Friday, 19 April 2013

Over $500m spent on fuel subsidies in 2011 (The Brunei Times)

Published in the April 20, 2013 issue of The Brunei Times. Click here for original article. 

Over $500m spent on fuel subsidies in 2011, strain on coffers


Saturday, April 20, 2013
THE sultanate spent more than half a billion Brunei dollars on fuel subsidies in 2011, putting a "tremendous strain" on the national coffers, an official of the Asian Development Bank told The Brunei Times.

Minsoo Lee, senior economist in the Macroeconomics and Finance Research Division of the Economics and Research Department of ADB, said in an email interview that the sultanate spent US$470 million ($580.283 million) on general fuel subsidies in 2011.

This meant that the government shouldered US$1,159, or $1,431.84, of the fuel costs of each person in the country, he added.

"The government provides very generous subsidies to ordinary citizens through a variety of pathways, including electricity, LPG (liquefied petroleum gas, or cooking gas), and transport fuels," Lee said.

"The costs of these programmes do weigh upon a government, even one with substantial financial resources. Transport fuels are held perhaps 45 per cent below market costs and are part of the overall energy subsidies," he added.

Transport fuel in the sultanate, said to be lowest in the region, ranges from 30 cents to 60 cents per litre at the pump.

Data from the Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) GmbH show that Brunei pays for almost half of the cost of the fuel that motorists buy at the pump.

On its website, the organisation noted that the commercial cost of gasoline with a 92 octane rating is at 92 cents per litre, but only retails for 51.9 cents per litre, with the sultanate covering the remaining 40.1 cents.

"The subsidy for diesel is even higher," it said, as it noted that the commercial cost for the fuel is at 91 cents per litre while it only sells at 31 cents, with the government shouldering the remaining 60 cents.

The GIZ draws up a database on fuel prices, taxes, price policies for countries in the world on behalf of the German Federal Ministry for Economy Cooperation and Development.

"Reallocating fiscal resources to infrastructure, health and education would spur growth and make it more inclusive," Lee said.

Earlier, the Ministry of Health proposed before parliament a $366.479 million budget for this year, to cover for payroll, additional manpower, purchase of medicines, hospital upgrades, procurement of laboratory equipment and health promotion, among others.

Social services, for its part, was given a $351.6 million outlay from the development budget to support projects in education, health, national housing and human resources, it was earlier reported.

The Ministry of Development has earmarked $313.2 million for the 2013/2014 financial year, for flood control projects, improvements in road safety, and public housing services.

The Ministry of Education, on its part, gets a bigger budget allocation than the amount the government spent to subsidise fuel in 2011. The ministry presented a $759.128 million budget for 2013/2014, up 3.8 per cent $731.066 million the previous fiscal year at the ninth Legislative Council proceedings.

The allocation was made for teachers' salaries, overhead costs, school buses, purchase of educational equipment, and training for teaching staff.

The budgets for these ministries, however, do not take into account support that may come from the 10th National Development Project, which was given $1.05 billion for this fiscal year.

Lee noted that while popular, selling fuel below true market prices "increases energy consumption, distorts energy development planning, and damages the environment".

Reducing the real price for diesel or electricity, he said, weakens incentives to conserve on energy and inhibits the development of renewable resources, which Brunei has been pushing for.

"Worse, the main beneficiaries of energy subsidies are not the poor. If the intent is to make energy affordable to the poor, only the poorest 20 percentile should benefit from the subsidy," he said, adding that in Asia, only five to 15 per cent of the subsidy benefits go to the poorest of the poor.

Lee also said that Brunei's ability to produce oil does not make it less vulnerable to the impacts of fuel subsidies, noting that the country's affluence is critically dependent on the energy sector.

"The oil and gas sectors account for nearly two-thirds of Brunei's GDP (gross domestic product), roughly 95 per cent of Brunei's export revenues and about 90 per cent of government revenues," he noted.

"This dependence on a single natural resource makes the economy vulnerable to fluctuations arising from energy markets. In common with other small oil and gas exporting countries, the economy is subject to pressures from swings in global prices and domestic production issues," he added.

