Bangkok - Thailand has secured an agreement to export up to 370,000 tons of duty-free rice to the Philippines as compensation for Manila's refusal to cut tariffs on the commodity, officials said Thursday. The two countries have agreed to a draft agreement on the quota, which is to go into effect once the Thai cabinet approves it, Deputy Permanent Secretary Krisda Piampongsant at the Thai Commerce Ministry said. "At first, the deal was considered off, but finally, the Philippine government was able to make a more favourable proposal," Krisda said.

Under the Association of South-East Asian Nations (ASEAN) Free Trade Agreement, Brunei, Indonesia, Malaysia, the Philippines, Thailand and Singapore were supposed to have dropped their tariffs to zero to 5 per cent on all imports as of January 1.

Although countries may exclude certain imports deemed "sensitive," they are required to offer compensation to exporting countries harmed by the failure to lift import tariffs.

Thailand, the world's leading rice exporter, has been lobbying Manila for months to provide it a duty-free quota of about 370,000 tons, the average amount the kingdom has exported to the Philippines over the past three years.

"The breakthrough was during the ASEAN Summit, where we discussed the rice quota issue behind closed doors," Krisda said.

Thailand hosted the last summit of 10-nation ASEAN on October 23-25.

Krisda said an expected shortfall of rice in the Philippines, which experienced several devastating typhoons last year, had probably helped persuade Manila to accept the 370,000-ton quota.

Under the quota, Thai rice is to be sold to the Philippines at the prevailing market price.