Manila has thumbed down Jakarta’s demand to lift the special safeguard duty (SSG) on coffee imports in exchange for the expanded access of Philippine agricultural products to Indonesia’s market.
Agriculture Undersecretary for Policy and Planning Segfredo Serrano said the Philippines would continue to impose SSG when imports exceed the minimum access volume (MAV) to protect local coffee farmers.
Serrano said the government imposed the SSG on imported coffee products last year after local manufacturers complained that the surge in imports is hurting their business.
Allowing the market to be flooded with cheap imports, he said, would be detrimental to farmers as Philippine-based manufacturers may reduce their purchases of local coffee.
“It is important to protect the livelihood of our people as the welfare of a large portion of our people is at stake. We do not want uncertainties in our coffee industry,” Serrano said in a recent interview with reporters.
“We are really making headways in coffee and other high-value crops, and these are also avenues for diversification for small farmers. It will not be in our interest to abandon and leave them to the dogs and vagaries of international trade,” he added.
Serrano also clarified that Manila did not target Indonesia when it imposed the SSG on coffee products, as it also applies to the other trade partners of the Philippines. He noted that local conglomerates manufacturing coffee, such as San Miguel Corp., were also affected by the SSG.
The agriculture official said Manila observed all the necessary procedures prescribed in Philippines laws in invoking the SSG and followed the terms of World Trade Organization (WTO) agreements, specifically on the use of safeguards.
“These are all at the discretion and the judgment of the agriculture secretary. We put a premium on providing safeguards that will protect our local industry in a justifiable manner,” Serrano said. “There is basis [to impose the SSG]. The triggers have been breached.”
In March, Agriculture Secretary Emmanuel F. Piñol issued Department Order 6 that authorized the slapping of SSG duty on out-quota imports of various agricultural commodities, including several coffee products, such as instant coffee.
These coffee products are: roasted coffee (not decaffeinated, unground); roasted coffee, (not decaffeinated, ground); roasted coffee (decaffeinated, unground); instant coffee; other extracts, essences and concentrates of coffee; preparations with a basis of extracts, essences or concentrates or with a basis of coffee, mixtures in paste form with a basis of ground roasted coffee, containing vegetable fats; and other preparations with a basis of extracts, essences or concentrates or with a basis of coffee.
The SSG was imposed on these products starting April 6, following the Bureau of Custom’s issuance of a memorandum circular.
Jakarta’s ‘demands’
Serrano said he took exception to the recent statements and moves of Jakarta. For one, the agriculture official said Jakarta had complained directly to President Duterte that Manila had targeted Indonesia in imposing the SSG.
He said he also came across news reports indicating that the SSG imposed by Manila was really aimed at reducing Indonesia’s exports to the Philippines.
Serrano disclosed that an Indonesian delegation recently arrived in the Philippines and brought an agreement without consulting agriculture officials. The draft agreement supposedly indicated that Manila will permanently withdraw the SSG on coffee imports in exchange for a factory.
He also said Jakarta had demanded Agriculture Secretary Emmanuel F. Piñol to meet with Indonesian investors, in a letter sent to his office.
“I feel insulted that they are making these demands. If they want to invest here then it is very much appreciated but it should be done without any conditions. They can invest here, apply for incentives, and we will support and assist them,” he said.
“But if they will meddle with our trade policies, that is totally and completely unacceptable,” Serrano added.
‘Hostage’
Serrano said Jakarta is also linking the SSG on imported coffee to the long-standing request of Philippines to expand the access of local farm products to the Indonesian market.
“That’s a different issue. We have an issue with the constant change in the rules and [the foot-dragging] on our submissions,” he said.
“[Indonesian] products freely enter our market because we have reasonable rules of entry. But they have seem to technically closed their borders to our products, which caused the Philippines to incur a huge trade deficit with them,” Serrano added.
Bilateral talks between Jakarta and Manila in December ended in a stalemate with the Indonesian market remaining closed to Philippine farm goods, including horticulture and tobacco products.
Serrano said Indonesia appeared lukewarm to negotiating with the Philippine delegates on market access. He said the Indonesian delegates sought for a “half-day” bilateral talk with the Philippine delegation.
“We were there to earnestly clarify issues so that the interests of both parties can be sorted out. My interpretation is that they want to make it appear that they are willing to talk but nothing substantial came out of that engagement,” he said.
“The Philippines respects Indonesia but apparently their actions show that they do not respect us,” he added.
In September, Jakarta questioned the Philippines’s decision to impose SSG on coffee imports in a meeting of the WTO Committee on Agriculture. Indonesia is home to a number of popular instant-coffee brands.
“Having substantial interests in supplying these agriculture product categories, Indonesia would like to express its deep regret on the imposition of this measure by the Philippines,” Jakarta said.
The Philippines argued that it “undertook due diligence by factoring in the very significant increased imports of coffee products in the last three to four years” in invoking the SSG duties.
For example, data from the Philippine Statistics Authority showed that the country’s instant coffee imports in 2017 expanded by almost 35 percent to 81,900.466 metric tons, from 60,732.319 MT recorded in 2016.