The House of Representatives approved on third and final reading House Bill (HB) No. 7735, which seeks to liberalize rice imports by replacing quantitative import restrictions with tariffs, and create an enhancement fund for the Philippine agriculture sector.
Principally authored by Committee on Agriculture and Food chairman Jose Panganiban Jr., the approved Revised Agricultural Tariffication bill aims to protect producers of agricultural products, ensure food security, and make the agricultural sector viable and globally competitive.
The measure, approved on August 14, declares that it is the policy of the state to employ anti-dumping and countervailing measures to protect local producers from unfair trade practices and non-use of quantitative import restrictions.
Likewise, to help the agricultural sector compete globally, the state shall seek to raise farm productivity levels by providing the necessary support services such as irrigation, farm-to-market roads, post-harvest equipment and facilities, credit, research and development, extension services, other market infrastructure, and market information.
The bill refers to quantitative import restrictions as non-tariff restrictions, including discretionary import licensing and import quotas, whether qualified or absolute, that are used to limit the amount of imported commodities.
Meanwhile, tariff refers to a tax levied on a commodity imported from another country. It earns revenues for the government and is regarded as an instrument to promote local industries by taxing their competitors. The benefit is accorded to the local producers through the maintenance of a domestic price at a level equal to the world price, plus tariff.
Lastly, the bill defines tariffication as the lifting of all existing restrictions such as import quotas or prohibitions imposed on agricultural products and replacing these restrictions with tariffs.
Tariffs for QRs
The bill provides that instead of quantitative restrictions (QRs), the maximum bound rate commitments of the Philippines under the World Trade Organization (WTO) shall be imposed on agricultural products whose QRs shall be repealed by the proposed Act. The President shall issue the corresponding tariffs. The schedule of the initial and final applied rates shall not exceed the country’s WTO tariff binding commitments.
In case of shortages or abnormal price increases in agricultural products whose QRs are lifted under the Act, the President may propose to Congress to revise, modify, or adjust the minimum access volume (MAV).
If Congress fails to act after 15 days of receiving the proposal, the same shall be deemed approved.
In lieu of the QR on rice, the maximum bound rate shall be as notified by the Philippines to the WTO.
Once the Act becomes effective, the MAV on rice will revert to its 2012 level at 350,000 metric tons as indicated in the country’s commitment to the WTO.
The bound rate of rice imported in the Philippines shall be 40% MFN (Most Favored Nation) rate for importation within the 350,000 metric tons MAV from non-Association of Southeast Asian Nations (ASEAN) WTO member countries; and 180% MFN quota tariff rate.
For imported rice originating from ASEAN member states, the import duty rate commitments of the Philippines in the ASEAN Trade in Goods Agreement (ATIGA) shall be applied.
Creation of NFA council
The bill also provides for the composition of the National Food Authority Council (NFAC), to be headed by the agriculture secretary as chairperson and the National Food Authority (NFA) administrator as vice chairperson. Members will be the Bangko Sentral ng Pilipinas governor; executive secretary; secretaries of the departments of finance, trade and Industry, social welfare and development, and interior and local government, as well as the secretary of the National Economic and Development Authority; National Disaster Risk Reduction and Management Council chairman; and two farmers’ representatives to be selected based on guidelines to be issued by the NFAC.
NFA shall establish the rules and regulations governing the importation of rice, and license, impose, and collect fees and charges for such importation.
The President shall be empowered to act with full delegated authority in adjusting the applied rate and regulating rice imports.
The bill also provides for the creation of the Agricultural Competitiveness Enhancement Fund (ACEF), to be used to raise productivity of farmers and fisherfolk by providing the necessary credit to them and their cooperatives and associations, and micro and small scale enterprises so they may acquire and establish production, postharvest, and processing machinery, equipment and facilities, farm inputs and improvements.
The ACEF will also be used in research and development on agricultural and fishery products by state universities and colleges, and for a comprehensive and attractive grant-in-aid program for agriculture, forestry, fisheries, and veterinary medicine education to promote the development of agriculture and fisheries.
The ACEF shall consist of all duties collected from the importation of agricultural products, except rice, under the MAV mechanism, including unused balances and collections from repayments from loan beneficiaries, including interests.
Tarrification of rice is being pushed by the Duterte administration to address rice shortage and help local farmers.