Following the accession of the Philippines to the World Trade Organization (WTO) in January 1995, Congress enacted a measure that converted quantitative import restrictions into tariffs. Republic Act (RA) 8178 or the Agricultural Tariffication Act was approved by Congress in March 1996. Apart from converting the quantitative import restrictions into tariffs, it also put in place the so-called minimum access volume (MAV) and created the Agricultural Competitiveness Enhancement Fund (ACEF).
The MAV scheme was a commitment made by the Philippines to the WTO under the Uruguay Round Final Act. RA 8178 mandated the Cabinet Committee including the National Economic and Development Authority to consult stakeholders in setting the MAV, or the specific agricultural product that is allowed to be imported with a lower tariff. Tariffs collected from imports under the MAV scheme constituted ACEF, which was used for agriculture-related projects.
Initially, commodities covered by the MAV scheme—chicken, pork, potatoes and coffee beans—had two tariffs (See, “Moving On MAV,” in the BusinessMirror, April 24, 2021). Due to the commitments made by the Philippines to the WTO, agricultural products that once had two tariffs eventually carried a unitary rate. However, imported pork is one of the commodities that continues to have two tariff rates—30 percent within MAV and 40 percent outside of MAV.
Traders who wish to import agricultural products under the MAV scheme must seek a license that will allow them to purchase the commodity at a lower tariff. Importers seeking allocation from the Department of Agriculture’s MAV Management Committee would have to submit a number of documents to the agency. These include certified true copies of their Department of Trade and Industry or Securities and Exchange Commission registration, certificate of good standing from the SEC for corporations, duly notarized sworn statement of importation, updated Mayor’s permit and accreditation from pertinent DA agencies.
The tedious process of securing a MAV allocation prompted calls for the abolition of the scheme following the government’s decision to raise the MAV for pork (See, “House Seeks Review Of Pork Imports MAV Hike, Tariff Cuts,” in the BusinessMirror, April 6, 2021). However, only Congress can repeal this provision as mandated by RA 8178. And it has to carefully weigh the pros and cons of outright abolition given the implications, such as the elimination of the Agricultural Competitiveness Enhancement Fund.
Policy-makers must focus on the amendment of RA 8178 and make the necessary tweaks in the law that will allow agencies to make use of funds from tariffs on agricultural imports to assist distressed sectors. The livestock and poultry subsector, for one, is badly in need of assistance from the national government after it was struck by animal diseases. Avian influenza nearly decimated poultry farms in Central Luzon in 2017 while African swine fever, which reached our shores in 2019, has caused hog raisers to incur huge losses.
RA 8178, together with RA 8453 or the Agricultural Modernization Act, was intended to hasten the modernization of the Philippine farm sector. Nearly three decades after the Philippines joined the WTO, farmers and other food producers have yet to fully realize the benefits of these policies. Amending RA 8178 and revisiting RA 8453 will help strengthen the agriculture sector and enable the country to achieve food security.