THE Philippines will operate under a tariff-based restriction to protect local palay farmers once the country’s quantitative restriction (QR) expires in July this year, a Cabinet official said on Wednesday, noting that the tariff range could be at 40-50 percent.
Lawyer Maia Chiara Halmen Reina Valdez, Undersecretary for the Office of the Cabinet Assistance System, said that Manila may impose 40-50 percent tariff on all imported rice post QR as per discussions with the National Economic Development Authority (NEDA).
“We are looking at 40-50 percent [tariff on rice]across the board,” Valdez told The Manila Times on the sidelines of a press briefing on anti-agriculture smuggling at the Bureau of Customs.
She said the government is now fast-tracking the crafting of policy guidelines for the amendment of Republic Act (RA) No. 8178, or the Agricultural Tariffication Act of 1996, which had kept the QR on rice importation in place.
“There will be a vacuum if we operate post QR without amending the law. That’s why we need to fast-track the amendment of the tariff law,” she said.
The proposed amendments would require the fine-tuning of trade agreements with other countries or trade blocs. The Asean Free Trade Agreement (AFTA), for example, gives rice exporting countries like Vietnam and Thailand a much lower duty of 35 percent.
“Right now, we are working under a concession with these countries, including the 35 percent tariff. If we are to ‘tariffy’ rice, we need to balance protectionism with global integration,” Valdez said.
“Under the domestic law, we are still tied up to 35 percent duty. So we have to amend it to conform with the WTO [World Trade Organization] requirement since we are no longer going to work under the conditions set under the QR,” she added.
The Philippines had earlier granted greater market access—not limited to rice—to countries affected by the extension of the special treatment on rice. In exchange for the QR extension, Manila offered other rice-producing countries certain trade concessions, such as greater access to the Philippine market for other products, including increasing the minimum access volume (MAV) from 350,000 metric tons to 805,000 MT of rice.
However, starting July 2017, tariff concessions made under the QR will end along with the program’s expiration, and tariff rates will revert back to their previous higher levels. This also means that the MAV for rice will revert back to the original 350,000 MT while tariff rates will have to be decided by the economic managers.
Valdez said amendments in the tariff law would also include the possible removal of the 350,000 MT MAV as committed by the Philippines to the WTO. “Technically, it will be free trade. So we need to remove caps of volume imported and shift to tariff protection,” she said.
For its part, the Department of Agriculture (DA) said that the Philippines should continue to implement the in-quota and out-quota rate under the MAV scheme—with a reduced tariff rate of 35 percent while shipments outside MAV pay higher rates.
Agriculture Undersecretary Segfredo Serrano said that Manila, as a signatory to the Asean Trade in Goods Agreement, should honor its commitment to implement a 35 percent tariff rate for rice originating from Asean member countries.
“Bakit ka pa nagkaroon ng agreement kung hindi mo masusundan [Why have an agreement if you cannot honor it]? If you want to change those conditions you have to renegotiate, but you have to be willing to pay the demand,” Serrano said.
Mercedita Somibilla, National Economic and Development Authority (NEDA)-Agriculture, Natural Resources and
Environment director, earlier said Filipino rice farmers will be equally protected, and could even enjoy competitive advantage, if the QR on rice is no longer be extended beyond 2017.
Sombilla said prices of locally grown rice will actually be lower compared to the landed cost of imported rice. “At 35 percent tariff, local farmers would have price advantage as compared to the landed cost (of imported rice) of about P4 per kilo and above,” she said.
In fact, about 35 of the country’s rice producing provinces will be able to compete directly with their Vietnamese and Thai counterparts, she said. Even without tariffs, she said about 13 rice-producing provinces would remain competitive, with a price advantage of P0.10 to as high as P3 per kilo.
“These figures are computed using existing data from the Department of Agriculture and Philippine Statistics Authority,” Sombilla said. “My stand is that at 35 percent, we are already competitive. What more if it is higher than that? Farmers will even have more protection.”
“That’s why it is important for President Rodrigo Duterte to finally come up with the policy guidance,” said Valdez. “But as of now, the rate that NEDA is looking at is 40-50 percent on all rice imports,” she said.