RICE industry stakeholders are pushing for a 180-percent bound tariff on rice imports once the quantitative restriction (QR) on the staple is scrapped, in order to give the government enough elbow room to impose duties that would protect farmers vulnerable from “cheap” foreign rice.
In a position paper, representatives of farmer organizations and cause-oriented groups said they “firmly believe” that Manila must aim for the maximum allowable bound tariff rate it could impose, as stipulated by agreements under the World Trade Organization (WTO).
“We firmly believe that the bound tariff rate for rice imports should be set at the maximum possible rate allowed by GATT-UR [General Agreement on Tariffs and Trade-Uruguay Round] regulations, which we affirmed when we joined the World Trade Organization [WTO]. In this regard, we support the 180-percent bound tariff rate being proposed by the House legislative version and the Department of Agriculture,” read the five-page position paper, a copy of which was obtained by the BusinessMirror on Tuesday.
“A high bound rate will allow the government to more freely adjust actual or applied tariff rates depending on market and other conditions. It could be adjusted to a much lower rate if import prices are very high, or increased to a level not exceeding 180 percent when import prices are very low,” the paper added.
The rice industry stakeholders said setting a “very low” bound rate, such as 40 percent—as proposed by the economic managers—would limit the government’s policy space in protecting local farmers from “cheap” imports.
“If the bound rate is set to a very low level, such as 40 percent as proposed by some of our economic managers, the government will not be able to impose a tariff higher than 40 percent even if the situation warrants it,” the paper said.
“Further, if and when the WTO members eventually agree to further reduce tariff rates, we will be forced to start our reduction from a relatively low tariff level. This will increasingly restrict our ability to protect our local farmers from cheap imports,” it added.
The groups said the government has “nothing to lose” by setting the bound tariff at 180 percent. “We therefore urge the government and legislators to adopt a prudent and judicious strategy of employing the highest possible bound rate so that it can preserve its policy space to react effectively to future and emerging marketing conditions.”
Furthermore, the groups urged the government to review its committed 35-percent tariff rate on rice imports under the Asean Trade in Goods Agreement in order to have a higher protection level for farmers. The groups noted the majority of the country’s rice imports come from Asean member-countries, particularly Thailand and Vietnam.
“We urge the government to review this commitment and, if deemed necessary, negotiate for an adjustment in our tariff on rice imports,” the paper read.
“It is worth noting that countries like Japan and South Korea, which are much more economically advanced than the Philippines, have set their rice tariffs to very high levels of 778 percent and 513 percent, respectively,” the paper added.
The groups are also pushing for the implementation of an “effective” trade remedy system that would allow the country to impose additional measures when rice imports are deemed unfair and too detrimental to the local sector.
“We also support moves to designate rice as a special safeguard [SSG] product in the WTO so that we will have the option to impose additional remedial tariffs on rice imports in the event of an abnormal surge in imports or a major depression in import prices,” it said.
“We further urge the government to put in place an effective trade remedy system that will allow us to impose countervailing duties on subsidized imports or antidumping duties on exports of foreign companies that sell rice below the price they normally charge in their home market,” it added.
SSG is a trade measure that allows countries to impose additional tariffs when the value of an imported product is below the trigger price.
The groups said they “fully support” the establishment of a rice competitiveness enhancement fund (RCEF), made up of the tariffs collected from rice imports.
The RCEF would provide the DA with additional resources “to expand and intensify their programs to improve the competitiveness and profitability of rice farmers as the rice market is liberalized,” according to them.
Furthermore, the groups said the RCEF could be used “to provide farmers with safety nets in the event of natural calamities, market disruptions and personal emergencies.”
The groups proposed that 80 percent of RCEF be pre-allocated to fund key programs for the rice sector, while the remaining 20 percent could be used to augment program budgets “when deemed necessary.”
“We are well aware of the problems that continue to hound the Agricultural Competitiveness Enhancement Fund, and we understand the reasons why some legislators have opted to pre-allocate specific percentages of RCEF for specified support activities, or limit the amounts that can be accessed by individual farmers or farmer organizations,” they said.
“On the other hand, we also feel that sufficient flexibility should be allowed for RCEF usage so that the fund can adequately fill up budgetary gaps or respond to changing priorities as they emerge,” they added.
The groups said they support the proposals to use the RCEF to fund credit programs, farm mechanization, postharvest facilities, and research and development and extension. The groups further proposed that the RCEF be used for: 1) common service facilities; 2) social protection programs; 3) subsidized crop insurance and loan guarantees; and 4) crop
diversification programs.
“We believe that the RCEP, together with the earmarking of rice import tariffs, should be retained for as long as necessary and until such time that local rice farmers can compete with imports on a sustainable basis,” it said.
“An initial 10-year life span for RCEP could be adopted, with the understanding that a thorough review will be conducted before its expiry, and with the option to extend its life span if deemed necessary after the review,” it added
The groups also support the idea of entrusting the RCEF with the DA, through the agriculture chief, “who shall formulate the guidelines and policies for the usage of the fund in consultation with the private stakeholders through the Philippine Council for Agriculture and Fisheries.” They proposed to create a special PCAF committee that would oversee the utilization of RCEF.
“We support proposals to immediately augment the budget of the DA to fast-track important competitiveness-enhancing programs while the RCEP is still being set up and tariff collections have yet to be accumulated,” they said.
There is no reason, the groups said, “the government should wait for QRs to be lifted before acting on the threats that farmers face from cheaper imports.”
The position paper was signed by representatives of the Federation of Free Farmers, Centro Saka, Alyansa Agrikultura, Rice Watch Action Network, Paragos-Pilipinas, National Union of Rural Based Organizations, Pambansang Katipunan ng Kababaihan sa Kanayunan, Ka Tribu Ug and Lasang Foundation, and Cacao/Coffee Alliance.
Image credits: Bernand Testa