Oct 23 - The Philippines and Thailand are squaring off in an escalating row over rice that threatens to derail a trade pact at the heart of Southeast's bid to build an EU-style economic community by 2015.
Thailand, the world's biggest rice exporter, repeated its threat on Friday that it would delay a Southeast Asian free trade agreement unless it can get a "fair deal" on tariffs from the Philippines, the world's biggest buyer of the food staple.
The 10 members of the Association of South East Asian Nations -- of which Thailand and the Philippines are members -- are due to ratify an ASEAN Trade in Goods Agreement (ATIGA) at a summit that began on Friday in the Thai seaside town of Hua Hin.
But whether they sign it depends on whether Thailand and the Philippines reach consensus on rice tariffs, said Thai Commerce Ministry spokesman Krisda Piampongsant. If ministerial talks fail on Saturday, their leaders will tackle it this weekend, he said.
"If they can't agree at the ministerial level, we will escalate it to the leaders' level," Krisda said. "We will try our best to agree on rice to have the ATIGA signed. But if we can't, it won't be signed.
"Many countries want ATIGA to be signed at this summit as it involves ASEAN's reputation."
According to the ASEAN free trade pact, Philippine rice import tariffs should be cut to 20 percent from 40 percent by Jan. 1, 2010. But Manila insists rice is classified under a "highly sensitive list" allowing tariffs to stay at 35 percent.
The Philippines is proposing to give Thailand a quota of 50,000 tonnes of tariff-free rice annually to compensate for not meeting the tariff target. Thailand has demanded 360,000 tonnes.
"It's a very sensitive issue. We're friends. We need to talk this through. It's sensitive for Philippines. It's a major importer of rice affected immensely by the typhoon, so we understand the situation," said Thai deputy commerce minister Alongkorn Polabutr.
TYPHOON DAMAGE
Recent typhoons badly damaged farmlands and roads in northern Philippines, killing more than 900 people and forcing the country of 98 million people to import more rice rather than rely on cheaper, domestic supplies.
"It's the right of the Philippines to decrease (import tariffs) or not, but we're moving towards an ASEAN economic community. So from the new year we have to show the same movement to decrease tariffs," Alongkorn said.
Officials in Manila said rice had been taken off the agenda at the summit to allow Philippine President Gloria Macapagal to focus on other issues including climate change, disaster relief and human rights.
But Thai officials said it remained on the agenda, noting that it was one of several issues that are crucial for ratification of the Trade in Goods Agreement, a key plank of an ambitious bid by ASEAN and its 540 million people to build an EU-style economic community by 2015.
Thailand exported 10 million tonnes of rice in 2008 of which 599,677 tonnes went to the Philippines, according to Thailand's Commerce Ministry data.
From January to August 2009, Manila bought 116,322 tonnes of rice from Thailand, mostly premium grade for high-end restaurants. Vietnam has mainly snatched the market for lower quality rice grades by offering better prices, traders said.