RP won’t buy Thai rice at unfavorable terms

The Department of Agriculture (DA) said it will not agree to the proposal for the Philippines to import rice from Thailand next year in exchange for the postponement of a cut in sugar tariff to start in January.

"Government right now does not have enough resources for the buffer stockpiling of rice and the proposed agreement will clip the flexibility of government to stretch its budget," said DA Assistant Secretary Segfredo Serrano. He added government is inclined to junk an arrangement where the country is forced to buy imported rice at very unfavorable terms.

Serrano explained that even if Thailand has been a steady supplier of the country’s rice import requirements, purchases were scaled under conditions that provided enough elbow room for the Philippine government to negotiate for better terms.

"We did this because Thailand rice is not exactly the cheapest source of the staple," Serrano said.

At the same time, with government’s thrust to liberalize rice importation and give farmers’ groups and the private sector the chance to import rice by 2003, the proposal does not seem to be feasible.

Earlier, the National Food Authority (NFA), which used to have a monopoly on rice importation, announced the approved guidelines for rice imports of between 800,000 metric tons (MT) and one million metric tons in the first and second quarters of 2003.

On the other hand, the proposed concession is being deliberated by the Sugar Regulatory Administration (SRA) and the Department of Trade and Industry (DTI).

Serrano noted that when government pushed for the exemption of sugar from the list of commodities whose tariffs will be cut to zero to five percent by January 2003, this was with the understanding that concessions to Thailand will not involve any other product.

One possible concession to Thailand though would be for the Philippines to buy a considerable volume of sugar from Thailand which aside from being a top player in the rice exporting trade, is also a big sugar exporter. This can be done under a bilateral agreement with Thailand.

Under the ASEAN Free Trade Area-Common Effective Preferential Treatment (AFTA-CEPT), the Philippine government committed sugar as one of commodities whose tariffs will be lowered to zero to five percent from the current 50 to 60 percent import tariff.

But with the local sugar industry unprepared to open up the domestic market, sugar producers convinced the government to exclude sugar in the list of commodities whose tariffs will be cut to zero to five percent by January 2003.

Thus, sugar was moved from the temporary exclusion list to the sensitive list, allowing the retention of existing tariffs until 2010.

Under the minimum access volume (MAV), sugar tariff is 50 percent. Volumes exceeding the MAV are slapped a 65 percent tariff. MAV refers to the minimum volume of agricultural products that a country is obliged to allow into its market under the World Trade Organization (WTO).

The domestic sugar industry said a drastic reduction in tariffs will mean flooding the country with sugar imports at dumping prices that is bound to seriously hurt the sector.

The deferment of the tariff reduction until 2010, should give them enough time to implement safety net measures and strengthen the industry to survive competition, the sugar producers claimed.