The Philippines has committed to the World Trade Organization (WTO) to subject rice to ordinary customs duties not later than June 30 this year. Manila made this commitment when it sought to have the waiver for the special treatment on rice extended once more. Following extensive negotiations and the grant of concessions to interested trade partners, the WTO General Council approved in July 2014 Manila’s request to continue imposing the non-tariff barrier until 2017.
Upon its accession to the WTO in 1995, the Philippines was allowed to delay the conversion of its quantitative restriction (QR) on rice into tariff for 10 years so the government could prepare farmers for competition. Despite its existence for a decade, the government had practically admitted that it failed to put in place the necessary measures to make rice farmers competitive when it sought to have the waiver extended. In seeking another extension, the government told the WTO that 2.4 million rice farmers, who account for more than a third of the country’s labor force, would be affected if the QR would be converted into a specific tariff rate.
The QR on rice had allowed the government to limit the entry of imported rice, especially from neighboring Southeast Asian countries that can produce rice more efficiently. In securing the second extension for the waiver, Manila had agreed to allow the entry of 805,200 metric tons (MT) of rice under the so-called minimum access volume (MAV) scheme. MAV allows the private sector to import rice at a tariff of 35 percent, lower than the 50-percent out-MAV duty.
The Duterte administration was keen on extending the waiver, but government officials admitted that it is no longer feasible due to lack of time. The government had already given the WTO the heads up that it would not be able to comply with its commitment to subject rice to ordinary customs duties come July 1, as Congress has not yet amended Republic Act (RA) 8178, or the Agricultural Tarrification Act of 1996. Under RA 8178, rice is the only agricultural commodity with QR and the law did not specify a termination date for it.
Various bills seeking to amend the QR on rice have been filed at the House of Representatives, but a Senate version has yet to be crafted. Congress and the Executive branch can no longer afford to drag their feet on this. Trade partners, including Australia, Thailand, the United States and Vietnam, are pressuring the Philippines to comply with its commitment to tariffy rice starting July 1.
While Duterte had earlier signed an executive order extending the concessions made by the country to secure the waiver, a ranking DA official admitted that the “gesture of goodwill” is no guarantee that trade partners won’t sue Manila.
The President must now certify bills amending RA 8178 as urgent so the Philippines could comply with its international commitments as soon as possible. Further delays would only harm the country, and unless the Duterte administration is prepared to bear the cost, it should act soon and urge Congress to amend RA 8178 when it resumes session next month.