Global pressure mounts over NFA stance

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The Philippine government faces mounting pressure from the international community and local sectors over the National Food Authority’s (NFA) continuing refusal to honor the country’s commitments under the World Trade Organization (WTO)—General Agreement on Tariffs and Trade (GATT).

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The Vietnam Food Association (VFA), Vietnam’s official regulatory body of rice exporters, in its October 22, 2013 letter to Bureau of Customs (BOC) Commissioner Ruffy Biazon followed up on its “request for comments” on “matters of the expiration of the QR [quantitative restrictions]on rice importation.”

The VFA, in its 10 October communication to Customs, argued that with the expiration of QRs, import permits were no longer necessary for rice to enter the country, provided the applicable 50-percent tariff rate “is paid by the importing entity after compliance with customs procedures.”

“We are of the position that WTO QR on rice entering the Philippines has indeed expired on June 30, 2012 and as a member country of the WTO we are aware that the WTO QR in favor of the Philippines has not been extended,” wrote VFA representative, Pham Van Bay.

All WTO member countries have agreed to improve market access and reduce trade-distorting subsidies and restrictions in agriculture. The organization, however, granted the Philippines “special treatment” for rice and was allowed to impose quantitative restrictions on its importation from 1995 to 2005.

While allowed extension in 2004, after the “special treatment” first expired, said extension has since expired in June 2012. Representatives from the Department of Agriculture (DA) have been tasked to obtain extensions of the privilege but have twice been denied by the WTO.

And while the DA insists on negotiating for another extension, other agricultural groups expressed concern that this may be pursued at the expense of the livestock and poultry sectors.

Hog raisers had previously disclosed that tariffs on meat products were reduced “as concession” for the retention of QR on rice from 2007 to 2012, when tariff on pork offal was reduced from 40 percent to 5 percent.

This week, DA-attached agency NFA also came under fire for seizing rice shipments by private importers in the port of Davao though the latter’s lawyers had officially coordinated the importation with the agency as evidenced by their August 20 and September 10 letters addressed to NFA administrator Orlan Calayag.

“Unless the Philippines is ready and willing to admit publicly that it has no intention of complying with its commitments under the WTO, it has no choice but to allow importation of rice without QR,” wrote lawyer Benito Salazar for clients, Silent Royalty Marketing and Stracraft International.

“If your good office insists to the contrary, then the country should be properly informed and advised to prepare for dispute cases to be initiated by WTO members and the possible sanction that will be imposed,” the lawyer further added.

Officially, DA’s own Food Staples Self-Sufficiency Program (FSSP) recommends for the country “to allow the expiration of QRs by 2012.”

Economist Roehlano Briones from government think tank Philippine Institute for Developmental Studies (PIDS) had proposed the same in order for “consumers to benefit from cheaper rice.

“Competition gives farmers an opportunity to improve efficiency, raise competitiveness, or even shift to other commodities, which can offer them greater returns, such as high-value crops,” opined Briones.

Experts estimate that replacing QRs with appropriate tariffs can increase government revenues by as much as approximately P7 billion annually, which in turn can be invested in irrigation and post-harvest facilities to increase agricultural production.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan presented a similar case in his September 10, 2013 Memorandum for the President, citing among others how importation can stabilize and possibly lower rice prices.

“The Filipino consumer pays so much more than the consumer of Vietnamese rice purchased from the world market. Moreover, the difference has been increasing. In 2011, Filipinos paid 56 percent more; in 2012, 92 percent and in 2013, 115 percent,” he wrote.

“The policy on rice importation therefore needs to be carefully evaluated against the broader objective of food security,” concluded the economist.

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