In the recently released ADB Development Outlook 2013, the bank ranked Brunei the third biggest provider of fossil fuel subsidies in Asia when considered as a share of a country's economy.

In the list of 11 Asian countries, Brunei, which provides subsidies of over three per cent of its GDP, or the total value of goods and services produced by a country within a period, trailed Bangladesh, at five per cent of its GDP, and Pakistan whose subsidies cover more than four per cent of its economy.

According to the report, a US$0.25 per litre increase in fuel prices causes a 4.5 per cent decline in real income of households in Asia and the Pacific.

The impact is partly direct, as households have to spend more on fuel, and partly indirect, as prices for goods and services increase with higher embedded energy costs, the report added.

Brunei produced 155,000 barrels of oil a day in January to September 2012, lower than the 166,000 barrels a day it produced in 2011.

The Brunei Times

Saturday, 13 April 2013

Brunei telco rates highest in ASEAN (The Brunei Times)

Published in the April 13, 2013 edition of The Brunei Times. Click here for the original article

Brunei telco rates highest in ASEAN


Jennee Rubrico
Saturday, April 13, 2013

THE sultanate has the most expensive tariffs for telecommunications services in the ASEAN, but this does not mean that it has the fastest Internet connection in the region, a report released by the World Economic Forum (WEF) the other day shows.

The 2013 edition of the Global Information Technology Report, which ranks 144 economies in the world for networked readiness, places Brunei at 135th for affordability of telecommunications services.

It beats the seven other member states of the Association of Southeast Asian Nations (ASEAN) which were included in the study: Vietnam, which at 38th of 144 economies has the lowest tariff for telecommunications services in the regional bloc; Indonesia, at 39th, Thailand at 45th; Malaysia, ranked 50th; Singapore (55th); the Philippines (82nd); and Cambodia (112th).

The WEF does not include Myanmar and Laos, the two other members of the 10-nation grouping, in the study.

In computing affordability of telecommunications services, WEF factors in mobile cellular tariffs, fixed broadband Internet rates and a competition factor derived from the Internet and telephony sectors competition index.

Brunei fares the worst in ASEAN for mobile cellular and fixed broadband Internet tariffs, with charges averaging US$0.45 a minute for mobile cellular calls and US$81.20 per month for wired broadband Internet service.

In contrast, Thailand, which has the cheapest cellular phone rates among the countries in the region, charges only US$0.09 per minute for calls. Vietnam, for its part, charges US$28.01 per month for fixed Internet services, the lowest among the members of the regional bloc.

For the Internet and telephony sectors competition index which measures the level of competition for Internet services, international long distance calls and mobile telephone services on a scale of 0 to 2 (2 being the highest) Brunei is again at the bottom, with a score of 0.78.

The country has three telco providers: Telekom Brunei Berhad, DST and B-Mobile.

Malaysia, the Philippines and Singapore are the regional leaders in the index with the score of 2. All the other countries in the region that are covered by the study score at least 1.79 in the index.

The WEF study also shows that the high Internet tariff of Brunei does not translate to faster connection the country has an international Internet bandwidth per user of 22 kb/s, a far cry from Singapore's 343.7 kb/s.

Brunei's bandwidth, however, is not the lowest in the region. The country of 400,000 people is only slightly behind Thailand's bandwidth of 24.6 kb/s, and is better than Cambodia's 13.5 kb/s, the Philippines' 12.4 kb/s, Malaysia's 10.7 kb/s, Vietnam's 10 kb/s, and Indonesia's 7.2 kb/s.

The WEF study also shows that Bruneians are Internet savvy, ranking second only to Singapore in the region when it comes to the use of virtual social networks such as Facebook, Twitter and LinkedIn for professional and personal communications.

And while there are more mobile phone subscriptions than there are people in the sultanate, with an average subscription of 109.2 per for every 100 people, the WEF report shows that the country's telecommunications market has room to grow.

