A FARMERS’ group scored the government for the delay in notifying the World Trade Organization (WTO) of the country’s final tariff-rate equivalent for rice imports after it removed the quantitative restriction (QR) on the staple.
The Federation of Free Farmers (FFF) also pointed out that the government has not notified the WTO that it is designating rice as a product that is eligible for special safeguard duty (SSG).
The group said this deprived the government of the power to impose SSG duties on imports at a time when millions of tons of the staple have entered the domestic market and pulled down the farm-gate price of local rice.
In a study by FFF obtained by the BusinessMirror, the group said the Philippines should have been able to impose the SSG on rice from abroad due to the surge in import volume.
However, the government, particularly the Department of Agriculture (DA), could not do this because the Philippines had not notified the WTO of its tariffication process.
“This notification should have also included our designation of rice as an SSG-eligible product, since the SSG is normally available only to products whose quantitative import restrictions have been removed,” the study read.
“The delay has reportedly been due to the failure of the Tariff Commission [TC] and the Neda [National Economic and Development Authority] to come up with the official out-quota rate or tariff equivalent,” it added.
FFF said the TC and Neda are now way beyond the 45-day deadline mandated by Republic Act 11203, or the rice trade liberalization (RTL) law, to compute for the official tariff equivalent for rice imports.
Under the RTL law, the tariff equivalent should be calculated by the TC and approved by the Neda board 45 days upon the effectivity of the law or by April 19.
Prescriptions
FFF said the Neda and TC should fast-track the release of the official tariff equivalent for the out-quota bound rate for rice imports to complete the country’s schedule of tariffs that would be notified to the WTO.
“The government must then immediately notify the WTO of our tariffication decision and tariff rates, MAV [minimum access volume] commitment, and the designation of rice as an SSG-eligible product,” it added.
FFF also urged the DA to monitor import volumes and immediately request the Bureau of Customs to impose applicable SSG once the volume trigger has been breached, in accordance with relevant laws.
Given the recent surge in import volume, the group said the government may now impose an SSG “to arrest the further inflow of imports and market displacement of local rice.”
Citing WTO rules, the Philippines could impose additional duties of up to one-third of the current tariff rate on the concerned products once trigger levels are breached.
SSG could be imposed if the volume of imports exceeds a volume trigger or when import prices are lower than price trigger levels.
FFF also said the Philippines could only invoke the SSG if the current rice import volume exceeds the country’s volume trigger level.
Based on FFF’s calculation, using the formula prescribed under the Safeguard Measures Act, the country’s estimated volume trigger for 2019 is around 1.8 million metric tons (MMT).
“If we consider imports from the start of the year up to July 2019 of 2.363 MMT, we have clearly breached this trigger level,” the group said.
“However, if our reference period starts only in March, or the month when the [RTL law] was enacted, imports total only 1.37 MMT, or about 427,000 metric tons below the volume trigger,” it added.
Should the Philippines impose SSG, the cost of rice imports would increase by approximately P2 per kg, FFF said.
“This SSG can be imposed on imports only up to the end of each year, except for imports already en route to the country when the SSG remedy was invoked, and for imports falling within the MAV,” FFF added.
Image credits: Nonie Reyes