The government is keen on imposing a lower tariff rate on mechanically deboned meat (MDM) of poultry to further temper inflation, even as concessions are set to lapse on March 5, when the rice trade liberalization law takes effect.
Deliberations on the petition of local meat processors to maintain lower tariffs on MDM are ongoing at the Cabinet-level Committee on Tariff and Related Matters (CTRM). Meat processors said lower tariffs would ensure that canned goods would remain affordable.
National Economic and Development Authority (Neda) Assistant Secretary Mercedita A. Sombilla told the BusinessMirror that the CTRM is inclined to impose “a tariff lower than 40 percent but higher than 5 percent on MDM imports.”
“We could see from the data that meat products contributed to inflation. [The CTRM] will lift [the tariff rates] but they will not put it at 40-percent [level],” Sombilla said in an interview last week.
Philippine Association of Meat Processors Inc. (PAMPI) urged the government last year to retain the lower tariff rate on MDM so that canned goods and processed meat products will remain affordable.
MDM is a raw material used by the industry to manufacture products such as hot dogs and chicken nuggets.
The lowering of tariffs on MDM imports was among the concessions made by the Philippines in securing the nod of World Trade Organization (WTO) members to extend its right to impose quantitative restriction on rice imports.
Agriculture Undersecretary for Policy and Planning Segfredo R. Serrano said concessionary rates on some agricultural products should automatically go back to the 2012 levels once Republic Act 11203 or the rice trade liberalization becomes effective on March 5.
This was stipulated in Executive Order (EO) 23 issued by President Duterte, which extended the concessionary rates until June 30, 2020, or when a law related to rice tariffication is enacted, whichever comes first. The Bureau of Customs (BOC) shall implement the tariff changes and no other requirements are needed to do it, Serrano added.
‘Not inflationary’
Sombilla noted that the President must issue an EO to implement the tariff modifications on MDM imports to override EO 23. “They are now trying to come up with an EO that will change the rates on MDM.”
The President could modify tariff rates as indicated in the Customs Modernization and Tariff Act provided that any adjustment underwent due process and was recommended by the Neda. Furthermore, the President could only exercise such power when Congress is not in session.
Congress is currently on a break and sessions would resume on May 20.
However, the United Broiler Raisers Association (Ubra) is opposing the proposal of the CTRM to implement a tariff rate lower than 40 percent on MDM.
Ubra President Elias Jose Inciong said a 40-percent tariff would not have an impact on inflation, citing an assessment made by the Bangko Sentral ng Pilipinas (BSP).
“The processors could not dispute our numbers. This, of course, assume that they are following the industry health standard of a 20-percent maximum inclusion rate,” Inciong told the BusinessMirror.
“Also, the processors failed to show any benefit to the consumers because of the absence in the labels of the inclusion rate. Price is what you pay, value is what you get,” he added.
If the government will not revert the MDM tariff to 40 percent, Inciong said his group would make an appeal to the President.
“The government will be throwing away potential revenues of P4.5 billion without any clear benefit to the consumers,” he said.
Serrano earlier disclosed to the BusinessMirror that the
CTRM decided to retain the 5-percent tariff on MDM imports despite the
assertion of the BSP and the Tariff Commission that a 40-percent tariff would
not be
inflationary.
He explained that the Tariff Commission found that reverting tariffs on MDM imports to its 2012 level of 40 percent would not have a “substantial” economic impact.
The DA official added that the BSP has already factored in the 40-percent tariff on MDM in its inflation forecast. Citing the BSP’s study, he said the government would still achieve its inflation targets even if the tariff level on MDM imports would go back to its 2012 level.