The report shows that only 56 per cent of Bruneians are Internet users, lower than Singapore's 71 per cent and Malaysia's 61 per cent. For every 100 people in the sultanate, only 6.3 have mobile broadband Internet subscriptions, compared to regional leader Singapore's 114.1, Indonesia's 22.2, Vietnam's 18, and Malaysia's 12.3.

And although it ranks third in the region for the category, Brunei only has 5.7 subscriptions for fixed broadband Internet for every 100. Singapore has 25.6 and Malaysia, 7.4.

The country fares better when it comes to households with Internet access and those with personal computers.

According to the WEF, 65 per cent of Bruneian households have Internet access while 79.6 per cent have personal computers. In the region, it trails only Singapore, with 84.8 per cent and 86.1 per cent respectively.

Software piracy in the country, at 67 per cent of the total software units installed, is the third lowest in the region, after Singapore's 33 per cent and Malaysia's 55 per cent.

The study does not indicate Brunei's mobile network coverage rate, or the percentage of total population covered by a mobile network signal. It is the only country in the region with unknown network coverage levels.

On the regulatory indicators, Brunei scored a 4.1 on a range of 0 to 7 in the assessment of its ICT laws, trailing Singapore (5.8), Malaysia (5.2) and Indonesia (4.2) in the region. It ranks third in the region for intellectual property protection, after Singapore and Malaysia.

Competition in the country is within the global average, with Brunei scoring 4.8 on a range of a low of 1 to a high 7. Competition in Singapore, Malaysia, Vietnam, the Philippines and Thailand is seen as more intense.

Brunei also lags other countries in the region in the number of procedures and the time required to start a business, at 15 steps and 101 days respectively. Malaysia, and Singapore, which lead in the first indicator, only require three steps, while it only takes three days to start a business in Singapore.

The Philippines, meanwhile, requires more steps than Brunei to start a business (16), but processes the requirements faster, at 36 days.

Brunei is above the global average of 4.3, in a range of 1 to 7, for the social impact of ICT on access to basic services. It scores 5.1 amd is behind Singapore and Malaysia. It is also on the upper side of the range for Internet access in schools, scoring 5.3 in a range of 1 to 7, putting it in second place in the region, after Singapore.

For overall networked readiness, Brunei is ranked 57th of 144 economies, three notches down from 54th place last year.

The Brunei Times

'Brunei 3rd in Asia's fuel subsidy list' (The Brunei Times)

Published in the April 10, 2013 issue of The Brunei Times
Click here for original story

'Brunei 3rd in Asia's fuel subsidy list'

Wednesday, April 10, 2013

THE fuel subsidy the sultanate gives to its people is among the highest in Asia when considered as a share of its economy, a report from the Asian Development Bank (ADB) shows.A ranking of 11 Asian countries that provide a fuel consumption subsidy in the 2013 Asian Development Outlook puts Brunei third, after Bangladesh and Pakistan.

The fuel subsidies provided by Brunei, which according to the International Energy Agency (IEA) is the biggest net exporter of oil liquids in the Asia Pacific, account for over three per cent of the country's gross domestic product (GDP) as of 2010, the report states.

The Oxford Business Group, in its country report on Brunei for 2011, placed the sultanate's GDP in 2010 at $11.846 billion at constant prices.

The country of about 400,000 people offers fuel prices of between 30 cents and 60 cents at the pump.
Statistics from the country's Royal Customs and Excise Department show that Brunei's prices for Super 92 petrol, as of May 2010, were about 22 cents per litre cheaper than in east Malaysia's Limbang, while Premium 97 was about 27 cents per litre cheaper.

The country produced 155,000 barrels of oil a day in January to September 2012 lower than the 166,000 barrels a day it produced in 2011.

Bangladesh, which tops the ADB list, provides subsidies that eat up five per cent of its GDP. Pakistan, meanwhile, provides subsidies translating to more than four per cent of its economy, according to the ADB.

Vietnam and Thailand trail Brunei, with subsidies accounting for around 2.8 per cent of their respective economies.

