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House panel opts for lower rice tariff to avoid trade sanctions.

The House of Representatives' Committee on Agriculture and Food on Monday reduced the proposed bound tariff rate for rice imports outside the minimum access volume (MAV) to 180 percent from 400 percent.

The House panel, which is chaired by Party-list Rep. Jose T. Panganiban Jr. of Anac-IP, decided to adopt a proposal of the Department of Agriculture (DA) to set a lower bound tariff rate so the government won't have to extend trade concessions and to ensure that rice prices would remain stable.

Agriculture Undersecretary Segfredo R. Serrano said notifying the World Trade Organization (WTO) that Manila would impose a 400-percent bound tariff rate on out-quota rice imports may put the Philippines at the mercy of other member-countries of the WTO. Serrano added other WTO member-countries may ask for concessions just to secure their approval for the proposed bound tariff rate.

'They [WTO member-countries] know that within the formula under the Agreement on Agriculture [AoA], the Philippines has every legal right to inscribe its level of commitment. But they can hit us if it is outside of the AOA,' he said during the committee hearing held on Monday.

'They [WTO member-countries] might ask something in exchange from us just to get their nod for a 400-percent bound tariff rate.

'We would not advise risking noncertification of our notification of tariffication at the WTO just because of the issue with the numbers,' Serrano added.

The DA official disclosed that under the formula provided by the AoA, the Philippines could impose a bound tariff rate ranging from 150 percent to 179 percent on imported rice.

'In fact, what we proposed is that we follow the computation. The problem with imposing 400 percent is how are we going to explain that, what is our basis?' Serrano said.

Earlier, former President and now Rep. Gloria Macapagal-Arroyo of the Second District of Pampanga had wanted a 400-percent bound tariff rate on out-quota rice imports in the substitute bill which would amend Republic Act (RA) 8178.

Arroyo, in proposing the figure, argued that the Philippines should interpret international agreements to its advantage and that a high bound tariff rate would afford the government trade 'flexibilities.' However, Serrano said WTO member-countries will not accept such justifications, as the Philippines is expected to follow and respect the provisions provided under the AoA in converting nontariff measures, such as quantitative restrictions (QR).

Annex 5 of the AoA states that the tariff equivalent of converting any nontariff measures shall be based on the difference between the domestic price and international price (cost, insurance and freight unit value, or CIF) of the commodity for 1986 to 1988.

Paragraph 10 of the Annex 5 states that the tariff equivalent coming from the formula 'shall be bound in the schedule of the member concerned.' Bound tariffs are maximum tariff rates that a WTO member-country could impose on a certain commodity.

Serrano's proposal was supported by officials from the Tariff Commission, National Economic and Development Authority (Neda), Department of Foreign Affairs, and was eventually approved by the committee.

The Committee on Agriculture and Food has approved on its first meeting the substitute bill that seeks to amend RA 8178, which allowed the government to regulate the entry of imported rice via the QR scheme.

Under the substitute bill, the Philippines will impose a bound tariff rate of 35 percent for rice originating from the Asean region, regardless of its volume. Manila would also impose a 40-percent bound tariff most-favored nation (MFN) rate for in-quota rice imports from countries that do not belong to the Asean.

Once the substitute bill is enacted into law, the country's MAV for rice shall revert to its 2012 level at 350,000 metric tons (MT), from the current 805,000 MT.

Panganiban vowed to fast-track the passage of the substitute bill that would allow the country to convert its QR on rice into tariffs. He revealed that the lower chamber is planning to approve the bill on third and final reading before the year ends.

'We will fast-track the approval of this measure and approve it before our Christmas break on December 16,' Panganiban told the BusinessMirror.

The passage of the law allowing the tariffication of rice is included in the priority bills identified as urgent by the Legislative-Executive Development Advisory Council this year.

However, Panganiban said the bill will be submitted first to the House Committee on Ways and Means for another round of deliberations.

Under the rules of the lower chamber, all matters directly and principally relating to the fiscal, monetary and financial affairs of the national government, including tariff, taxation, revenues, borrowing, credit and bonded indebtedness shall undergo deliberation by the ways and means committee.

Earlier, Socioeconomic Planning Secretary Ernesto M. Prenia told the BusinessMirror that the President's economic team would like Congress to pass the law scrapping the QR by the end of the year so the country can start imposing rice tariffs by the first quarter of 2018.

The authority to set bound tariffs is vested in Congress. But, under the Customs Modernization and Tariff Act, the President, upon the recommendation of the Neda, has the power to modify the tariffs applied on Philippine imports.

The Philippines is under pressure to convert its QR on rice into ordinary customs duties after its waiver on the special treatment on rice expired on June 30. The WTO General Council approved the waiver, which allowed Manila to keep its rice QR until June 30, on the condition that the Philippines will subject its rice imports to ordinary custom duties by July 1.

In March the Philippines informed WTO members that it is facing delays in converting the QR because it has not amended RA 8178, which imposed the import caps on rice indefinitely. As a sign of 'goodwill' to its trading partners, President Duterte signed Executive Order 23 in July to extend the concessions made by the Philippines in securing the waiver in 2014.
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Publication:Business Mirror (Makati City, Philippines)
Geographic Code:9PHIL
Date:Nov 20, 2017
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