Paying the price of protectionism

Stringent imported meat inspections are fine as long as they do not masquerade as restrictions that limit the entry of cheaper meat products. Not at this time when our countrymen are getting clobbered by the soaring prices of oil products and consequent higher cost of living.

That is why I fully support the concern of our meat importers and processors about the newly legislated Meat Inspection Code of the Philippines (MICP) recently signed into law by the President.

The heart of the conflict once again is the issue of cheap meat importations. The MICP’s recent passage is the latest obstacle in the guise of protecting the consuming public, but actually simply curtails the entry of cheap meat products.

No wonder then that our meat processors and importers, weary of pitching their cause to seemingly deaf ears in the domestic front, have decided to solicit the support of their foreign suppliers, in particular, representatives of the United States Department of Agriculture and 12 other embassies.

The MICP apparently could have serious implications on these countries‚ meat exports to the Philippines as highlighted during a recent closed-door meeting between the Philippine Association of Meat Processors Inc. – whose members include San Miguel Foods Inc. and Swifts Foods – and the Agricultural Food Suppliers Association (AFSA).

Local meat processors believe that Section 54 of the code is a violation of international trade rules set by the World Trade Organization (WTO), and consequently exposes the Philippines to retaliatory measures by its trading partners. Section 54 states that it’s unlawful for any shipping line or airline to accept shipment of meat and meat products for export to the Philippines without securing a veterinary quarantine certificate issued by the Department of Agriculture (DA) and an international veterinary certificate issued by the national controlling authority of the exporting country. The quarantine certificate issued by DA is then to be sent to the foreign supplier, who in turn will be required to include it among shipping documents used to negotiate with banks, such as bills of lading, packing lists, commercial invoices and health/sanitary certificates issued by the exporting country.

Last Minute Inclusion

Meat importers accuse that Section 54 was stealthily inserted and included in the final version of the bill submitted to President Arroyo supposedly by parties that wanted to protect the local hog industry. The provision did not have the benefit of advice from WTO experts in the agriculture and the trade and industry departments. Industry sources said Section 54 was never even discussed in any of the public hearings, nor was deliberated upon by the inter-agency technical working group tasked to study Senate Bill 26911 or the MICP, authored by Senator Ramon Magsaysay Jr., chair of the Senate Committee on Agriculture Modernization. Requiring meat importers to secure two sets of quarantine certificates – one from the exporting country and one from the Philippines – is cumbersome and unnecessary because all importers of meat and meat products from the accredited government agencies in the country of origin have already been pre-approved and pre-cleared under existing multilateral or bilateral agreements, or accreditation procedures. Some of the embassy trade representatives also commented that the measure restricts trade and is a form of import control. At the very least, they said that this would result in confusion among foreign suppliers because it is not normal trade practice to include quarantine permits of importing countries among negotiable commercial documents.

The controversial MICP passage comes at a time when the agriculture department is hearing Administrative Order 39 that requires meat processors to secure a veterinary quarantine certificate before importing their carabeef or Indian buffalo meat requirements. This controversial AO 39 is the subject of my column entitled "Controlling the Karne Norte source" (Philippine Star, 31st May 2004).

Burdened Consumers Need A Champion

The lobby group working for AO 39 is really making sure that all doors allowing importation of cheap meat for processed foods remain tightly closed.

Again, this proposed AO is threatening to start a trade row with the country’s trading partners because the required quarantine certificate has become a disguised restriction to the free importation of meat and meat products. Currently, the US or European Union members do not require quarantine import permits for the importation of agricultural goods from the Philippines.

The country imports about 150 million kilos of meat annually, 52 million of which is manufacturing-grade carabeef used by meat processors as raw material for producing hotdogs, sausages, luncheon meat, and other meat products such as corned beef or karne norte. Only about five percent of carabeef imports consist of table-grade which is consumed in restaurants, hotels and homes.

With such volumes at stake, it is understandable why domestic hog producers are desperate to curb meat imports. However, prices of domestic production are much higher than import cost.

Once again, backed up by well-motivated legislators, domestic hog producers are putting their own interests before that of the public who currently benefit from having cheap meat products.

Will somebody please champion the consumer?

The Mounting Garbage Issue On TV

"Isyung Kalakalan at Iba Pa" on IBC News (5:00 p.m. and 10:30 p.m., Monday to Friday) ends today the discussion of the garbage problem of Metro Manila and many of our provincial cities. With more and more people living in our urban centers, the amount of garbage generated grows. Recycling as an option to relieve the pressure on garbage disposal is not gaining ground. While there are examples of local initiatives to push recycling, general public support is wanting. The local government’s priority is the easier way, finding landfills to dump garbage. Soon, we may find ourselves buried in tons of garbage. Watch it.

‘Breaking Barriers’ With Eduardo T. Malinis, Insurance Commissioner

"Breaking Barriers" on IBC (11 p.m. every Wednesday) will feature Mr. Eduardo T. Malinis, officer-in-charge of the Insurance Commission, as guest on Wednesday, 16th June 2004.

After more than a decade of liberalization, there are questions about the local insurance industry that the public wants to be clarified. Is the insurance industry stronger and more viable now than when it was not liberalized? What were the objectives set for the liberalization of the insurance industry? Were they achieved? There is concern that insurance costs in the Philippines are more expensive. Is this perception correct? If so, why? Watch it.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.