Placing sixth was Malaysia, which provides subsidies translating to around 2.5 per cent of its GDP.
Former OPEC member Indonesia, which subsidises fuel by as much as 2.5 per cent of its economy, came in seventh.

Other countries in the list were India, where fuel subsidies are estimated to be around 1.5 per cent of its GDP; Sri Lanka, at one per cent; the Philippines, at around 0.6 per cent, and China, at around 0.5 per cent.
Noting that governments impose consumer subsidies to guarantee affordability and protect households from potential shocks of fuel price increases, the ADB nevertheless stressed that the move artificially reduces the price of energy and encourages over consumption.

Simulations done by the bank show a US$0.25 ($0.30) per litre increase in fuel prices causes a 4.5 per cent decline in the real income of households in the Asia Pacific.

"Such subsidies are well-intentioned, or at least popular, but they increase energy consumption, distort energy development planning, and, when applied unevenly, provide incentives for adulteration and illegal cross-border sales," the report states.

It added that while subsidies were meant to help the poor, the less well-off "benefit little" from reduced fuel prices.

"If the intent is to make energy more affordable to the poor, only the poorest 20 percentile should benefit from the subsidy. In fact, the poor in Asia benefit little from subsidised fuel prices because many lack electricity and gas connections, few own vehicles, and most transport sparingly," it said.

Citing a study by the IEA, the ADB noted that in nine Asian countries with the highest fossil fuel subsidies and two countries in Africa, only 15 per cent of the benefit of kerosene subsidies and five per cent of subsides for liquefied petroleum gas went to the poorest 20th percentile.

In the meantime, the amount that the government shoulders "puts pressure on the budget and external account".

The ADB recommends that economies switch from general transfers to targeted subsidies to benefit the poor and reduce over consumption.

"Poor households are identified for benefits like food distribution, education support, and medical treatment. The energy subsidy could be similarly targeted," it said.

"For example, a cash payment scaled for the energy used by a typical energy-poor household, not tied to the households' energy consumption, would extend access without encouraging wasteful use."

It said this system would give beneficiaries an incentive to use less energy and keep the surplus from the payout to fund other needs.

"This achieves the objective of restraining energy use without creating the perverse incentives that so frequently drive energy systems off track.

"Replacing general energy subsidies with subsidies targeting the energy poor can immediately restrain energy demand without denying those in need. It can go a long way towards laying the foundation for Asian energy security," the ADB said. The Brunei Times




Zoomania (BusinessWorld)

published in the November 9 , 2012 issue of BusinessWorld. Click here for the original article.
Focus
Posted on 06:03 PM, November 08, 2012
Text and Photos by Jennee Grace U. Rubrico

Zoomania

Under artificial lighting that approximates the gleam of the moon, lions roar, tigers swim in a pool inside their enclosure, and owls stare hard from inside their cage. The animals that are awake are on hunt mode, but content themselves with feeding on prey that’s served dead.
OTTERS interact with the visitors of the zoo
OTTERS interact with the visitors of the zoo
It is 8.30 p.m. at the Taiping Night Safari, and while the day walkers sleep in their darkened cages, the nocturnal mammals, reptiles, and birds lose the lethargy that weighs them down at daytime. They now have full use of their faculties, and in the limited space that they have, are raring to get the night going.
Sitting on a 14-hectare piece of land in the heart of Taiping’s Lake Gardens, the Zoo Taiping & Night Safari is noteworthy in a number of ways. The 51-year-old zoo is the oldest in Malaysia, having hosted fauna since 1961. It is also the only night safari in peninsular Malaysia, and is a breeding center for some of the world’s endangered animals. The animal park has also put the sleepy town of Taiping, in the state of Perak, on the country’s tourism map.


