‘Stricter measures on rice imports may lead to trade disputes’

MANILA, Philippines — The Philippines is opening itself up to possible trade disputes following its decision to implement stricter measures on the entry of imported rice after the liberalization of the industry.

The Federation of Free Farmers warned that imposing stringent measures on the issuance of sanitary and phytosanitary import clearance could expose the country to disputes or challenges before the World Trade Organization (WTO).

“SPS measures are intended to protect the country from pests, diseases and food contamination. They must be science-based and must be applied regularly and uniformly, and cannot be used as trade barriers,” FFF national manager Raul Montemayor said.

“You cannot tighten SPS measures at harvest time and then loosen them during lean months without having a scientific basis. Besides, once the importers learn how to comply with the new SPS rules, there will be no way to stop them from resuming their imports,” he said.

Agriculture Secretary William Dar recently signed a memorandum order that seeks to impose more stringent requirements for rice bought outside the country.

FFF questioned the logic of the government’s decision to impose stricter SPS measures rather than tapping safeguard measures and imposing higher tariffs.

Under the rules of the WTO and the Safeguard Measures Act, an additional tariff can be imposed on imports of rice if there is a surge in imports and this is proven to cause, or threaten to cause, major injury to local rice farmers.

“If they impose very strict SPS measures, then nobody will be able to import, at least temporarily, because importers will have to find a way to comply with new food safety standards.  Alternatively, if they impose very high safeguard duties, nobody will also be able to import because the imported rice will become too expensive,” Montemayor said.

“So both options result in a temporary stoppage in imports.  How then can one option (safeguard measures) be inflationary, while the other (SPS measures) is not, when they have the same outcome?” he said.

The farmers likewise questioned the claims of the economic managers that the imposition of safeguard measures would constitute a reversal from the policy direction of the Rice Tariffication Law.

Montemayor said the rules on safeguard measures were adopted by the WTO mainly to allow countries to address market disturbances that may occur after they tariff and liberalize their sensitive sectors.

In fact, section 10 of the Rice Tariffication Law invokes the Safeguard Measures Act and prescribes safeguard measures to “protect the Philippine rice industry from sudden or extreme price fluctuations.”

The Department of Agriculture initiated an investigation in early September  to determine the necessity for imposing safeguard duties on rice imports.

However, it unilaterally terminated the investigation allegedly due to the concern of economic managers of the inflationary effect of increasing tariffs on rice imports.

The country’s rice imports are set to reach three million metric tons this year, making the Philippines the world’s largest buyer, beating China.

The surge in imports has resulted in the drastic and continuous drop in the farm gate prices of palay (unhusked rice) from their peak of P23.14 per kilogram in September 2018 to only P15.50 per kilo last month.

Income losses of farmers were estimated at P20,000 per hectare, or a total of P60 billion during the second semester harvest season alone.