Another kind of flooding

As expected, the bleeding hearts are vociferously opposing against the declared plans of the government to allow greater importation of basic foodstuffs to prevent galloping inflation that could further hurt the Philippine economy the rest of this year. Citing feared adverse effects to Filipino farmers and fisherfolks, do-gooders from the left and the right have voiced their apprehensions for the affected agriculture sectors over projected impact once tariffs are reduced and non-tariff barriers are removed on these imported goods.

To stave off potential runaway inflation, the economic managers of President Rodrigo Duterte have come up with these recommended measures following the steep rise of inflation rate the past few months. While the average consumer price index (CPI) reached precipitous levels, there is still so much quibbling on the proposed reduction of tariff whether it would only be to a uniform five percent or all the way down to zero.

“Zero tariff is not a certainty. We’re leaning towards a uniform tariff of 5%, except rice which will be at 35%,” Department of Budget and Management (DBM) Secretary Benjamin Diokno disclosed last week.

Immediately after being installed as new House Speaker, former president and now Pampanga Congresswoman Gloria Macapagal-Arroyo (GMA) met with President Duterte and brought to his attention the dire need to forestall any further uptick of inflation rate. An economist herself, Speaker GMA asked her erstwhile economics students led by Albay Rep. Joey Salceda to study fiscal and monetary policy tools to calibrate them to such extent that it could achieve the desired result of immediately stabilizing the prices of goods and services.

The end-goal of which is to lessen the pains, especially for the greater number of lower income and poorer sectors of the country. Salceda crunched the numbers and came up with recommended measures and its expected results and floated the idea of bringing down tariff rates to zero as among the immediate measures to increase foodstuff supply to counter the demand-driven push on inflation.

The worst fears of higher inflation came as the Philippine Statistics Authority (PSA) reported last week that prices monitored for the entire month of July rose by an average of 5.7 percent from 5.2 percent in June. The PSA noted this is so far the fastest increase in CPI in five years.

The surge in inflation rate has been largely blamed to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law that took effect on January 1 this year. Administration critics point to the TRAIN law pass-on effects of higher taxes that pushed prices of goods and services to us consumers. The economic managers of President Duterte, however, assuaged the public that the rising prices of goods and services were just a “temporary” reaction of the markets to the TRAIN law and that it will taper off eventually later on this year.

Brainstorming with the Duterte economic managers during the Cabinet meeting at Malacañang Palace last week, Speaker GMA endorsed a slew of proposed anti-inflationary measures to slow down the rise in prices, one of which is to ensure more than enough supply of basic foods and commodities through temporary tariff cut and lifting of non-tariff barriers.

Under existing tariff rates, the following imported food products are levied as follows: rice at 35 to 50%; 7 to 15% on fish; swine at 30 to 40%; poultry at 40%; corn at 35 to 50%; feed wheat flour and corn flour at 7%; and, vegetables at 3 to 40%.

Salceda cited the President is empowered by the “flexible clause” under Section 1608 of Republic Act  (RA) 10863, or An Act Modernizing the Customs and Tariff Administration “to modify” tariff rates when Congress is not in session which is in consonance with the country’s 1987 Constitution.

The third and last regular sessions of the 17th Congress is set to go on recess this August 17 until 27 within which President Duterte can issue an Executive Order (EO) to implement the tariff reduction.

But the entire Cabinet of President Duterte reportedly unanimously argued against Salceda’s proposed zero tariff on these selected food products. Perhaps ignorant on the law of supply and demand, certain members of the 17th Congress also echoed the same fears and concerns.

They all warned against “flooding” the markets with more imported food products as it could spell doom to the already moribund agriculture sector of the country.

Have they even read the newspapers lately? Only last Friday, Malacañang published EO 61 “Modifying the rates of import duty on certain imported articles in order to implement the Philippine tariff commitments pursuant to the Free Trade Agreement between the European Free Trade Association (EFTA) States and the Philippines.”

EO 61 listed the Philippine Schedule of Tariff Commitments on Agricultural Products originating from Switzerland/Liechtenstein; Norway and Iceland; and the non-agricultural products originating from all the EFTA States.

This was after President Duterte signed the EFTA on December 8, 2017 while bad-mouthing the European Union (EU) over the latter’s linking its aid and trade relations with the Philippines to human rights issues. As endorsed by President Duterte, the Philippine Senate ratified EFTA in March this year.

Or much closer to home, haven’t they heard yet that the Philippines – as one of ten member states of the Association of South East Asian Nations (ASEAN) – have entered into zero-tariff commitments under the ASEAN Free Trade Area (AFTA) since 1992?

Are they even aware that our country has cut tariffs and removed non-tariff barriers in compliance with our treaty commitments under the World Trade Organization (WTO) since the Philippine Senate ratified it in December 1994?

Thus, it is rather discomfiting why there is so much gnashing of teeth over something that they in Congress – who by their previous actions – brought these things upon us Filipinos. So what flooding of imported goods are they worried about?