The government should issue a new executive order (EO) retaining the low tariffs on offal and mechanically deboned meat (MDM) before June 30 to prevent spikes in the prices of processed meats.
Victorio Mario A. Dimagiba, former trade undersecretary and president of consumer-protection group Laban Konsyumer Inc., said the tariffs on raw materials used for manufacturing processed-meat products would revert to 40 percent starting July 1 sans the extension of EO 190.
“The time clock ends on June 30, that’s the default [according to EO 190]. We need an EO directing the Bureau of Customs [BOC] not to apply the 40-percent duty,” Dimagiba said during the Tariff Commission’s (TC) public hearing on Thursday.
Under EO 190, the 5-percent tariff on MDM will go back to 40 percent upon the expiration of the quantitative restriction (QR) on rice on June 30.
The World Trade Organization (WTO) granted the request of the Philippines to extend the QR on rice until this year. In return, Manila had to lower tariffs on offal and MDM, as well as dairy products, oil-seed meals and frozen potatoes.
The government also had to increase the minimum access volume (MAV) for rice to 805,200 metric tons (MT). Rice exported to the Philippines under MAV is slapped a tariff of 35 percent, lower than the 50-percent out-MAV duty.
The public hearing on tariff lines under EO 1990 was held upon the request of the Cabinet Committee on Tariff and Related Matters (CTRM), according to Tariff Commissioner Ernesto L. Albano.
Albano, who presided over the public hearing, said the agency is keen on fast-tracking the consultations and public hearing, so the TC could come up with a recommendation to the National Economic and Development Authority (Neda).
However, the TC has yet to schedule the next public hearing on extending EO 190. Interested parties were given until February 24 to submit their position papers. Under Republic Act (RA) 10863, the TC will submit its findings and recommendation to the Neda within 30 days after the termination of the public hearings. After the Neda has approved and reviewed the recommendation, it will then be sent to Office of the President.
“We have to be quick as possible because a new EO will have to be issued before July,” TC Chairman Marilou P. Mendoza told reporters in an interview after the public hearing.
Industry groups’ position
Industry groups that presented their position during the public hearing include the Philippine Association of Meat Processors Inc. (Pampi), United Broiler Raisers Association (Ubra), Rice Watch and Action (R1), and the Meat Importers and Traders Association (Mita).
In their respective position papers, both Pampi and Mita proposed the retention of duty on four tariff lines under EO 190: chicken MDM at 5 percent, frozen turkey meat at 20 percent, turkey MDM at 5 percent and other MDM at 20 percent.
Pampi said the extension of EO 190, signed by former President Benigno S. Aquino III in 2015, will prevent increases in the price of processed meats such as hot dogs in the second half of the year.
“The use of MDM in processed products has allowed us to maintain affordable protein-filled wholesome processed meats and its use is regulated by the National Meat Inspection Service since March of 2015,” Pampi Executive Director Francisco Buencamino said in the position paper submitted by his group.
“The main advantage of using this ingredient is the control in product costs that make processed meats affordable to the consumers,” Buencamino added.
Mita said reimposing the 40-percent tariff on MDM would hurt not only meat processors, but also consumers.
“Any change in the cost structure of this product will severely impact a lot of consumers. A lot of this [MDM] goes to processed meat and not only impacts the big processors, but severely impacts small- and medium-sized processors that my members are servicing,” Mita President Jesus C. Cham said during the public hearing.
Ubra has not yet submitted its position paper but the group’s president, Jose Elias Inciong, requested for a “broader consultation” on extending EO 190.
“We are requesting for a broader consultation not only on tariff, but also on how to assure the rice farmers [of safeguard measures], how to address the governance issue with customs, and also how to address the concerns of the processors,” Inciong told the BusinessMirror.
He said the group would ask the government to gradually increase the tariff on chicken MDM to 10 percent to prevent technical smuggling. Ubra will submit their position paper next week.
‘Help rice farmers’
During the hearing, R1 Coordinator Hazel Tanchuling urged the government to immediately put in place measures to ensure the competitiveness of the rice sector before it talks about converting the QR on rice into a specific tariff rate.
“As we looked into the 2017 budget, this is not reflected in the allocation of their programs.
“The Department of Agriculture direly needs to enhance its efforts, as local rice production even decreased to only 17.6 million metric tons in 2016, from 18.9 MMT in 2014 and 18.1 MMT in 2015,” Tanchuling said.
“Members of the rice sector, particularly the poor and small rice farmers
demand that the government proceed with the negotiation to extend the QR on rice. The challenge lies in the government’s political will to ensure the local rice industry is competitive within two years,” she added.
Earlier, Agriculture Secretary Emmanuel F. Piñol said the CTRM is keen on extending EO 190, while the amendment of RA 8178, or the Agricultural Tariffication Act, is ongoing.
“While the QR on rice is still in place and the law is not yet amended and the new tariff on rice is not yet implemented, we wish to continue the concessions we gave in exchange for the waiver [on special treatment on rice],” said Noel A. Padre, director of DA-Policy Research Service, during the public hearing.
“At least we can show that we are maintaining our concessions while the domestic processes is not yet completed to remove the QR on rice, we can how them in good faith that we are doing something moving towards that direction [removal of QR on rice],” Padre added.
Last month Piñol said during a Malacañang news briefing that the government has abandoned its plans to ask the WTO to extend the QR on rice due to the lack of time.
Ealrier, the Neda said it is no longer possible to amend RA 8178 before June 30. Neda Assistant Secretary Mercedita A. Sombilla said the agency has already prepared a draft bill, but it has yet to be subjected to consultations.
Trade experts and the Neda expressed concern that the failure to amend RA 8178 under a post-QR scenario could open the country to WTO sanctions.