Rice policy flaws hit as grains prices soar

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Amid the ongoing Senate hearings that seek to address the country’s rice woes, the average retail price of a kilo of well-milled rice hit an unprecedented P40 mark even as government lawyers have cited flaws in the rice importation policies under the current leadership of the Department of Agriculture (DA) and the National Food Authority (NFA).

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The Philippine Statistics Authority-Bureau of Agricultural Statistics (PSA-BAS) reported that as of February 11, well-milled rice now retails for P40.06 per kilogram, 13.58 percent higher than at the same time last year. A kilo of regular-milled rice, on the other hand, now retails for P36.75, 14.74 percent higher than in February 2013.

Steady increases in the prices of rice and other issues pertaining to the food staple have prompted inquiries in both houses of Congress. The focus, however, has shifted to rice smuggling and government rice importation policies.

On the other hand, rice traders insist that the government no longer has the authority to impose quantitative restrictions (QR) on rice importation via the NFA’s issuance of rice permits with the June 2012 expiration of the General Agreement on Trade and Tariffs-World Trade Organization (GATT-WTO) Agreement’s special treatment on
rice for the Philippines.

The country will be conducting further negotiations for the extension of the QR in March this year. Negotiations are ongoing with four countries––the United States, Canada, Australia, and Thailand––that have withheld support for the extension of the QR until tariff concessions are given on beef, chicken, swine, and turkey.

In the February 3, 2014 hearing of the Senate Committee on Agriculture and Food, Justice Secretary Leila de Lima conceded that the Department of Justice (DOJ) was wary about providing a definitive opinion on the QR as it was carefully studying the issue.

“It might jeopardize the ongoing negotiations, kung halimbawa lang po ang aming final opinion ay lifted na ‘yung QR on rice. [If, in case, our final opinion is that the QR has been lifted].”

De Lima nonetheless admitted at the same hearing that the DOJ already had an initial opinion “but it would not be wise or prudent for me to publicly declare that opinion until we shall have thoroughly discussed it with the Solicitor General.”

Sources within the Bureau of Customs (BOC) have confirmed that the DOJ issued an initial opinion on the QR issue, copies of which were provided to the DA and BOC.

The DOJ opinion, received by the BOC in January, stressed that there was no existing agreement to extend the QR, as a country’s authority to impose the QR can only be granted with the agreement of member-countries after the conduct of negotiations. As such, the DOJ advised the DA and NFA that with the expiration of the QR in June 2012, the agencies had no choice but to comply with the conditions of the GATT-WTO and remove restrictions such as the issuance of import permits.

Lawyers of rice traders have argued that under the same principle, the rice brought in by various rice trading companies in Manila, Batangas, and Davao and seized by the BOC could not be classified as smuggled goods. Regional trial courts in these areas subsequently ordered the shipments released.

The opinion emphasized that the WTO treaty was not an ordinary law as its provisions, by the acts of both the President and the Senate, became part of our body of laws.

De Lima echoed the same arguments at the January 22 hearing, when she told senators that the WTO “forms part of the law” consistent with the legal principle of “maxim pacta sunt servanda [agreements must be kept].”

Both the DA and BOC have yet to publicly acknowledge the existence of the said document.

Another government lawyer, Government Corporate Counsel Raoul Creencia, has warned NFA officials that the Philippines risks sanctions from the WTO if the government continues to impose the QR on the importation of rice despite the June 2012 expiration of the GATT-WTO Agreement’s special treatment on rice for the Philippines.

Creencia advised NFA Administrator Orlan Calayag in a February 3, 2014 letter that “other WTO member countries, which may be prejudiced by NFA and the country’s action on rice imports, may file a dispute.” He also advised the NFA leadership “to bring this to both the DTI and the DFA’s attention” given “the clash between the intended NFA action, i.e., prolong the regime of quantitative restriction on rice and the expiration of the GATT-WTO Agreement’s special clause on rice for the Philippines.

“Adverse decisions on such disputes,” Creencia stressed, “may result in WTO sanctioned retaliation to the Philippines.”

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