REPORT OF THE 5TH MEETING ON THE NATIONAL FOCAL POINT FOR ASEAN COCOA CLUB (ACC) ON ASEAN COOPERATION

AND JOINT APPROACHES IN AGRICULTURE AND FOREST PRODUCTS SCHEME 12-13 June 2001, The Legend Hotel, Kuala Lumpur, Malaysia

INTRODUCTION 1. The Fifth Meeting of the ASEAN Cocoa Club on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme was held on June 12-13, 2001 in The Legend Hotel, Kuala Lumpur, Malaysia. 2. The Meeting was attended by delegates of the government and private sector from Indonesia, Malaysia, Philippines and Singapore. The list of the delegates is presented herewith as ANNEX1. WELCOMING AND OPENING REMARKS 3. The Chairman of the ASEAN Cocoa Club (ACC) Dato' Dr. Mohd. Musa Md. Jamil welcomed all delegates to the meeting. He noted that the previous meeting in Manila was fruitful as it provides a good platform for member countries to discuss issues and areas of cooperation for the good of the ASEAN cocoa industry. During the meeting member countries also has the opportunity to exchange information and experiences. 4. The Chairman in his speech highlighted the situation in the global cocoa economy and current cocoa development covering the following: The cocoa production in the ASEAN region is progressing well, however its production is vulnerable to pests and diseases problem in particular Cocoa Pod Borer (CPB). He urged member countries to give more emphasis in working together to overcome the CPB problem. In order to remain competitive, the producers need to ensure that cost is managed efficiently as prices of commodities are dictated by supply and demand factors. The world cocoa production in 1999/2000 was estimated at 3.03 million tonnes. For the same period world cocoa grindings was estimated at 2.91 million tonnes resulting in a small surplus. The African, South and Central American regions were producing about 2.08 million and 0.39 million tonnes respectively. While in South East Asia (SEA) including Papua New Guinea, the production was estimated at 0.55 million tonnes.

The production in the South and Central American region has declined mainly due to inability to control disease problem. The same thing will happen to the ASEAN region if we cannot control black pod and cocoa pod borer. The prospect for higher cocoa consumption in this ASEAN region is good as there are many possibilities to utilize and develop different types of cocoa products that are unique to our region. In order to increase consumption, ASEAN member countries need to do promotion and research together with the private sectors to develop new type of products. Currently there is a trend moving towards using herbal products. It was also mentioned that currently there are accumulation of information on the health aspect of cocoa consumption. He urged member countries to support research programmes on the health benefits of cocoa.

AGENDA ITEM 2: ELECTION OF CHAIRMAN AND VICE-CHAIRMAN 5. The meeting unanimously elected Dato' Dr. Mohd Musa Md. Jamil, DirectorGeneral of the Malaysian Cocoa Board and Chairman of the ASEAN Cocoa Club as Chairman and Ir. Zulhefi Sikumbang, Executive Secretary of Asosiasi Kakao Indonesia (ASKINDO) as Vice-Chairman. AGENDA ITEM 3: ADOPTION OF AGENDA 6. The meeting adopted the Agenda

which

appears

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ANNEX

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AGENDA ITEM 4: BUSINESS ARRANGEMENTS 7. The meeting was held in plenary. AGENDA ITEM 5: MATTERS ARISING FROM THE 21st SOM-AMAF, 25-27 OCTOBER 1999, BRUNEI; AMAF, 28-29 OCTOBER 1999, BRUNEI; SPECIAL 21st SOM-AMAF, 27-29 APRIL 2000, BRUNEI; AND 22nd SOM-AMAF, 23-25 OCTOBER 2000; AMAF, 26-27 OCTOBER; SPECIAL 22nd SOM-AMAF, 24-26 APRIL 2001, CAMBODIA 8. The meeting took note of the report presented by the representative from ASEAN Secretariat, Mr. Rony Soerakoesoemah, on matters arising from the above-mentioned meetings as appeared in ANNEX 3. He highlighted that the 21st SOM-AMAF agreed that under the Joint Products Promotion Scheme, it was not necessary for all member countries to attend meetings of the National Focal Points Working Group/Industry Club for a particular product. Nevertheless they were encouraged to do so. This was subsequently endorsed by the 21st AMAF. The 21 st AMAF also signed a Revised MOU on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme. The revised MOU was to allow for the inclusion of new members of ASEAN (Cambodia, Lao PDR, Myanmar and Vietnam). The Ministers also urged SOM-AMAF and its working groups to undertake more concerted group approaches. AGENDA ITEM 6: MATTERS ARISING FROM THE 7TH MEETING OF THE JOINT COMMITTEE ON ASEAN COOPERATION AND JOINT APPROACHES IN AGRICULTURE AND FOREST PRODUCTS PROMOTION SCHEME, 24-25 AUGUST 2000, BANDUNG, INDONESIA

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The meeting also took note of the matters arising in the 7th Meeting of the Joint Committee on ASEAN Cooperation and Joint Approaches in Agriculture which appears in ANNEX 4. The meeting was informed that the 22nd SOM-AMAF took note of member countries concerned on the issue pertaining to high import tariff for cocoa products in China and India that was raised at the 7th Joint Committee Meeting. There is a need to strategise and lobby relevant authorities in both countries to consider giving a favourable treatment by reducing import duties on ASEAN cocoa products and to take up joint positions at future ASEAN dialogue meetings with these countries.