A baby elephant bred at the conservation center
 walks with adults in their enclosure

Every year, 700,000 visitors go to the town north of Kuala Lumpur to visit the animal park, Hanim Ramly, the head of Taiping’s Tourism, Education and Publicity Division, said in an interview.
The visitors are mostly students from all over Malaysia who take school trips to the town, roughly three hours away from the capital, to learn more about the 200 species and 1,300 animals it hosts.
The zoo opens at 8.30 a.m. and closes at 6 p.m. It reopens as a night safari from 8 to 11 p.m. On holidays and Saturdays, opening hours extend up to midnight.
Visitors can go to the park during the day then come back in the evening to see how the animals, a sizable number of which are nocturnal, change under the veil of darkness.
At night, they remain in their enclosures, so visitors can safely navigate around the property. It gets a little disconcerting when you know that vicious animals such as crocodiles, hippopotamuses and panthers -- not to mention snakes -- lurk somewhere in the area, and the only sources of light are the soft glow of bulbs that are installed in certain enclosures to mimic moonlight.
But, Dina, a zoo ranger and our guide for the trip, says there has not been, to her knowledge, any untoward incident at the zoo involving guests.



Malayan tigers frolic in the water

Operating mainly through revenues generated by ticket sales, the nature park nevertheless avoids money-generating gimmicks like animal shows. But if they are lucky, visitors may see the beasts being given food during feeding time. Guests can go around on foot, or by taking the trams that the zoo provides for both day- and night-time operations.
Meeting guests immediately after they pass the turnstile are some of the smallest and rarest monkeys in the world. Among the residents are the endangered golden-handed tamarin, the saddleback tamarin, and the pygmy marmoset, said to be the smallest monkey in the world. The slow loris, which moves at the same pace as someone suffering from arthritis, is also housed in the complex.
Their bigger counterparts, the old world monkeys, are housed in a different section of the zoo, where they have enough space to swing around.
"The difference between the old world monkeys such as the chimpanzees and the orangutans, and the new world monkeys, besides their size, is their tails. Old world monkeys do not use their tails for swinging or holding things," Dina says.
Primate lovers would have to come during daytime because at night, the apes sleep.
Fans of otters will delight in the park’s naturally adorable residents. They are bubbly, with bright eyes that follow visitors’ movements even as they also move around in their glass enclosures to ask for food. And they seem to be awake both during the day and at night.


Scarlet ibis and flamingo share an enclosure

Cat lovers, meanwhile, have a lot to see with the zoo’s sizable collection of felines, which range from the small cats to their great kin. In the park are several civet species, the medium-sized Asiatic Golden cat, panthers, lions and tigers.
Dina reveals that the zoo has successfully bred Malayan tigers, which are on the endangered species list. On its web site, the San Diego Zoo also mentions Zoo Taiping & Night Safari as one of the conservation centers for Malayan tigers.
The zoo has also successfully bred elephants, monkeys, deer and night herons. When other zoological parks in the world need any of the creatures that Taiping has too many of, an animal swap usually happens, Dina says.
The park boasts a good mix of endemic and exotic fauna. Besides the Malayan tiger, the endemic animals include the Asian elephant, Malayan sun bear, wild boar, bearded pig, tapir, and gaur, which is Perak’s state symbol.
Among the exotic species are the arapaima, the world’s biggest scaled freshwater fish, which are endemic to the Amazon river basin. The vicious fish, which look like overgrown arowana, eat smaller animals. They can grow up to 11 feet, are considered to be living fossils for not having changed over the past 13 million years, and are on the endangered species list due to overfishing and loss of habitat.
Also in the zoo are the scarlet ibis -- bright red wading birds which are also endemic to South America. Wallabies, cassowary and ostriches from Australia, as well as deer, zebras and giraffes from Africa are also residents.


Wild boars take a nap during the day

The center tries to provide an environment that takes the animals’ welfare into account. Flash photography, for instance, is not allowed. While this would make taking pictures at night difficult, it also reduces the stress the animals are subjected to.
Young males are also separated from the alpha male when they become a threat, in apparent deference to the laws of the jungle. And in the case of lions, Dina says they take turns in taking the viewing platform.
"We try to keep the setting as close as possible to the animals’ natural habitat," Dina says, noting that the park tries to operate as an open-concept zoo.
Just how close an approximation to the animals’ natural habitat is it? Enough for them to keep their instincts, it seems.
"A baby monkey fell from the tree above the arapaima pond," Dina recounts. "It was eaten by the fish."


