Manila will ask Beijing to slash tariffs on sugar imports to zero so the Philippines could expand its sugar shipments to China, according to the chief of the Sugar Regulatory Administration (SRA).
SRA Administrator Anna Rosario V. Paner said a zero tariff on imports would “level the playing field” in sugar trade, as China exports high-fructose corn syrup (HFCS) to the Philippines duty-free.
“We would ask the Department of Trade and Industry to help us organize a bilateral talk with China,” Paner told reporters on the sidelines of the Department of Agriculture’s budget deliberation at Congress last week.
“If China’s HFCS enter the Philippines duty-free, then we hope that our sugar would also enter their market at zero tariff”, she added.
According to data from the Philippine Statistics Authority, the Philippines exported 245 metric tons (MT) of sugar to China valued at $706,000 last year.
Paner noted China continues to protect its sugar industry by imposing high tariffs.
China slaps a 15-percent tariff on in-quota sugar imports, and 50 percent for those outside of the quota. It allocates a minimum import-quota of 1.94 million metric tons (MMT) as part of its trade commitment to the World Trade Organization.
Paner also said the SRA would not mind if Beijing would cap Philippine sugar exports.
She added the Philippines broached the idea of taking a regional approach in asking China to slash its tariff on sugar imports during the Asean Sugar Alliance Summit held in July.
Paner said Asean member-countries welcomed the proposal, as other sugar-producing nations, such as Thailand, are also experiencing difficulties in exporting to China.
“That’s one consensus during the meeting, to hopefully work as a group to ask for favorable concessions from China”, she added.
“The prohibitive tariffs being imposed by China encourage sugar smuggling. So, we said, maybe we can have a uniform tariff for all Asean countries”, Paner said.
In May China’s Ministry of Commerce announced that it would be implementing a three-year safeguard measure after a government investigation found out that imported sugar “has caused serious damage” to the local industry.
Beijing would be now be increasing the tariff it slaps on sugar imports outside the import quota to 95 percent for year 2017-2018, which would go down to 90 percent and 85 percent by 2018-2019 and 2019-2020, respectively.
However, Beijing pointed out that the safeguard measure will not apply to developing countries where China sources its sugar, such as the Philippines.
The Philippines has started to impose an import cap on HFCS this year after reaching a compromise with beverage manufacturers that make use of the alternative sweetener, according to Paner.
She added the SRA has limited the entry of imported HFCS this year to 287,000 MT. The figure is 23.08 percent lower than the 373,137.994 MT imported in 2016.
Paner said the import cap is a “moving volume” and that it could increase depending on local sugar-supply situation. The 287,000 MT will serve as the “base volume”.
“We could increase the cap if there is a need for such. For example, there’s a typhoon and the sugar industry is greatly affected, to the point [that] there’s limited supply to be sourced,” Paner added. The SRA chief said she will also ask the Bureau of Internal Revenue to reconsider the tax it imposed on refined-sugar exports.
“The government has reimposed the 12-percent valued-added tax on our refined-sugar exports. That makes our exporters uncompetitive,” Paner added.
Data from the Bureau of Customs showed that the Philippines imported 373,137.994 MT of HFCS last year, 50.94 percent higher than the 247,204.570 MT recorded in 2015. The total volume of HFCS imported in 2016 was equivalent to 287,316.256 MT of raw sugar.
The SRA and sugar-industry stakeholders said the importation of HFCS by beverage companies slashed the price of local sugar by as much as P500 per 50-kilogram bag in crop year 2016-2017.
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