Postponement of RCEP and damage control
Farmers, fishermen and agriculture stakeholders are calling for the postponement of Senate ratification of the Regional Comprehensive Economic Partnership (RCEP). This is to partially implement damage control until the necessary mechanisms are in place for the implementation of RCEP.
One example is to strengthen measures to prevent a deluge of rampant subsidized smuggling of imports that will continue to kill our agriculture. We simply need to reinstate a public-private task force that successfully reduced the smuggling rate from 31% to 25%. All it needs is the political will to implement this. Once transparency and private sector participation are ensured, the fight against smuggling can help prevent RCEP abuses.
For the World Trade Organization (WTO) which we joined 28 years ago, countries like Vietnam have made the necessary preparations and benefited from the WTO. We neglected to do so. So far, we have not taken enough action, which has resulted in enormous suffering for our farmers, fishermen and agricultural stakeholders. Our decision-makers should interact more with them, so that they can better understand the reality of their situation.
With RCEP, this neglect is repeated. In official meetings at Senate hearings and Department of Agriculture (DA) meetings, agriculture officials insist that there are no threats from RCEP and that there is no is therefore not necessary to make preparations. As of February 3, 104 organizations have signed a letter strongly contesting this and have requested a meeting. So far there is no DA response.
At the January 5 biannual meeting of the Philippine DA Public-Private Sector Council for Agriculture and Fisheries (PCAF), a recommendation was approved to convene a meeting of the PCAF’s International Relations Committee which had previously abolished meetings regular quarterly meetings for two years prior to the RCEP Senate International Relations Committee hearing. The main purpose of this meeting was to hear the private sector identify RCEP threats that the DA believes do not exist.
This meeting is scheduled for February 11. But despite the PCAF’s officially endorsed recommendation, threat identification will not be on the agenda, and will instead be deferred to a later date. It is disconcerting how the private sector is treated in an issue as important as RCEP.
We now plan to enter RCEP immediately without three key preparatory elements: (1) identification of threats and opportunities so that we can take necessary action; 2) proposals from the agriculture sub-sector, especially those that are dying out, for immediate implementation; and 3) essential defensive measures so that we are not subject to unfair trade practices, such as rampant smuggling. These are now more imminent as some importers take advantage of the new RCEP opportunity with potential unfair trade practices that we are no longer prepared to address.
Take rice as an example. According to the Bureau of Customs (BOC), from March 29 to October 2021, customs duties waived on smuggling reached 8.85 billion pesos.
A proposal was submitted by Raul Montemayor, National Director of the Free Farmers Federation, with four specific easy-to-implement steps: “a) declaration of importers – requires submission of full product specifications; validate product specifications; train BOC staff to validate these specifications; b) BOC Classification—full reference values for onboard freight and insurance; consistent tariff classification for rice categories; application of the correct tariff rate; c) undervaluation detection – automatic flagging of undervalued imports; require the mandatory deposit of a bond if the undervaluation exceeds a threshold; and d) post-verification of transactions – sanctioning offending staff, brokers, importers; black list of exporters in error; and adding collections and penalties to the rice fund.
BOC has not responded as to whether or not they will. Meanwhile, Senator Risa Hontiveros has identified repeat smugglers as still not penalized, rendering the anti-smuggling effort uncredible.
In the midst of this, the volume of imported rice increased by 32% from 2.1 to 2.8 million tons, while our rice deficit is only 1.2 to 1.5 million tons. . A misleading argument that has been repeatedly made is that rice pricing has lowered prices for regular milled rice. While it is true that rice fell by 7.72 pesos from its unusually high price of 45.57 pesos in 2018 because the government failed to import in time that year, the rest of the information shows that prices of ordinary milled rice before and after tariffication did not decrease: May 2017—P36.62; May 2020—P31.85; February 2022—P36.14.
From before pricing in May 2017 until today, the price only decreased by P0.48, not P7.72. Rice pricing is commendable as it minimizes corruption and incompetence. But DA was not equipped to put in place the desirable and necessary safeguards to accompany tariffication, which are encouraged by the WTO and our law (Republic Act No. 8800). This lack of trade remedy expertise should be addressed immediately before we are swamped with unfair trade practices that we are not prepared to guard against with the immediate ratification of RCEP.
How does this affect people’s lives, which should be one of RCEP’s main goals, especially as it affects our poor farmers and fishermen? The Philippine Statistics Authority reported that rice farmers’ income per hectare increased from P28,000 in 2017 to P23,242 in 2019 and P21,430 in 2020. Per kilogram, it increased from P7.16 to P5, 51P and P5.24. Imagine the impact on their already high levels of poverty.
Farmers, fishermen and agricultural actors are asking for time and justice. After 24 years of virtually no preparation since joining the WTO in 2004, RCEP is about to be ratified, again with no preparation. We must now act as one nation, without the rich leaving behind the poor. The postponement not only signifies a critical need for damage limitation, but the necessary steps we must take to ensure that RCEP benefits our nation and our long-neglected and abused agricultural sector.
The author is President of Agriwatch, former Secretary of Presidential Programs and Projects and former Undersecretary of the DA and DTI. Contact is [email protected]
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