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Pampi in a bind as BOC reverts tariff of imported MDM of chicken to 40%.

THE Philippines has reverted to 40 percent the tariff on imported mechanically deboned meat (MDM) of chicken, but local meat processors are questioning the legal authority of the Bureau of Customs (BOC) to implement the measure.

Customs Commissioner Rey Leonardo B. Guerrero issued Customs Memorandum Circular (CMC) 131-2019 dated May 23 that authorized the reversion of higher tariffs on certain agricultural products, including chicken MDM.

The reversion of tariffs is in line with President Duterte's Executive Order (EO) 23, which stipulated that concessionary rates on certain agricultural products should go back to the 2012 levels once the quantitative restriction (QR) on rice is removed and converted into ordinary customs duties.

EO 23 extended the concessionary rates on certain agricultural products while the Philippines worked toward the removal of the nontariff measure.

'Accordingly, the Bureau of Customs's Electronic to Mobile [E2M]system is hereto updated to reflect the modified rates pursuant to the said EO,' Guerrero said in the CMC, a copy of which was obtained by the BusinessMirror.

'The Philippine Tariff Finder [PTF] was also udpated by the Tariff Commission to reflect the said MFN [most-favored nation] rates,' he added.

A quick check on the Tariff Commission's tariff book showed that the tariffs on the covered agricultural products should have been reverted to the 2012 levels as early as March 5, when the rice trade liberalization law took effect.

'Not automatic'

Philippine Association of Meat Processors Inc. (Pampi) President Felix O. Tiukinhoy Jr. said his group is questioning the legal authority of the BOC to modify the tariffs and argued that only an EO by the President could authorize the reversion of rates.

Tiukinhoy added that the reversion of duties is not automatic 'as far as EO 23 is concerned.'

'Our position is that he [Guerrero] cannot issue that circular. He has no authority to do that. Only the President can issue an EO,' he told the BusinessMirror in an interview.

'As far as EO 23 is concerned, [the reversion of tariffs to 40 percent] is not automatic. It needs to have an EO to put it back to 40 percent or to maintain it at 5 percent,' he said, adding that this was the advice of their legal counsel.

Affected shipments

Tiukinhoy claimed that even prior to the issuance of CMC 131-2019, BOC collectors had already imposed a 40-percent tariff on imported chicken MDM.

He said Pampi wrote to Guerrero to inquire whether he authorized the 'sudden' change in tariff rates on imported MDM, but the commissioner has not yet responded to the group.

Documents provided by Pampi showed that 'several hundreds' of containers were affected by the sudden change of tariff rate on MDM, which started on May 17.

Pampi added that imported MDM was assessed with a 5-percent tariff before May 17, or two months after the rice trade liberalization law took effect.

The importers, mostly members of Pampi, deferred the release of their MDM shipments until questions over the legality of the implementation of a 40-percent tariff on their purchases have been resolved.

The increase in tariff rate would cost importers an additional P350,000 per container. Prior to the issuance of the circular, Pampi said traders paid only P55,000 per container. 'The cost implication of the tariff increase is huge. Pampi members will have to shell out an additional of roughly P350,000 per container compared to about P55,000 per container they pay at 5 [percent],' the documents read.

Congress is the government body mandated to amend tariff rates but the President may modify rates if Congress is not in session. Congress resumed session on May 17.

Former Agriculture Undersecretary for Policy and Planning Segfredo R. Serrano said the automatic reversion of concessionary rates is provided under EO 23. He said the BOC should implement the tariff changes and no other requirements are needed to do it.

In March, National Economic and Development Authority Assistant Secretary Mercedita A. Sombilla told the BusinessMirror that the Cabinet-level Committee on Tariff and Related Matters is inclined to impose 'a tariff rate lower than 40 percent but higher than 5 percent on MDM imports.'
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Publication:Business Mirror (Makati City, Philippines)
Geographic Code:1MEX
Date:Jun 4, 2019
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