The government may increase the volume of rice imports from non-Asean countries that can enter the Philippines at a lower tariff rate, according to the draft implementing rules and regulations (IRR) of the rice trade liberalization law.
Based on the second draft of the IRR for Republic Act (RA) 11203, the minimum access volume (MAV) for rice will revert to its 2012 level of 350,000 metric tons (MT) based on the country’s commitment to the World Trade Organization (WTO).
“If there will be a huge demand for rice from India, Pakistan, China, then that’s the time we will increase the MAV,” National Economic and Development Authority (Neda) Assistant Secretary Mercedita A. Sombilla told the BusinessMirror via SMS.
“Any recommendation to increase it [MAV] will depend on market situation,” Sombilla added.
The draft IRR indicated that an “equitable and transparent” mechanism for allocating the MAV shall be developed and established.
It also stated that the Neda may be advised by the National Food Authority Council (NFAC) to formulate guidelines on the auction of the rice MAV to importers. These guidelines will be formulated on or before March 5.
The auction of the rice MAV will be implemented by the Bureau of the Treasury (BTr) and the Land Bank of the Philippines (LBP).
The Department of Agriculture (DA) said rice imports from non-Asean countries within the MAV will be charged a lower applied tariff of 40 percent, while those outside of MAV will be slapped a rate of 50 percent.
For rice imports from Asean member-states like Vietnam and Thailand, the applied tariff rate is 35 percent, as provided for the Asean Trade in Goods Agreement (Atiga).
Apart from paying tariffs, rice importers will be required to secure sanitary and phytosanitary import clearances (SPSIC) from the Bureau of Plant Industry (BPI).
This covers even rice importation for the purposes of donation during calamities and emergency situations. In these instances, the agency/office/organization or private entities, if they are based in the Philippines, will be required to secure the SPSIC.
This is because the food safety regulatory function of the NFA stipulated in the Food Safety Act of 2013 will be transferred to the BPI.
Powers of the President
Upon the recommendation of Neda and as advised by the NFAC, the President “may increase, increase, reduce, revise or adjust existing rates of import duty up to the bound rate” of rice tariffs.
Further, in the event of an “imminent or forecasted shortage,” the draft IRR provides that the President may allow the importation of rice at a lower applied tariff “for a limited period and/or specified volume” to address the situation.
The lower applied tariffs shall only apply for a maximum of 90 days or until the “shortage ceases to exist, whichever comes first.” The extension of the period may be done upon the recommendation of Neda, as advised by the NFAC.
However, the draft IRR stipulated that these powers of the President will only be allowed when Congress is not in session. The NFAC may create a technical working group to monitor these kinds of events.
The draft IRR also provides that the President may task the secretary of trade and industry and the Philippine International Trading Corp. “to expeditiously participate in the rice industry to enhance market competition and stabilize rice prices.”
The Neda Board Committee on Tariff and Related Matters will determine the need for negotiation and renegotiation of international trade agreements/commitments for rice.
The Philippine position and tariff modifications will be recommended to the President, who has the power to negotiate and/or renegotiate the country’s trade agreements.
These trade agreements include WTO agreements and RA 8178 as amended by RA 11203; Atiga; Asean Plus trade agreements; an Agreement on Asean Plus Three Emergency Rice Reserve, and Asean Food Security Reserve Agreement, among others.
NFA rationalization
The draft IRR provided that, effective on March 5, the functions and powers of the NFA, such as those on licensing and instituting a quedan system, are repealed.
The NFA will be given 60 days to transition and restructure according to the stipulations in RA 11203. The NFA will be required to submit its restructuring or reorganization plan for the review and approval of the Governance Commission for GOCCs within the first 30 days of effectivity of the IRR.
The reorganizational plan will include the compensation packages for employees considered redundant; work-force plan for those who will be retained; job matching and retooling of personnel; and other systems that will allow the NFA to mange the country’s buffer-stocking requirements and become “an open market player in the rice industry.”
The NFA’s Commercial Stocks Survey activities will also be transferred to the Philippine Statistics Authority starting on March 5. This means all documents and records concerning commercial rice stocks will be turned over to PSA within 15 days of the effectivity of the IRR.
In terms of buffer stocking, the NFAC is tasked to craft rules, regulations and procedures involving the acquisition, maintenance and distribution of buffer stocks by December 31.
Until the study is commissioned and completed, the NFA will be tasked to adopt a rice inventory level equivalent to 15 to 30 days of national rice consumption. This procurement will be funded by the NFA’s 2019 appropriations for palay procurement.
Safeguards
The IRR provides for a Special Rice Safeguard to help protect local rice farmers from sudden or extreme price volatilities. These will be imposed in accordance with RA 8800 or the Safeguard Measures Act and its IRR.
The DA will be tasked to monitor rice importation and impose rice safeguards if the volume of imports exceeds the average in the last three years. The volume trigger will be 125 percent of the average in the last three years.
In line with this, all tariff lines with the heading 10.06 in the Asean Harmonized Tariff Nomenclature will be annexed to the IRR of RA 8800 on the list of agriculture products eligible for special safeguards.
“If the volume trigger is activated, the Secretary of Agriculture shall issue a department order requesting the commissioner of Customs, through the secretary of finance, to impose an additional special safeguard duty on an agricultural product, consistent with Philippine international treaty obligations,” the IRR stated.
“The additional safeguard duty shall be at most one-third of the applicable out-quota customs duty, and is only valid at the end of the year in which it is imposed,” it added.
Road map
The DA will lead the crafting of the Rice Industry Roadmap, which, the IRR stipulated, should be adopted no later than September 5.
Agencies that will craft the road map include the Neda, Department of Finance, Department of Budget and Management, Department of Trade and Industry, National Irrigation Administration and the National Anti-Poverty Commission.
Representatives from the Philippine Council for Agriculture and Fisheries Committees on Food Staples and Agricultural and Fisheries Mechanization and a farmer will also help draft the rice road map.
Image credits: Nonie Reyes