NG reviews MFN rates

The National Government has started a review of the country’s Most Favored Nation (MFN) tariff rates beyond 2004, Trade and Industry Secretary Manuel Roxas II said yesterday.

The review is intended to prevent the Philippines from becoming the "biggest recipient" of foreign goods following an earlier decision of the government to reduce the country’s MFN rates to a uniform rate of five percent by 2004.

MFN rates are duties given to countries outside the ASEAN Free Trade Area.

In undertaking the review, the government has set at least five parameters which include taking into account local production as well as a comparison of Philippine MFN rates against the MFN rates of neighboring countries, supplier countries and buyer countries.

The review will also take into consideration the percentage of applied MFN rates to bound rates and a consideration of rates for export products.

The latest review will also consider the impact on the consumer price index, particularly on the food basket

"Aside from the parameters, the review would also try to align the Philippines’ existing 5,500 tariff lines with the 10,000 tariff lines of neighboring ASEAN countries," Roxas said.

Sources said the government could still change its programmed tariff rates since it was a unilateral decision on the part of the government to lower the MFN rates when it became a member of the World Trade Organization (WTO) in 1994.

The current MFN rates remained frozen at their 2002 levels. Under Executive Order 264, however, the country’s MFN rates should decline to a uniform rate of five percent by 2004.

According to Roxas, the government will start accepting position papers of various industries next month.

"The impact of the current review would be beyond 2004," Roxas said.

Local industries have become increasingly vocal against the government’s headlong rush towards liberalization in light of other countries’ reluctance to open up their markets.