Zoo Taiping charges an entrance fee of RM12 per person while the Night Safari charges RM16 per person. Taiping can be reached by bus, train or car. Visitors who drop off the bus or railway station can take a taxicab to the animal park.



25: Looking Back, Moving Forward (book)



For its silver anniversary, BusinessWorld came out with a coffeetable book called 25: Looking Back, Moving Forward.

I was asked to write one of the chapters of the book -- on the Philippine power sector. Running for 10 pages, the chapter discusses how the Electric Power Industry Reform Act, the law passed in 2001 to rectify the problems in the power sector, has or has not been able to meet its mandate.

The book also tackles other sectors and the issues they grapple with. Philippine telecommunications, agriculture, and the stock exchange are just some of the important industries discussed extensively in the book.

25: Looking Back, Moving Forward was launched on July 28, 2012, and will soon be sold to the public.

For inquiries, call +632-5359901

'Brunei must diversify economy to avoid Dutch Disease' (The Brunei Times)

This originally appeared on the May 2, 2012 issue of The Brunei Times. Click here for the original article

'Brunei must diversify economy to avoid Dutch Disease'


A file photo of an oil drilling platform off the coast of Brunei. 'Petro-states' like Brunei need to decrease heavy dependence on oil and gas, which could be earmarked for other investments instead, said the World Economic Forum in a paper titled 'New Energy Architecture: Enabling an effective transition'. Picture: Courtesy of Shell
Wednesday, May 2, 2012

PETRO-STATES like Brunei have to look at ways of diversifying their economies, a study conducted by the World Economic Forum (WEF) states.
In the paper "New Energy Architecture: Enabling an effective transition", which was released last month, the WEF said that countries that capitalise on their hydrocarbon resource base depend on oil and gas exports heavily to boost their economies.
This in turn puts a heavy toll on the environment and the economies, it added.
Brunei, Saudi Arabia, the United Arab Emirates, Iraq, and Kazakhstan, among others, are categorised by the WEF study as "capitalise" countries, or those with large hydrocarbon reserves and have the energy infrastructure to focus on sustainable ways of harnessing them. Referred to as petro-states, countries under the archetype typically export oil and gas.
"Key opportunities for these countries involve diversification of economies and leveraging experience to enable expansion across the energy value chain," the study states.
It adds that "options with regard to maximising energy sector returns are not necessarily sustainable", and that they must be "carefully considered and executed to ensure co-benefits across government, society and environment".
It notes that these countries often rely on oil and gas exports to generate economic growth and maintain social stability, often taking a heavy toll on their environment and resulting in large fuel subsidies.
These countries, the study states, run the risk of a range of economic problems, including Dutch Disease, where oil exports push up prices and harm other industries.
Heavy focus on oil and gas could also divert capital earmarked for other investments, the study notes, adding that "reform fatigue", where structural economic problems are not tackled due to potential future wealth, may also affect these countries.
"The common challenge for these countries is to ensure that the opportunities for longer term economic development are not lost to economic distortion and ensuring political and social pathologies," the study states.
The WEF study covered 124 countries, which were categorised into four archetypes. Aside from the "capitalise" countries, the other archetypes are: "rationalise" countries, or mature economies, mostly members of the Organisation of Economic Cooperation and Development, that focus on reorganising their energy architecture to balance the needs of the environment, government and society; "grow" countries, such as China, which are focused on securing energy supply in light of rapid economic growth; and "access" countries, like Cambodia and Bangladesh, which struggle with providing its people with basic energy needs at affordable prices.
The study categorised the countries based on their economic growth and development, including energy intensity or the amount of energy they use to produce a unit of gross domestic product, the cost of energy imports, and a combination of GDP and human development index, among others; environmental sustainability; and energy access.
The study aims to present trends that are common to groups of countries with similar needs and objectives, to enable policy-makers to understand the broader consequences of their actions and the trade-offs they entail. It also presents ways for countries to effectively transition into a "new world energy architecture" according to their archetypes, given the radical shift in the way the world sources, transforms and consumes energy.
Data from the study show that the world will need US$38 trillion worth of investments in energy supply infrastructure between 2011 and 2035.
It also points out that global cost of fossil fuel consumption subsidies will reach US$660 billion in 2020 if reforms are not instituted, from US$409 billion in 2010.
World energy consumption, meanwhile, is expected to grow by 40 per cent between 2009 and 2035. -- Jennee Grace U Rubrico
The Brunei Times




