DA confident of winning its trade dispute with Australia

The Department of Agriculture (DA) is confident of getting a favorable ruling from the World Trade Organization (WTO) if government decides to apply a "full-court press" against Australia for its continued refusal to allow the entry of Philippine bananas and pineapples in its market.

"The momentum is with us. We have a strong case that has the potential of dealing their import regime on fruits and vegetables inconsistent with WTO rules," said Agriculture Assistant Secretary Segfredo Serrano.

Serrano said that since nothing concrete came out of the Philippine government’s bilateral talks with the Australian government late last year, it will now be up to Agriculture Secretary Luis Lorenzo Jr. to decide whether to ask the WTO to create a dispute panel that will hear and settle the charges of unfair trade practices leveled by the Philippines against Australia. Members of the dispute panel will be picked by the parties in conflict.

Another option is for the Philippine government to press for another round of bilateral talks with Australia while the dispute panel reviews the case.

Serrano refused to give details about the government’s strategy, but a source from the department said "Australia will be beaten black-and-blue" if it clings to is hard-line stance of rejecting the country’s tropical fruits.

The Philippines is convinced that after years of tedious negotiations and counterproposals, its efforts to penetrate the lucrative but elusive Australian market will bear fruit.

Serrano said the country is waging its trade row with Australia by presenting scientific evidence showing that production, risk management measures, fumigation, treatment and pre-shipment practices conform to established international standards and by questioning Australia’s entire quarantine rules and legislation.

Late last year, the DA submitted two letters to David Herbert Spencer, Australian ambassador to the WTD, raising questions on the quarantine laws and the measures affecting the importation of fresh pineapple fruit, fresh fruits and vegetables.

In both letters, the Philippines charged that Australia’s Quarantine Act is inconsistent with its obligations under the General Agreement on Tariffs and Trade, the agreement on the Application of Sanitary or Phytosanitary Measures (SPS), and the agreement on Import Licensing Procedures.

Serrano explained that Australia’s quarantine laws violate the principles of free trade set by the WTO because of outdated provisions that were meant to keep out foreign competition before they could even start trade with Australia.

Australia’s quarantine rules and its import policy on fruits and vegetables were established in 1908 and amended to accommodate its commitments under the WTO.

Still, Serrano said there are several loopholes that allow Australia to continue blocking efforts to allow exporters like the Philippines to trade in its market.

Australia has rejected the entry of Philippine pineapples, and said exports will be permitted if the country agreed to de-crown the fruit and subject it to pre-shipment methyl bromide fumigation. At the same time, Australia is also preventing Philippine bananas from penetrating its domestic market, saying this will cause widespread infestation of its local banana plantations.

Australia said the Philippines can start exporting pineapples using its pre-shipment requirements and fumigation methods and try this for a year before it completely amends its quarantine laws and totally open up its market.

The Philippine government rejected this because this would mean exporters would be shipping pineapples to Australia at a loss. By the time the shipment reaches Australian ports, the product would already be rotten.

A source from the Bureau of Plant Industry who helped firm up the Philippines’ position said the government could still invoke a provision under the Food and Agriculture Organization International Plant Protection Convention Treatment Manual.

The manual specifies that the Philippines’ proposed alternative treatment or fumigation method is an internationally-accepted practice which Australia earlier rejected.