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WTO told: PHL can’t convert QR into tariff yet

Apr 11 2017

April 9, 2017 ( by Business Mirror )

Manila has informed the World Trade Organization (WTO) that the Philippines may not be able to convert the quantitative restriction (QR) on rice into tariff by July 1 due to the delay in the amendment of a domestic law.

Agriculture Undersecretary for Policy and Planning Segfredo R. Serrano said Noel Padre, director of the Department of Agriculture’s (DA) Policy Research Service, was given the task of informing the WTO.

“I sent Padre to Geneva, Switzerland, to explain the initiatives the government is undertaking so we will be predictable to [the WTO]. [My marching order] was to report that the legislative process is something we can’t control,” Serrano told reporters on the sidelines of a recent news briefing.

“But there are things we are currently doing, that there are already bills filed to amend [Republic Act (RA) 8178] and while we are not able to comply we are maintaining our concessions [under the waiver],” he added.

Serrano said extending the concessions under the Philippines’s waiver on the special treatment on rice is an option to avoid disputes with other WTO member-countries.

Former President Benigno S. Aquino III had to issue Executive Order (EO) 190, which outlined the concessions that allowed the Philippines to continue implementing the QR on rice. Under EO 190, the concessions will expire on July 1.

“As a gesture of goodwill and to avoid disputes, the Philippines would maintain the concessions while RA 8178 has not yet been amended,” Serrano said.

On July 24, 2014, the WTO General Council approved the Philippines’s waiver on the special treatment on rice, allowing Manila to keep its QR on rice until June 30.

However, the WTO General Council approved the waiver on the condition that the Philippines will subject its rice imports to ordinary custom duties by July 1.

“At the expiration of this waiver, and no later than June 30, 2017, the importation of rice shall be subject to ordinary customs duties in accordance with paragraph 10 of Annex 5, Section B, of the Agreement on Agriculture,” the WTO General Council decision read.

One of the concessions made by Manila in securing the waiver was to lower the tariff on mechanically deboned meat (MDM) to 5 percent, from 40 percent. Under EO 190, the tariffs on MDM would revert to its original rate on July 1.

The WTO General Council also noted that the concessions made by the Philippines in securing the waiver would cease to exist upon the expiration of the waiver.

To allow the conversion of the QR into tariffs, Serrano said RA 8178 must be amended. Under RA 8178, rice is the only agricultural commodity with QR and the law did not specify a termination date for it, according to Serrano.

However, Serrano said retaining the concessions while RA 8178 is being amended is not an assurance that trading partners will not file a complaint before the WTO against the Philippines for not converting the QR.

“It’s not a guarantee. What we are saying to interested parties, our trading partners, is that the Executive branch cannot intervene in the enactment of a law. That’s the domain of the Legislative branch, which has its own process,” he said.

Even if the waiver expires on June 30, Serrano said the government will continue to implement the QR on rice as mandated by RA 8178.

“That’s a no-brainer because you have to implement the law. Besides, it’s not the DA that is implementing the law on QR, it’s the NFA [National Food Authority],” he said.

A source privy to the meeting in Switzerland said there was no “substantive” discussion regarding the Philippines’s statement during the WTO Committee on Agriculture (COA) meeting on March 27 in Geneva.

Another source disclosed that the Philippines had bilateral talks with the United States after the WTO COA meeting. “The US was concerned about the concessions.”

Meanwhile, other trading partners, like Vietnam and Thailand, initiated “informal” talks with the Philippines concerning their rice-import quotas, the source said.

“Thailand was concerned on what will happen with their quota, given that they have a huge rice-import quota. They wanted to increase their quota, but there’s no formal talk yet,” the source added.