Removal of trade restrictions to spur agricultural growth

Catherine Talavera - The Philippine Star

MANILA, Philippines — The continued implementation of trade restrictions for agricultural commodities does not augur well for the agriculture sector, according to a former socioeconomic planning secretary.

“The  problem is we’re always trying to help our rice farmers the wrong way by allowing them to charge higher prices and set higher cost of production by shutting the door or building a wall,” said Cielito Habito at a seminar organized by the Economic Journalist Association of the Philippines (EJAP) over the weekend.

“What we’re saying is that the only way that you can truly stimulate our agriculture sector to grow the way that it should is to remove those trade restrictions that have led it to complacency over the past decades,” he said.

Habito, who served as the secretary-general of the National Economic and Development Authority (NEDA) during the Ramos administration, likened the imposition of trade restrictions such as tariffs to floaters used by children who are learning how to swim.

“You can’t keep their floaters on forever. You have to throw them into the water at some point,” Habito said.

He emphasized that trade restrictions are viewed as protection measures to support industries while they are still in the infancy stage until they are able to establish a strong foundation.

“But our history has shown that these infant industries just kept on lobbying for the extension of the tariff protection until they became 25-30 year old infants,” Habito said.

The former socioeconomic planning secretary cited the manufacturing industry under the Ramos administration in the 1990s as an example, when trade restrictions were reduced.

“We ended up having more export oriented industries,” Habito said.

President Duterte recently issued executive orders (EOs) reducing the tariffs for agricultural products such as pork and rice imports in a bid to augment local supply and keep prices stable for consumers.

Under EO 134, in-quota pork imports or those under the minimum access volume (MAV) are imposed a 10 percent tariff for three months and will be increased to 15 percent in the remaining months. This is lower than the original rate of 30 percent.

Out quota pork imports are slapped with a 20 percent tariff for the first three months, which will be raised to 25 percent in the remaining months. This is lower than the original tariff of 40 percent.

In addition, Duterte also issued EO 135, which reduces the tariff on rice imports to 35 percent for both in-quota and out-quota for one year.

Agriculture Secretary William Dar earlier said having a same tariff rate for both in-quota and out quota rice imports works in line with the Economic Development Cluster (EDCs) direction to unify tariff rates of agricultural products.

“We are one with the EDC again to pursue this unified, equalized tariff rates for agricultural products,”he said.

While the lower tariff rates will only be implemented for a period of one year, Habito said the reduced rates should be implemented indefinitely.

“The reason why government keeps on saying that it’s time bound, only for one year, is because of the strong resistance of the people who claim that their hearts are bleeding for the rice farmers,” Habito said.

He said the best policy is to always keep a level playing field in the market and let imports compete equally with the domestic producers.

“And just to point out, our livestock industry is very competitive.As you know we have been exporting pork until all of this happened,” Habito said, referring to the African swine fever (ASF) outbreaks.

Habito said the DA is looking in the right direction as it moves towards getting away from a top down management approach in the agriculture sector, particularly with the implementation of the Province-led Agriculture and Fisheries Extension Systems (PAFES).

With the PAFES, the province serves as an extension hub that synchronizes agricultural plans and programs, as well as orchestrates the activities of the various stakeholders.

DA will co-plan, co-invest, co-implement, and co-monitor priority projects in the provinces, particularly as they embark on commodity specializations to maximize comparative advantage.

While the DA is looking towards the right direction, Habito said it would take awhile for the results of these changes to be felt, emphasizing that the continuity of the current programs by the next administration is vital.

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