Part Two
ASKED why the country failed to achieve rice self-sufficiency, Segfredo R. Serrano of the Department of Agriculture (DA) told the BusinessMirror the government’s support was not enough and the change in agriculture chiefs affected the priorities of the department.
“It’s not just the discontinuity of programs, but there’s a political disturbance every six years when the secretary is changed,” said Serrano, undersecretary for planning, research and development and regulations of the DA.
In 2004 the Philippines felt the need to extend its special treatment on rice, as farmers are not yet ready for the lifting of the quantitative restriction (QR) on rice.
By that time, the Philippines invoked section B of Annex 5 of the Agreement on Agriculture (AoA), which allows World Trade Organization (WTO) member-countries to extend their special treatments on the basis that the requesting country will appease the concessions made by other member-countries.
“Any negotiation on the question of whether there can be a continuation of the special treatment as set out in Paragraph 7 after the end of the 10th year following the beginning of the implementation period shall be initiated and completed within the time frame of the 10th year itself following the beginning of the implementation period,” Section B:8 of Annex 5 of the AoA read. “If it is agreed as a result of the negotiation referred to in Paragraph 8 that a member may continue to apply the special treatment, such member shall confer additional and acceptable concessions as determined in that negotiation.”
In securing the extension for its special treatment on rice, the Philippines had to increase its minimum access volume (MAV) scheme for rice imports to 350,000 metric tons (MT), while lowering the tariff from 50 percent to 40 percent.
The Philippines was allowed to extend its special treatment for rice from July 1, 2005 to June 30, 2012.
However, by that year, the government was determined again to extend the Philippines’s right to keep the rice QR as it targets to achieve rice self-sufficiency by 2013.
Waive obligations
IN 2012 the Philippines invoked Article IX of the Marrakesh agreement, particularly Article IX:3, which allows member-countries to waive their obligations on defined circumstances.
“In exceptional circumstances, the ministerial conference may decide to waive an obligation imposed on a member by this agreement or any of the multilateral trade agreements, provided that any such decision shall be taken by three-fourths of the members, unless otherwise provided for in this paragraph,” Article IX:3 of the Marrakesh agreement read. “A decision by the ministerial conference granting a waiver shall state the exceptional circumstances justifying the decision; the terms and conditions governing the application of the waiver; and the date on which the waiver shall terminate. Any waiver granted for a period of more than one year shall be reviewed by the ministerial conference not later than one year after it is granted, and thereafter annually until the waiver terminates.”
To secure the waiver for the special treatment on rice, Manila had to appease the requests of nine countries, including Canada and Thailand, in exchange of their support in the World Trade Organization (WTO). Thailand and Vietnam, which are the country’s top source of imported rice, wanted to have an increase in their allowable export volume to Manila under the MAV scheme.
Meanwhile, nontraditional sources of rice, like Pakistan, El Salvador and India, wanted to have a minimal access to the Philippine rice market.
US, Australia
THE United States and Australia negotiated for easier access to other commodity markets, including meat, poultry, vegetables and fruits, to the Philippines.
In turn, Manila had to lower tariffs on offal and mechanically deboned meat, as well as dairy products, oil-seed meals and frozen potatoes, to get the support of the requesting WTO member-countries for its waiver. The government also had to increase the MAV for rice to 805,200 MT.
On July 24, 2014, the WTO General Council approved the Philippines’s waiver on the special treatment on rice, allowing Manila to keep its QR on rice until June 30. However, the WTO General Council approved the waiver on the condition that the Philippines will subject its rice imports to ordinary custom duties by July 1.
“At the expiration of this waiver, and no later than June 30, 2017, the importation of rice shall be subject to ordinary customs duties in accordance with Paragraph 10 of Annex 5, Section B, of the Agreement on Agriculture,” the WTO General Council decision read.
The WTO General Council also noted that the concessions made by the Philippines in securing the waiver would cease to exist upon the expiration of the waiver.
Confusing statements
IN September last year Socioeconomic Planning Secretary and National Economic and Development (Neda) Director General Ernesto M. Pernia pronounced the government will not anymore seek any extension on its right to keep its rice QR.
Pernia said the decision was collectively decided by the government’s economic managers, which include the secretaries of finance, trade and industry, and budget and management and agriculture.
However, in September last year, Agriculture Secretary Emmanuel F. Piñol countered the statement of Pernia, saying the Filipino rice farmers need more time—two years to be exact—to become competitive and prepared when rice QR is lifted.
The difference in the statements of the Cabinet officials caused controversy and confusion among agricultural stakeholders on the government’s official stand on the QR on rice. During the Commitee on Tariff and Related Matters (CTRM) meeting in January, the issue on whether to extend the country’s right to rice QR or fulfill the commitment to the WTO to scrap the nontariff barrier was put on the table.
The meeting resulted in the Department of Agriculture (DA) being outvoted by other Cabinet members who agreed to scrap the rice QR once and for all, and abide by the country’s commitment to the WTO.
The CTRM is a Cabinet-level interagency committee mandated to “advise the President and the Neda Board on tariff and related matters and on the effects on the country of various international developments.” The CTRM is chaired by the trade secretary, with the Neda director general sitting as its cochairman.
Other members of the Cabinet-level interagency committee include the executive secretary, secretaries of foreign affairs, agriculture, transportation, environment and natural resources, budget and nanagement, and finance, the Central Bank governor and the Tariff Commission chairman.
Amendments pushed
EVEN if the Philippines’s waiver on the special treatment on rice expires by June 30, it doesn’t mean the rice QR is automatically lifted.
What goes along with the waiver’s expiration is the right of the Philippines to keep its rice QR.
But as mandated by RA 8178, which does have a termination date, the country’s QR on rice is still on place, unless the law is amended.
Given the developments inthe CTRM meeting, the Neda started rushing to amend RA 8178 to be in time in complying with the government’s obligation to the WTO.
However, Neda Assistant Mercedita A. Sombilla admitted that despite the number of bills filed in Congress to amend RA 8178, the government may not be able to amend the law before June 30.
According to Piñol, representatives from the Neda asked him to endorse the bill amending RA 8178, which he automatically thumbed down. Piñol said endorsing the amendment of RA 8178 runs counter to his personal and the agency’s stand to extend the QR waiver to support Filipino rice farmers.
Piñol said RA 8178 serves as the “saving grace” for the local rice sector, as it effectively prevents the influx of cheap imported rice to the Philippines. The amendment of RA 8178 is included on the priorty legislative agenda of the Duterte administration, according to the Philippine Development Plan (PDP) 2017-2022).
Trade disputes
THE noncompliance of the Philippines’s obligation to the WTO would result in a word that could cost the government millions: dispute.
Trade experts and government officials have expressed concern that the failure to amend RA 8178 after the Philippines’s waiver on special treatment on rice expires could open the country to WTO sanctions.
Former Tariff Commissioner George Manzano told the BusinessMirror that sanctions can be imposed against the Philippines if other WTO member-countries complain about paying a higher duty if RA 8178 is not amended.
Manzano noted that sanctions could come in the form concessions from trade partners, such as lowering tariff on specific goods or nondelivery on the trade pacts.
However, Manzano said before these are imposed, the WTO needs to subject the complaints to due process. Such is the importance of the WTO—placing order on global trade, he added.
To be continued
Image credits: Nonie Reyes