AGENDA ITEM 7: ENHANCEMENT OF INTERNATIONAL COMPETITIVENESS OF ASEAN FOOD AND AGRICULTURAL PRODUCTS/COMMODITIES Formulation of ASEAN Cocoa Contract 11. The Chairman informed members that the idea of having ASEAN Cocoa Contract was mooted during the Second Meeting of ACC in Jakarta. Indonesia was given the task to take the lead in developing the cocoa contract. The draft contract was presented at the Third Meeting of ACC in Tawau and the meeting agreed that ASEAN countries will consult and discuss with their respective industry. 12. The delegate from Indonesia re-introduce the draft contract. Malaysia representative also presented the revised contract which appears in ANNEX 5. 13. The meeting agreed that the contract should be simple and flexible but must be able to address the issue of quality standard and arbitration in case of any dispute. A working group comprising representatives from Indonesia, Malaysia, Philippines and Singapore was formed to redraft the contract. 14. The working group met and came up with the revised contract (ANNEX 6) which was presented to members for deliberation. The working group proposed that any dispute arising out of this contract should be settled under the rules of ASEAN Cocoa Association. 15. The meeting considered the revised cocoa contract and agreed to adopt it as a basic format. The meeting also instructed the working group to prepare a guideline and come up with suggestions on the arbitration body. 16. The meeting took note of a suggestion by Indonesia of the need to monitor the performance of the cocoa contract and to improve and overcome any weaknesses of the contract. 17. The meeting agreed that the Chairman of ACC will liase with other working group regarding their trading contract. 18. The meeting took note of the information paper by Malaysia on ASEAN Common Contract for Cocoa Beans Specification and Quality Aspects which appears in ANNEX 7. 19. The meeting agreed that the arbitration body formed must comprised of members that know about cocoa and understand the cocoa industry. Tariff and Non Tariff Barriers on Cocoa Beans and Cocoa Products 20. The ACC Secretariat briefed members on the status of the Tariffs and NonTariff Barriers on Cocoa Beans and Cocoa Products of ASEAN member countries. The matrix on the tariff rates of ASEAN member countries appears as ANNEX 8. The Secretariat appealed to member countries to inform the

Secretariat of any changes of their tariff structure. In relation to this, the ACC Secretariat also seek the cooperation from member countries to provide information on import and export of cocoa products to enable the Secretariat to update its ACC database. AGENDA ITEM 8: ENHANCEMENT OF ASEAN COOPERATION AND JOINT APPROACHES IN INTERNATIONAL AND REGIONAL ISSUES Issue of the Market Access For Cocoa Beans and Cocoa Products to EU 21. The meeting was briefed on the status of the issue on market access for cocoa beans and cocoa products to the EU market which appears in ANNEX 9. The EU took note of the ASEAN request and agreed that the expected new rounds of WTO negotiations would be the appropriate forum to further discuss the issue. 22. The meeting recognised the negative impact on the discriminatory tariff structure imposed by EU and the need to continue to lobby the EU. The meeting agreed of the need to prepare a comprehensive paper on this issue to be presented in the ASEAN-EU JCC meeting in Brussels in September 2001. High Import Tariff Imposed By India and China 23. The meeting was briefed on the high import tariff imposed by India and China which appears in ANNEX 10. It was proposed that the issue on market access for cocoa products be presented at the forthcoming ASEAN-India Dialogue scheduled on 25-28 September 2001 in Kuala Lumpur and at the ASEAN-China Joint Cooperation Committee in 2002. Codex Committee on Cocoa Products and Chocolate 24. The meeting noted paper presented by Malaysia on matters arising from 18th session of the Codex Committee on cocoa products and chocolate (ANNEX 11) which highlighted the following: The agreed draft Revised Standard For Cocoa Butters, Draft Revised Standard For Cocoa Powders and Dry Mixtures of Cocoa and Sugars and Draft Revised Standard For Cocoa Mass (Cocoa/Chocolate Liquor) and Cocoa Cake. The Codex Committee agreed to allow the use of up to 5% vegetable fats in the manufacture of chocolate and chocolate products and the use of vegetable fats in addition to cocoa butter should be indicated on the label in association with the name of the products. The Codex Committee propose a reduction of the maximum limit for lead in cocoa butter from 0.5 mg/kg to 0.1 mg/kg. 25. The meeting urged all member countries to be aware of the proposal from the Codex Committee to reduce the maximum level of lead in the cocoa products and support the recommendation of ASEAN TASK FORCE ON CODEX of the Draft Maximum Limit in Food from Step 8 to Step 6. AGENDA ITEM 9: DEVELOPMENT, ACCELERATION OF TRANSFER AND ADOPTION OF NEW TECHNOLOGIES Project on Cocoa Pod Borers Management by Using Biological Agents and Plant Resistant Materials in Indonesia 26. The meeting was briefed on the status report on the Project on Cocoa Pod Borers Management by using Biological Agents and Plant Resistant Materials in Indonesia (ANNEX 12). The meeting agreed that the proposed project to be

