THE Tariff Commission (TC) will hold a public hearing on Friday to discuss the private sector’s proposal to lower the country’s rice tariffs to 10 percent from 35 percent.
The TC issued on Tuesday the Notice of Public Hearing regarding the petition filed by the Foundation for Economic Freedom Inc. (FEF) to lower the most favoured nation (MFN) tariff rates on rice to 10 percent.
The public hearing will be conducted via videoconferencing on September 15 from 9:00 a.m. to 12:00 noon, according to the TC’s notice.
The FEF was one, if not the first, to lobby for the reduction of tariffs on rice imports as a measure to temper and eventually pull down domestic rice prices.
The rise in imported rice prices, FEF argued, has been the “main cost push” for the increase in domestic rice prices.
“This tariff decrease would tackle the demand-supply gap for rice, address food inflation, and ease the rice prices that hurt the everyday Filipino consumer,” the group said in a recent statement.
“The high cost of imported rice with the tariff is causing traders to scramble for scarce palay stocks, leading to high prices cascading down the value chain,” the group added.
The Philippine Chamber of Commerce and Industry (PCCI) said it supports the removal of import duties on rice.
PCCI President George T. Barcelon said since the world price of rice is going up, the Philippine government should remove the import duties on the staple food of Filipinos to cushion the impact on the general population, who he said “are having a hard time already because other food ingredients are already higher.”
Should the tariff on rice be reduced to zero, Barcelon said the government should study how long it would impose the zero-tariff on the staple food, as this might also affect the country’s farmers.
“We have according to some projections, our harvest moving forward, the next few months would be good then that would mean more supply. We don’t want it too long also kasi matatamaan ‘yung farmers,” the PCCI chief said.
He said the price of palay will be low. Hence, he said the price of rice has to be in the form of a “balancing act.”
While he is for reviewing the period by which to impose zero-tariff on rice, he stressed the importance of implementing zero-tariffs as a stopgap measure.
“But in the meantime, since we’re short of rice, when we import sana walang tax muna para [it’s good not to put a tax yet so] you lower down the cost of rice,” he said.
Diokno’s rationale
The Department of Finance (DOF) on Monday announced that it is pushing for the reduction of rice tariffs to as low as zero percent to cushion the impact of rising world market rice prices and temper the increase of the price of the staple locally.
Finance Secretary Benjamin E. Diokno said reducing the rice tariffs temporarily to zero or up to a maximum of 10 percent would help in “arresting” the surge in local rice prices.
Diokno said the proposal is part of the DOF’s slate of recommendations to ensure that the country would have sufficient rice supply at “reduced prices.”
The tariff reduction proposal will cover both the Asean and most favored nation (MFN) rates for rice imports, Diokno added.
“It is crucial that the government continue to adopt a comprehensive approach to help ensure that rice supply remains sufficient at reduced prices,” he told reporters in a recent press briefing.
The Finance chief said the earliest possible time that the executive branch can modify the tariffs on rice would be next month, when Congress is no longer in session. Congress is set to adjourn session by the end of the month.
Under existing laws, the President can modify tariffs when Congress is not in session, upon the recommendation of the National Economic and Development Authority (Neda).
Fil-Chinese business
On Tuesday, the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc (FFCCCII) declared support for Diokno’s proposal to reduce the tariff rates on imported rice temporarily to zero percent or a maximum of 10 percent amid the current supply gap and high prices of rice. “We support government efforts to stabilize rice prices and supply,” it said in a statement signed by its president, Dr. Cecilio K. Pedro.
“The FFCCCII believes that Secretary Diokno’s proposal to temporarily reduce the said rates from the existing 35% to 0% or maximum of 10% would not only translate to a decrease in rice prices and temper the increasing inflation in food prices, but also address the demand-supply gap in this sector. This move will undeniably mitigate the pinch our countrymen are feeling due to the sharp increase in the price of rice, our staple food. We believe that the temporary lowering of tariff, coupled with other calibrated measures to be taken by this administration’s economic team, will result in the long-term stabilization of the prices of rice and improve the inflation situation,” explained FFCCCII.
DTI for retailers
Meanwhile, the Department of Trade and Industry (DTI) said it implemented the Rice on Wheels for Retailers program in collaboration with Bulacan rice millers and traders on Friday as part of its efforts in implementing Executive Order No. 39.
EO 39, or the Imposition of Mandated Price Ceilings on Rice, took effect last September 1. Under this measure, the DTI is tasked to perform its monitoring and enforcement functions in collaboration with the Department of Agriculture (DA) and other concerned agencies.
The price ceiling for regular-milled rice is P41 perkilogram. For well-milled rice, the price ceiling is P45 per kilogram.
In a televised interview on Monday, Trade Secretary Alfredo E. Pascual said he believes the price cap on rice should be removed in two weeks. “Maybe another 2 weeks we’ll have a good idea of the availability of supply.”
“This means within September we’re looking at 2 million metric tons of harvest and some entry of imported rice so maybe within 2 weeks we should be able to lift . . or to see whether we can lift the price cap already,” the Trade chief said last Monday.
FEF calculations
Based on its calculations, the FEF, which pitched the zero tariff as a temporary measure, said the landed cost of imported rice at zero tariff—even at a quotation of $600 per metric ton—would be at P39 per kilogram.
This, the group claimed, would allow retailers of imported rice to meet the P45 per kilogram price ceiling on well-milled rice.
Nonetheless, FEF has thrown its support behind deeper rice tariff reductions, arguing that the closer the tariffs are to zero, the greater the impact it would have on the local market.
“FEF submits that reducing tariffs will bring significant relief to the domestic rice market. The greater the reduction—down to zero or close to it—the greater the relief. A cut down to a 10-percent rate will have a significant impact,” the FEF said.
Economic managers, including Diokno and Socioeconomic Planning Secretary Arsenio M. Balisacan, have put forward also they proposal to reduce the tariffs on rice imports to as low zero percent to cushion the impact of rising world market rice prices and temper the increase of the price of the staple locally
