Asia's oldest regional preferential trading arrangements designed to liberalise and expand trade in the Economic and Social Commission for Asia and the Pacific (ESCAP) region. In July 1975, seven countries including Bangladesh, India, Laos, Republic of Korea, Sri Lanka, the Philippines and Thailand met in Bangkok and agreed to a list of products for mutual tariff reduction.

This resulted in the signing of the first agreement on trade negotiations among developing member countries of ESCAP, known as the "Bangkok Agreement" which was ratified by five of the seven countries except the Philippines and Thailand. The People's Republic of China joined the Bangkok Agreement in 2001.

The consolidated lists of concessions of the member countries cover 4,857 tariff lines including special concessions (587 tariff lines) offered to the least developed countries.

See table

Member 		General-No.	Special No.of	Total 	     
Country		of Tariff	Tariff Lines	Tariff
               	Lines	 	for LDCs	Lines
				
Bangladesh	209		-		209
China		1697		161		1858
India		570		48		618
Repub. of Korea	1367		306		1673
Sri Lanka	427		72		499
Total		4270		587		4857

Recognising the great potential of the Bangkok Agreement particularly after the accession of China in 2001, the six-member countries initiated a process to revitalise the agreement as a mechanism to strengthen regional economic cooperation. Under the revitalisation process, amendments were made to the text of the Agreement to reflect changes in the International Trading system that have taken place since the agreement was signed in 1975.

Under the revitalisation process, the member countries set up a Ministerial Council to provide the overall policy direction for the future negotiating agenda of the Agreement. Accordingly, the First Session of the Ministerial Council of the Asia Pacific Trade Agreement was held on November 2, 2005 in Beijing, China.

During this Session of the Ministerial Council, the APTA was signed by the Trade Ministers of the six-member countries. Speaking of future plans, Sidath Kumar said that during the fourth round of negotiations they will request for further tariff cuts or higher MOP and inclusion of new items. The APTA, as the world's largest trading block in terms of population and market size, has vast potential for trade expansion and economic cooperation among countries in the Asia-Pacific region.

There are possibilities for some observers, i.e., Pakistan, Indonesia, Nepal and the Philippines to join the APTA in the future and then the market will be further expanded. He said that it would be a good opportunity for Sri Lankan exporters to diversify their exports by identifying potential items from the lists of concessions offered by the APTA member countries. Lists of concessions can be viewed from the following web sites:

www.unescap.org/tid/apta.asp or www.doc.gov.lk