The Philippines is inching closer to finally scrapping the quantitative restriction (QR) on rice after a substitute bill mandating its abolition has been approved by a technical working group (TWG) in the House of Representatives.
The TWG created by the House Committee on Agriculture and Food approved on Wednesday the substitute bill that would amend Republic Act (RA) 8178, or the Agricultural Tariffication Act, the law which enabled the government to impose the rice QR since 1996.
Under the substitute bill, a copy of which was obtained by the BusinessMirror, the Philippines will impose a 400-percent bound tariff rate on imported rice once the QR on the staple is abolished.
“In lieu of the QR on rice, the maximum bound rate shall be as notified by the Philippines to the [World Trade Organization, or WTO],” the substitute bill read.
The House Committee on Agriculture and Food will deliberate over the substitute bill once Congress resumes session after its Halloween break.
Once the substitute bill is enacted into law, the country’s minimum access volume (MAV) for rice shall revert to its 2012 level at 350,000 metric tons (MT), from the current 805,000 MT.
“Upon the effectivity of this act, the MAV will revert to its 2012 level at 350,000 MT, as indicated in the Philippines’s commitment to the WTO,” the substitute bill read.
Under the bill, the Philippines will impose a bound tariff rate of 35 percent for rice originating from the Asean region, regardless of its volume. Manila would also impose a 40-percent bound tariff most-favored nation (MFN) rate for in-quota rice imports from countries that do not belong to the Asean.
A 400-percent bound tariff MFN rate shall apply for rice imports outside the MAV of 350,000 MT sourced from non-Asean member-countries, according to the bill.
Notably, the substitute bill indicates that the National Food Authority (NFA) will be allowed to import rice without having to secure certification from the NFA Council. However, the NFA shall only import rice for the sole purpose of securing its buffer stock.
“The [NFA] shall only undertake the direct importation of rice for the purpose of ensuring fod security and maintaining sufficient national buffer stocks,” the bill read.
Furthermore, the substitute bill stipulated that the private sector can import rice, provided that they would comply with the NFA’s rules and regulations.
“For importation other than maintaining buffer stock, the [NFA] shall allocate import quotas among certified and licensed importers,” it read.
The President is vested with the power to modify the tariff rates imposed on the country’s rice imports, upon the recommendation of the Department of Agriculture (DA) and the NFA Council. The President, through an executive order, can adjust the applied tariff rates on rice only when Congress is not in session.
Also, the President is allowed to immediately reduce rice tariffs in times of “imminent or forecasted shortage”.
“In the event of any imminent or forecast shortage, or such other situation requiring government intervention, the President is empowered for a limited period of time and/or a specified volume, to allow the importation of rice at a lower applied tariff rate, to address the situation,” the bill read. “Such order shall take effect immediately, and can be issued even when Congress is in session.”
The President is also empowered to restrict the entry of imported rice to protect the local sector from sudden or extreme price fluctuations due to unexpected surges of imports.
“The President may, following a recommendation from the DA and the NFA Council, impose temporary regulations or restrictions on the volume of imports of rice for a temporary period through the imposition of a rice safeguard tariff sufficient in level to address the situation,” the bill read.
The bill stipulated that the DA and the NFA Council shall craft the rules and regulations governing the special safeguard on rice.
House Committee on Agriculture and Food Chair Party-list Rep. Jose T. Panganiban Jr. of Anac-IP earlier told the BusinessMirror that they plan to approve the bill on third and final reading before the end of the year.
The authority to set bound tariffs is vested in Congress. But, under the Customs Modernization and Tariff Act, the President, upon the recommendation of the National Economic and Development Authority, has the power to modify the tariffs applied on Philippine imports.
The Philippines is under pressure to convert its QR on rice into ordinary customs duties after its waiver on the special treatment on rice expired on June 30. The WTO General Council approved the waiver, which allowed Manila to keep its rice QR until June 30, on the condition that the Philippines will subject its rice imports to ordinary custom duties by July 1.
In March the Philippines informed WTO members that it is facing delays in converting the QR because it has not amended RA 8178, which imposed the import caps on rice indefinitely. As a sign of “goodwill” to its trading partners, President Duterte signed Executive Order 23 in July to extend the concessions made by the Philippines in securing the waiver in 2014.