By Bernadette D. Nicolas, Jasper Emmanuel Y. Arcalas & Cai U. Ordinario
PRESIDENT Duterte may be inviting lawsuits as there is no legal basis for his decision—announced verbally in a late-Tuesday press conference—to prohibit the private sector’s importation of rice during harvest, according to an expert.
Apart from this, former Agriculture Secretary Leonardo Montemayor said the President’s order to suspend imports at this time will no longer help farmers, as harvest of the wet season crop is almost over.
Instead of suspending imports, economists and legal experts told the BusinessMirror that the government may impose safeguard duties, a trade remedy that is allowed by the World Trade Organization (WTO).
The President’s verbal order to ban rice imports was made as calls mounted for the government to stem the surge of imports—tracked since the rice trade liberalization law took effect in March—that farmers blamed for the plunge in their incomes as farm-gate prices of palay have hit record lows.
Lawyer Michael Ll. Yusingco, nonresident research fellow of the Ateneo School of Government, said on Wednesday he cannot recall any law allowing the President to stop the importation of rice.
“As the head of the Executive branch of government, the President could have the authority to prohibit his administration from importing rice. But absent any national statute authorizing him to do so, the President cannot just prevent private entities from lawfully importing rice,” Yusingco said in an e-mail to the BusinessMirror.
He said the government may face lawsuits if it will stop the private sector from importing rice, a move which could affect the supply of the staple in the domestic market.
“Preventing private business from importing rice without the proper authority can open the government to legal action. More important, it may have an adverse impact on the rice supply market, which may ultimately affect consumers. It is never a good move for government to intervene in private matters without justification and proper authority,” said Yusingco.
Montemayor agreed with Yusingco, saying the rice trade liberalization (RTL) law does not give the President the power to suspend rice imports. He noted that the law only allows the President to hike tariffs to effectively limit the purchases of traders.
The BusinessMirror reported that Republic Act 11203, or the RTL law, effectively dismantled the government’s right to impose quantitative restriction on rice imports as a trade remedy.
“On the matter of stopping importation, the government could be questioned because under the law, [rice trade] is already liberalized. The government cannot just stop imports under the new law,” said Montemayor. “What is the legal basis of the government to stop imports?”
Legal remedies
Experts said there are other legal remedies outside of suspending imports.
“We’ve been proposing for some time now the general safeguard protection which has the same effect of stopping additional rice importation. Unfortunately, our economic managers rejected that proposal,” said Montemayor, who is also chairman of nongovernment organization Federation of Free Farmers.
“Imposing safeguard duties would discourage importers from bringing in more rice to the country because our total imported volume is already over and above our requirement,” he added.
The Philippine Chamber of Agriculture and Food Inc. (Pcafi) reiterated its call for the government to impose special safeguard (SSG) measures on rice imports as a legal remedy to limit imports.
Pcafi said the SSG may still be implemented by January or February next year to protect farmers during the summer harvest season.
“This is to ensure imports will not coincide with harvest by dry season in March to April 2020, the peak harvest of the two-season crop. It will help support farm-gate price of palay [unhusked rice] to at least P17 per kilogram,” Pcafi President Danilo V. Fausto said in a statement on Wednesday.
“It takes 30 to 60 days to implement the law. So it should be issued January to February. A suspension is against the prevailing law on ‘no QR’ [quantative restriction],” Fausto added.
The founding President and Chairman of the Society Towards Reinforcing Inherent Viability for Enrichment Foundation Inc. Leonardo A. Gonzales said the government can consider non-tariff measures (NTMs) to somehow help local farmers recover from the steep decline in farmgate prices.
While NTMs are the prerogative of the administration, former Tariff Commissioner George Manzano said the government should be able to provide a solid basis for this.
Manzano said if the government imposes NTMs, the Philippines must officially notify the World Trade Organization (WTO) to ensure that the country is not violating any of its commitments.
“Depends on the type of NTMs, provided the administration can defend it objectively. For example, sanitary measures provided that there is a justification. But government has to notify WTO. Not easy to use arbitrary NTMs,” said Manzano in an SMS to BusinessMirror.
Economist Maria Ella C. Oplas urged the government to amend RA 11203 to involve the National Food Authority in the monitoring of rice prices.
Chuck ‘BBB’
Ateneo Eagle Watch Senior Fellow Leonardo A. Lanzona Jr. said he believes the President’s decision will not yield the results that he is hoping for, and would only lead to suffering for consumers.
“Suspending the [implementation] of the law will just bring back the old system and remove the gains achieved by our consumers. Any kind of trade restriction will not solve the problem. The solution is a comprehensive reform of the agricultural sector,” said Lanzona.
“[Government] must channel resources to rural areas and deal with the problems there. Forget ‘Build, Build, Build’ [BBB], and work on the basic needs like food, education and health,” he added.
Lanzona said that while it was true that a significant amount of funds have been set aside for the government’s ambitious infrastructure program, the impact on the economy and farmers has been “underwhelming.”
He said the infrastructure program would have a greater impact if rural areas received more projects. Thus far, Lanzona noted that the program “has no effect on the lives of farmers.”
“We have seen growth in the previous quarter but this is an empty achievement,” he said.
Economist Rene Ofreneo told BusinessMirror that abandoning “dubious” BBB projects would free up necessary resources that will hasten the development and boost the growth of the farm sector.
An example of these dubious projects, Ofreneo said, are connecting bridges between islands, as well as the “expensive” subway project in Makati. He said these projects limit the government’s ability to help other sectors of society.
He said abandoning the dubious projects is a better alternative than suspending rice imports at this time, when importers have already stocked up on the staple.
“The President, given his awesome power, can ask the big importers listed by the BusinessMirror’s report [See “Pre- and post-rice trade lib law, big traders gaming farmer groups,” in the BusinessMirror, October 31, 2019] to calibrate any importation program based on local production and harvesting schedule,” said Ofreneo.
“What the government is doing is fire fighting,” he said. “The lesson is that any major policy requires a comprehensive program of adjustment measures to smoothen the process. In this case, [the goal should have been] not to sacrifice domestic palay production and palay producers.”
Gonzales said the government should pursue sustainable agriculture. This means going for programs and projects that will help make agricultural value chains more efficient.
“The problem is that infrastructure projects, such as farm to market roads, are not linked [to specific] commodities,” said Gonzales.
Money for procurement
Aside from
suspending imports, the President also ordered the purchase of all unhusked
rice produced by local
farmers.
While Yusingco sees nothing wrong with this move, he said this cannot be a long-term policy as it can distort market dynamics.
He also noted that government’s “ultimate goal” should be to make rice farmers competitive and allow them to meet not just the requirements of domestic consumers but also that of the export market.
“This approach of government buying directly from rice farmers has to be well-thought of and well-timed. It cannot be just a knee-jerk response on the part of the administration. But it can be a part of the economic and social safety net package to help rice farmers cope with the implementation of [RA 11203],” he said.
Oplas, who is also an economics professor at the De La Salle University, expressed concern over the feasibility and the impact of the President’s pronouncement to buy all the produce of local farmers.
“One, where will the government get the budget to buy? New sets of taxes? Two, if government buys, they will now create an artificial floor price,” she said.
The creation of an artificial floor price, Oplas explained, could lead to market distortion and may make room for corruption as the government can sell rice at a lower price.