RP declares trade war vs Australia

The Philippine government has declared a trade war against Australia, the second under the World Trade Organization (WTO) regime.

A similar action has been taken against Belgium last month, when government filed a trade complaint with the WTCO protesting Belgium's move to ban the entry of Philippine tuna products.

Belgium ordered the pullout of all Philippine tuna products after discovering that the inner coating of the tuna cans were contaminated with bisphenol diglycedyl, a cancer-causing substance. But the Philippines said Belgium was only retaliating against the government's earlier move to ban Belgian dairy and meat products containing dioxin.

President Estrada has approved a recommendation from the Department of Agriculture to discourage local traders from importing Australian farm products until such time that the latter opens its market to Philippine fruit exports.

The President said during the Mindanao Food Congress over the weekend that he will specifically direct the DA, Department of Foreign Affairs, and Department of Trade and Industry to take action protect the Philippine fruit industry.

While Philippine imports from Australia reached an average of $742 million from 1994-1999, exports averaged only $170 million or a trade deficit of an average of $572 million.

In 1999, imports reached $688 million, half of which were agricultural products, while exports managed to hit only $205 million, for a trade imbalance of $483 million.

Many years back, the Bureau of Plant Industry and its counterpart in Australia signed an agreement whereby the Philippines will allow Australia fruits to enter in exchange for allowing Philippine mangoes, bananas, and pineapples to enter the Australian market.

But while the Australia already started sending its fruits to the Philippines, it raised certain phytosanitary questions regarding Philippine mangoes. It originally questioned the use of ethyldibromide (EDB) as a means of treating RP mangoes against fruit flies. When the Philippines shifted to vapor heat treatment (VHT) for treating mangoes.

Australia said there was a need to go into VHT trials, which the BPI said was no longer necessary because Japan is already allowing VHT as a treatment for Philippine mangoes. Up to now, the issue has not been resolved.

The Philippine government, in a position paper, noted that Australia's requirement for high levels of destructive sampling remains a concern. It said this is not necessary since any infestation by red-banded caterpillar and black borer would be visible to the naked eye. It reiterated that it found a way to prevent fruit fly by the use of VHT and steps had been taken to prevent the movement of mango pulp weevil.

The government also expressed concern over the lengthy process involved in undertaking pest risk analysis, specifically those for bananas and pineapples.

The Philippines has also raised concern over Australia's restriction on the use of benzoic acid as a preservative in sauces. It said there is no international standard for benzoic acid and no conclusive findings that it is harmful to human health.

The government also noted that Australia's practice is inconsistent with the WTO sanitary and phytosanitary agreement, noting that it allows the importation of products containing benzoic acid from New Zealand.

Over the past six years, the Philippines has been a net importer of goods from Australia. Imports from Australia reached a high of $955 million in 1997 which was the time when exports to Australia peaked at $204 million. Total trade in 1997 reached a high of $1.16 billion.

Agricultural imports from Australia from January to November of 1999 reached $358.59 million, of which the bulk or $136.2 million (38 percent) was dairy products. Live animals, including cattle accounted for the second largest at $70.87 million (20 percent) followed by cereals and cereal preparations at $55.05 million (15 percent), sugar and sugar preparations at $26.67 million, meat and meat preparations at $25.65 million, and animal feeding stuff at $4.96 million.

Australia has been the major source of the Philippine's feeder cattle supply. Between 1994-1997, nearly 1.2 million head of cattle were brought in during the period. Cattle importation was highest last year when over 253,000 head were brought in from Australia. The Philippines also imports live swine for breeding from Australia bringing in an average of about a thousand head yearly.

On the other hand, Philippine agricultural exports to Australia consisted mainly of desiccated coconut ($4.45 million in 1999), followed by seaweed and carageenan ($3.15 million), processed tropical fruits ($1.18 million), pineapple and pineapple products ($200,000) and tuna ($260,000) for a total of $9.73 million.

According to the Department of Agriculture, most of Australia's more stringent sanitary and phytosanitary regulations are under protest by other WTO trading partners.