By Jasper Emmanuel Y. Arcalas & Bernadette D. Nicolas
AN executive order that will maintain the 5-percent tariff on mechanically deboned meat (MDM) of chicken, a raw material used in manufacturing processed meat products, is awaiting President Duterte’s signature.
Traders and meat processors, who had to pay a higher tariff rate on chicken MDM due to a Bureau of Customs (BOC) order, said the EO will avert increases in the prices of processed meat products, such as hot dogs.
“It’s [the EO] up for signing,” a Palace source, who requested anonymity, told the BusinessMirror.
The power to amend tariff rates rests with Congress. But if Congress is not in session, the President may modify the tariff rates of commodities. National Economic and Development Authority (Neda) Assistant Secretary Mercedita A. Sombilla also confirmed to the BusinessMirror that the draft EO is now with the Office of the President for review and consideration.
The BusinessMirror reported last week that the Bureau of Customs (BOC) has issued a memorandum circular authorizing the reversion of higher tariffs on certain agricultural products to 2012 levels, including chicken MDM.
Customs Commissioner Rey Leonardo B. Guerrero issued Customs Memorandum Circular (CMC) 131-2019 dated May 23, authorizing the reversion of higher tariffs on certain agricultural products.
According to EO 23 issued by the President in 2017, concessionary rates on certain agricultural products should go back to the 2012 levels once the quantitative restriction (QR) on rice is removed and converted into ordinary customs duties.
The rice trade liberalization law, which removed the QR on rice, took effect on March 5.
Objection
The Philippine Association of Meat Processors Inc. (Pampi) questioned the BOC memorandum circular and said the reversion of the tariff rate is not automatic.
Pampi also claimed that BOC collectors had already imposed a 40-percent tariff on imported chicken MDM even prior to the issuance of the circular.
Documents provided by Pampi to the BusinessMirror showed that “several hundreds” of containers were affected by the sudden change of tariff rate on MDM, which started on May 17.
The group said the increase in the rate would cost importers an additional P350,000 per container.
Pampi said imported MDM was assessed with a 5-percent tariff before May 17, or two months after the rice trade liberalization law took effect.
The importers, mostly members of Pampi, deferred the release of their MDM shipments until questions over the legality of the implementation of a 40-percent tariff on their purchases have been resolved.
Warning
The Meat Importers and Traders Association (Mita) told the BusinessMirror that the BOC has been retroactively applying the higher tariff rate on imported chicken MDM.
Mita said it received reports that the BOC is demanding that some brokers pay the tariff difference of between 5 percent and 40 percent on MDM even after the shipments were released.
The group warned that small meat traders and meat processors could go out of business if the BOC continues to do this.
Mita President Jesus C. Cham said earlier shipments of chicken MDM were assessed by the BOC with a 5-percent tariff.
“To apply the 40-percent duty retroactively and collect the difference will drive many of the smaller importers out of business,” Cham said. “This will mean not only the loss of jobs for the employees of these enterprises but also deprive the small meat processors who rely on these importers of their raw material.”
A BOC letter dated May 27 obtained by the BusinessMirror showed that the agency directed a broker to pay the bureau an additional P4.044 million to compensate the 35-percent tariff difference on chicken MDM.
The imported MDM shipments consigned to the broker, which were already released from the Manila International Container Port (MICP), were found “short in payment” due to the Tariff Commission’s clarification on the duties applied on the goods, the letter read.
Industry sources told the BusinessMirror that they have seen the same letter, which has caused alarm among importers, traders and processors.
Cham said a Mita member said he would have to pay P40 million to P50 million if the BOC retroactively applies the 40-percent tariff rate on recent chicken MDM shipments.
He said Mita will write to Socioeconomic Planning Secretary Ernesto M. Pernia to formalize its position against the BOC’s retroactive collection of duties.
Pernia cochairs the Cabinet-level Committee on Tariff and Related Matters. The letter will also be submitted to the concerned Cabinet Secretaries and to the Customs Commissioner.
Mita will ask the government to desist from issuing new demand letters and refrain from enforcing the demand letters it has issued pending the resolution of the matter.
Image credits: Asayenka | Dreamstime.com
