‘Focus on rice import rules, not NFA overhaul’

By Jasper Emmanuel Y. Arcalas & Cai U. Ordinario with a report by Butch Fernandez, BusinessMirror, Feb 21, 2019

THE rice liberalization law will take effect on March 5, but the government has not rolled out the new import rules that will guide traders, according to a senior official of the Department of Agriculture (DA).

In contrast, inordinate focus and priority was accorded to restructuring the National Food Authority (NFA), a matter that should have been the subject of a separate law, said one critic of the rice tariffication measure.

“The real intention of the law when you read it is to allow the importation of rice through tariffs. The decision to insert the reorganization in the law raises questions considering the significance of the measure. NFA is not only in charge of importation but also food security. NFA’s food security functions were also removed from the law,” lawyer Jose Manuel “Chel” Diokno said on Wednesday.

Agriculture Undersecretary Segfredo R. Serrano had a similar view. He told the BusinessMirror that the government should prioritize the crafting of new import procedures instead of focusing on the restructuring of the NFA.

“What are the import rules [by March 5]? The only thing clear [right now] is that the NFA is out of the picture,” Serrano said in an interview on Wednesday.

The DA official said the import procedures were not discussed during the last NFA Council (NFAC) meeting where the collegial body approved a motion to fast-track the restructuring of the food agency.

Sources told the BusinessMirror that some importers and traders are already inquiring about the import procedures, particularly the tariff payment process, under the new trade regime.

NFA OIC-Administrator Tomas R. Escarez said the food agency will stop accepting applications for its out-quota importation program starting March 5.

The rice liberalization law only states that interested importers must simply secure a sanitary phytosanitary import clearance (SPIS) from the Bureau of Plant Industry (BPI) prior to arrival of shipments.

Sought for comment, the National Economic and Development Authority (Neda) said the importation rules for rice have not yet been finalized and will still be subject to consultation with stakeholders.

In a phone interview, Neda Undersecretary Rosemarie G. Edillon told the BusinessMirror that the oversight agency is recommending that consultations be done according to stakeholder groups, such as farmers, millers and retailers. This proposal, however, will still be presented to the Economic Development Cluster (EDC).

Edillon said the government aims to complete the consultations and the implementing rules and regulations before the law takes effect next month.

Safeguards

Diokno, a human-rights lawyer gunning for a Senate seat under the Liberal Party, told the BusinessMirror that the restructuring of the NFA should have been done via a separate measure.

Diokno said in an interview that the restructuring of the NFA could jeopardize not only the livelihood of some 6,000 workers but also the country’s food security goals.

“The real intention of the law when you read it is to allow the importation of rice through tariffs. The decision to insert the reorganization in the law raises questions considering the significance of the measure. NFA is not only in charge of importation but also food security. NFA’s food security functions were also removed from the law,” he said.

Diokno said a law usually accompanies the government’s policy decision to restructure or abolish a certain department. This is especially crucial for workers who depend on these agencies for livelihood.

He noted that the new law does not have provisions on what will be done to the affected NFA workers and whether they will receive separation pay.

‘Ensure RCEF reaches farmers’

Because of this, Sen. Juan Edgardo Angara prodded the Duterte administration to ensure that government support, particularly the Rice Competitiveness Enhancement Fund (RCEF), provided under the law will reach farm workers.

“The government must ensure that support measures under the law will be fully realized for the benefit of our local rice farmers,” Angara said.

He said the P10-billion RCEF seeks to provide various forms of assistance to rice farmers, such as development of inbred rice seeds, rice farm equipment and skills enhancement.

The fund, he said, will serve as a special safeguard to protect the rice industry, which will be distributed, accordingly: 50 percent for machinery and equipment; 30 percent for rice seed development, propagation and promotion; 10 percent for expanded rice credit assistance; and 10 percent for rice extension services.

Tariff rates

Serrano also said the new law did not modify the applied rates on rice imports from Asean nations and outside Asean countries.

The law, Serrano pointed out, only specifies guidelines on what would be the bound rate for imported rice. The bound rate refers to the maximum tariff that a country could impose on its goods.

Under the provisions of the WTO Agreement on Agriculture (AOA), a country must notify a bound rate for its imports after it converts its quantitative restriction (QR) into ordinary customs duties.

The applied tariff rate on rice imports from non-Asean countries within the minimum access volume of 350,000 metric tons is 40 percent. This is stated in Executive Order (EO) 23 signed by President Duterte in 2017, according to Serrano.

The current tariff rate of 50 percent for non-Asean rice imports will remain, Serrano added.

Rice imports from Asean member-states will be slapped a tariff of 35 percent as negotiated under the Asean Trade in Goods Agreement (Atiga) for both in-quota and out-quota.

“Not until there are new rates, which are modified through procedures provided under the Customs Modernization and Tariff Act, the applied tariff rates at present would remain,” Serrano said.

The country’s notification of its bound rate could be transmitted to the WTO later on, Serrano said.

RA 11203 states that the bound rate for imports from Asean would be 35 percent. The rate for non-Asean imports will be based on pertinent legal texts of the WTO under the AOA.

However, Department of Agriculture (DA) Policy Research Service Chief Noel A. Padre said the Philippines has committed a 40-percent bound rate on its in-quota rice imports long ago.

WTO documents showed that the Philippines scheduled the 40-percent bound rate on in-quota imports in 2005.

What the Philippines would need to notify the WTO about is its out-quota bound rate for non-Asean imports, which under the law would be at least 180 percent, Padre said.

The law stipulated that the bound rate for non-Asean out-quota rice imports could be higher than 180 if it would be determined by the Tariff Commission and approved by the Neda Board through pertinent procedures. The law gives the TC and Neda Board 45 days to undertake such process.

The 180-percent bound rate was a proposal of the DA, which it computed through the formula provided under the Annex 5 of the WTO AOA.