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reviewed and location of survey to be conducted in Indonesia, Malaysia and Philippines. The meeting agreed to have 2 sub-projects which used biological agent and plant resistance materials. The meeting also agreed that Indonesia, Malaysia and Philippines to prepare a joint proposal and seek funding from Common Fund for Commodity (CFC). Each member country needs to identify their counterpart to carry out this project. Proposed Collaboration on the Improvement of Quality of Cocoa Beans through Fermentation and Drying Technologies for Smallholders The meeting took note on the proposal on collaboration on the improvement of quality of cocoa beans through fermentation and drying technologies for smallholders which appears in ANNEX 13. Different views had been expressed by member countries regarding this proposal, nevertheless the meeting agreed to maintain this agenda and will further discuss and brainstorm this issue. Proposed Trials on Selected Cocoa Progeny and Clones in Selected ASEAN Region As agreed during the 4th ACC meeting in Manila, Malaysia presented two proposals on cocoa progeny evaluation (ANNEX 14) and cocoa clonal evaluation (ANNEX 15). The meeting agreed that this proposal need to be revised and upgraded. The meeting also agreed that Mr. Kelvin Lamin and Mr. David Lim will continue to be the coordinator of this research project.

AGENDA ITEM 10: ENHANCEMENT OF PRIVATE SECTOR INVOLVEMENT 33. The ASEAN Secretariat briefed the meeting on the ASEAN Investment Area (AIA) as one of the economic integration scheme along with the ASEAN Free Trade Area (AFTA) and ASEAN Industrial Cooperation (AICO) to attract direct investment into the region (ANNEX 16). However, the meeting was informed that the area in agriculture has not yet being included in the negotiation process under the AIA. With regard to tariff, under the AFTA common effective preferential tariff scheme by 2003, most ASEAN member countries offer tariff rate of between 0 5% for cocoa beans and products.. 34. The meeting was also briefed on some possible areas of cooperation that can ensure ASEAN region in becoming a vibrant cocoa production and consumption centre which appears in ANNEX 17. The Chairman informed members to explore these possibilities and come out with suggestions for discussion in future meetings. AGENDA ITEM 11: PROGRESS REPORT OF THE WORK PLAN 1999 - 2004 OF ASEAN COCOA CLUB 35. The meeting took note on the progress report of the work plan 1999-2004 of the National Focal Point For ASEAN Cocoa Club (ACC) on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme which appears in ANNEX 18. Member countries may wish to explore other activities that can be carried out based on the strategic thrust areas that have been identified.

AGENDA ITEM 12: OTHER MATTERS 36. The meeting took note on the suggestion from delegate from Singapore to change the name of ASEAN Cocoa Club (ACC), however the meeting agreed that the Chairman would consult other working groups during the Joint Approaches in Agriculture and Forest Products Scheme that will be held on the 15 and 16 June 2001. 37. The Philippines delegate informed the meeting that Philippines Cocoa Foundation will participate in the Food and Beverages Exhibition in August 2001. The member countries may wish to send samples and promotional materials to be displayed. 38. The meeting was informed that Indonesia will hold an International Cocoa Conference in Makassar, Indonesia in November 2001. 39. The meeting took note of the briefing by The Honourable Dato Dr. Zakaria M. Yatim, the Director of Kuala Lumpur Regional Centre for Arbitration on the functions and activities of the centre. The meeting expressed its appreciation to The Honourable Dato' for the very interesting and informative presentation. DATE AND VENUE OF THE NEXT MEETING 40. The meeting agreed to propose the Sixth Meeting of the ASEAN Cocoa Club on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme to be held in Singapore. The Singapore delegate will consult the relevant authority to confirm on hosting the meeting and will inform the Secretariat. ADOPTION OF THE REPORT 41. The meeting unanimously adopted the report of the Fifth Meeting of the ASEAN Cocoa Club on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme held in Kuala Lumpur, Malaysia on 12-13 June, 2001. ACKNOWLEDGEMENT 42. The Chairman of the ASEAN Cocoa Club (ACC) expressed his gratitude and thanks to all delegates for their active participation in the meeting. 43. The delegation of Indonesia, Philippines and Singapore expressed their sincere appreciation to the government of Malaysia in particular Malaysian Cocoa Board for their warm hospitality accorded to them and the excellent arrangements made for the meeting. 44. The meeting was held in the traditional sprit of ASEAN Cordiality and solidarity.