Challenges seen in TPP pact (The Brunei Times)

This was published in the April 21, 2012 issue of The Brunei Times. Click here for the original story

Challenges seen in TPP pact

Saturday, April 21, 2012

NEGOTIATIONS under the Trans-Pacific Partnership (TPP) agreement are rife with challenges and prospects of meeting its objectives are dim, a working paper from the S Rajaratnam School of International Studies states.
The paper, written by Deborah Elms, head of the Temasek Foundation Centre for Trade and Negotiations (TFCTN), highlights difficulties faced by the TPP in meeting its objective of "open market with no exceptions".
The paper, titled 'Getting from Here to There: Stitching Together Goods Agreements in the Trans-Pacific Partnership (TPP) Agreement', was released for comments on April 17.
Originally composed of Brunei, Chile, New Zealand and Singapore, the TPP also includes the US, Australia, Peru, Vietnam, and Malaysia. Canada, Japan and Mexico have also indicated their willingness to join the economic grouping.
"The agreement is not finished, so there is still the possibility of a breakthrough in the talks. However, after two years of negotiations in goods, the prospect for an agreement that matches the rhetoric of no exceptions does not look bright," Elms says in the paper.
She points out that the countries under the TPP already have existing multilateral and bilateral agreements, wherein issues on goods trade have already been discussed.
"These deals are the result of carefully crafted compromises at the time of negotiation in each agreement. Any decision on how to negotiate in the TPP would run the risk of upsetting the existing PTA preferences," she notes.
She also highlights challenges in drafting tariff schedules for goods that would be included in the agreement by member countries.
She says TPP members have three options: to have a single schedule that would apply to all countries; to have each country prepare its own market access schedule following negotiations with others; or to combine the two options and have a uniform schedule for tariff reductions for non-sensitive products and separate schedules for sensitive ones.
But she also says: "There are nearly 6,000 tariff lines corresponding to trade in goods. For the nine countries in TPP (except for Singapore which has tariffs at zero on all products except for six lines) the starting point varies tremendously."
She also points out difficulties in opening the markets in new non-agricultural areas. Apparel, for instance, is a sensitive issue between the US and Vietnam, with Hanoi currently facing "a bewildering array of tariffs and exports" to Washington for textile, apparel and footwear exporters.
"Tariff levels of rubber footwear were as high as 37.5 per cent in May 2011," she notes.
"Vietnamese officials would like to see these complicated tariffs reduced. Up until now, most of these textile, apparel and footwear tariffs have not been addressed in American PTA negotiations."
As for market access for agricultural products, Elms notes that negotiations on "extremely sensitive items" under other trade agreements have resulted in the exclusion of certain highly sensitive items as well as the reduction, but not the elimination, of their tariffs.
She also states that other restrictive methods employed by countries were to allow high tariff peaks to remain, or subject these products to extremely long phase-in periods. In addition, countries can use a range of quantitative restrictions that are not generally allowed in other products.
"A high-quality, 21st century TPP with no exceptions should, as far as possible, avoid all these elements," she says.
The paper also raises issues on goods' rules of origin which must distinguish whether they are from TPP member countries.
"The rules must also be capable of distinguishing goods that are not from members to ensure that these non-originating goods are not eligible for the benefits of the agreement.
If these rules of origin were not put into place, any firm from any country could take advantage of any PTA," she states.
The Brunei Times