RP, Thailand agree on rice tariff targets

Hua Hin—Thailand has accepted the country’s proposal for a slower tariff reduction on rice, but in return asked Manila to import more rice from Bangkok, Trade Secretary Peter Favila said.

Favila said he met with Thai commerce minister Porntiva Nakasai, who understood why the Philippines needed to continue protecting its farmers in the wake of the onslaught of storm Ondoy and typhoon Pepeng that caused an estimated P24 billion in damage to the farm sector.

“We really cannot lower the tariff further beyond our proposal of 35 percent starting next year, with an end-rate of until 2015,’’ Favila said in a chance interview at the 15th Association of Southeast Asian Nations Summit here.

“We made it clear to them that’s the best we can offer, so what we are looking at now is that in lieu of the tariff cut, we will start discussing market access, such as the volume of rice that we will be importing from Thailand.”

Favila said both panels agreed to give themselves until December to reach a comprehensive agreement on rice imports.

Under the Asean Free Trade Agreement, the six founding members of Asean—which include the Philippines and Thailand—have committed to reduce their common effective preferential tariffs to between zero and 5 percent for most farm products, including those under the sensitive and highly sensitive lists, by 2010.

But the Philippines has asked to keep rice on its highly sensitive list with import tariffs at 40 percent.

“While we are the largest rice importer in the world, we have some regions in our country where there is a surplus of rice, but there are also areas that do not produce rice, ’’ Favila said.

So I have these farmers to protect. I cannot afford to let them lose their livelihood and I cannot make my farmers competitive.”

Favila said Porntiva had also accepted Manila’s earlier proposal of a quota on only 50,000 tons under zero tariff, way below the 400,000 tons being asked by Thailand, for as long as the volume of imports for next year was “acceptable.”

“Our proposal now is to have one single piece of document that covers everything. Regardless of whether we will import through the duty-free quota or through a government-to-government arrangement, we will have one figure for the entire volume to be imported from Thailand,” he said.

Favila said that if a consensus was not reached, the Philippines might not be able to sign the regional accord on goods and services next year.

“But there were similar cases in the past where a member-state would ask for more time before signing an agreement while the others have already signed it.”

Agriculture Secretary Arthur Yap said the country had the “flexibility” to boost rice imports in the wake of the damage from the two stormsthat was the equivalent of almost 450,000 tons of milled rice.

Still, there was “no pressure” to boost rice imports because there was “a healthy national buffer stock,” Yap told reporters.

Yap declined to specify what he was discussing with US Agriculture Secretary Tom Vilsack as they went around Los Baños, particularly the facilities of the International Rice Research Institute. There was no discussion with the US to assist with rice supplies, he said.

The country will be holding a tender for 250,000 tons of long grain, white rice on Nov. 4 to be delivered by the first quarter of 2010, and officials had said it might hold more in anticipation of the effects on the destroyed rice crop on the country’s food security for 2010.

The government is trying to buy in small quantities to dissuade premature speculation on rice, and may schedule succeeding tenders depending on the recommendation of the Inter-Agency on Rice and Corn.

This year, imported rice totaled 1.775 million metric tons, 1.5 million metric tons of which were procured through a government-to-government deal with Vietnam. In 2008, at the height of food crisis, the Philippines imported a record high volume of 2.3 million metric tons of rice.

The rice production outlook for the year has been pared down to 17 million metric tons from 17.4 million metric tons because of the typhoon damage. –Joyce Pangco Pañares with Othel V. Campos and Bloomberg