Tariff scheme for rice high on agenda after quantitative restrictions expire

By Janina C. Lim | Posted on December 27, 2016

THE PHILIPPINES is rushing to set a tariff scheme for rice after the lapse of the quantitative restriction (QR) regime.

Mr. Pernia and Finance Secretary Carlos G. Dominguez have expressed their intent to allow the QR scheme to lapse.

However, an official from the Department of Agriculture (DA) says that preparations for the tariff regime on rice will take more time because of the need to go through the legislative processes.

“It takes time… Congress will still need to amend the law,” said the undersecretary for the Agriculture Department’s Planning and Policy Division Segfredo R. Serrano in an interview with reporters last week.

The required amendments involve Republic Act 8178 or the Tariffication Act of 1996 which authorizes the president to set import duties on the staple grain upon the expiry of the country’s waiver for the special treatment on rice.

The NEDA has been proposing to adopt the same import duties applied on rice — 35% — corresponding to the Asean Trade in Goods Agreement — in-quota and 40% out-of-quota of the minimum access volume which by July will revert to its 2012 level of around 350,000 metric tons from the current 805,200 MT, pursuant to Executive order 190 series of 2015.

During the negotiations for the second extension, which was granted in 2014, the Philippines had agreed to, among others, increase the MAV to 805,200 MT and reduce the in-quota tariff to 35% corresponding to the Asean Trade in Goods Agreement (ATIGA) duty and a most-favored nation (MFN) rate of 40% for volumes imported outside the MAV.

The failure to tarrify, according to Mr. Serrano, may bring upon the country the burden of cases that may be raised by WTO-members to the dispute settlement body of the WTO for the failure to implement duties established on the basis of under the Agreement on Agriculture under the Uruguay Round.

“We stand to face trade disputes immediately,” the DA official added.

Previously, lapses of the QR without the benefit of a legislative-approved tariff system were treated in “good faith” with the retention of concessions to other WTO members.

However, the reversion to the pre-2012 tariff levels, contained in Executive Order 190, which was issued last year by then President Benigno S.C. Aquino III, may take away such “good faith” options.

According to Section 2 of the order, “the concession entered by the Philippine government shall cease to exist upon the expiration of the waiver.”

“It will depend on our trading partners if they want to raise a dispute… The problem is we are certain to lose and may have to pay compensation…,” added Mr. Serrano, who has been pushing to start renegotiations for another extension as early as 2014.

Such compensation will depend on the WTO’s dispute settlement board, which may involve the slashing of import duties on other commodities even outside agriculture.