AGRICULTURE industry representatives said the government has not adequately supported farmers in achieving competitiveness against imports, which they called a necessary step before opening up the market under the terms of the Regional Comprehensive Economic Partnership (RCEP).
During a Senate hearing on the world’s largest free trade agreement on Tuesday, United Broiler Raisers Association President Elias Jose M. Inciong said: “What will provide true protection is competitiveness… the reason why we did not become competitive, the reason why we are so prone to imports, the reason why the agriculture sector cannot provide adequate supply is because of the dereliction of duty of the NEDA (National Economic and Development Authority and the DA (Department of Agriculture) in the implementation of the overall design of the WTO (World Trade Organization),” he said.
He was referring to the trade regime the Philippines signed on to in 1995, which guarantees market access for foreign commodities up to a minimum volume.
“There is no path for development for the sector; however, the path is very wide for import development,” he added.
Mr. Inciong compared the current pitch to join the RCEP with the campaign to join the WTO, noting that only features benefiting importers were implemented while provisions specifying domestic support were neglected.
The last major commodity to be opened up to imports was rice. The Rice Tariffication Law opened up rice imports to private parties, who had to pay tariffs of 35% on Southeast Asian grain.
Of these tariffs, P10 billion a year is allocated to the Rice Competitiveness Enhancement Fund (RCEF), which supports the industry’s modernization by funding mechanization, upgraded seed, and rice cultivation know-how, among other things.
Mr. Inciong said the rest of the farm industry as well as fisheries have yet to undergo modernization, and added that database support for the industry remains inadequate.
“Whenever we have hearings here and at the House, on tariffs and the like, 30% of the time, there is a debate on the correctness of the data,” Mr. Inciong said.
“We could produce all of these products but because we did not do our homework, we become more and more reliant on imports, and that will be the scenario in RCEP,” Raul Q. Montemayor, national manager of the Federation of Free Farmers, said.
He noted that the agricultural trade deficit continues to grow despite claims of adequate protection provided by trade deals.
“They told us that there was nothing to worry about because tariffs will not go down, but we have seen over the past few years that the agricultural trade deficit has ballooned to $90 billion,” he said.
Under RCEP, he added, 84% of agricultural tariff lines will have zero tariff protection.
Trade Assistant Secretary Allan B. Gepty said the trade deal only calls for the additional liberalization of 33 tariff lines to four trade partners, with most other commodities already subject to other free trade agreements.
“Mr. Montemayor is correct to say that we have trade deficits, that’s the reality. In fact,… as early as the ’60s, deficit in trade and goods has been creeping in,” he said.
However, “before we characterize deficits, we have to consider that importing is not outrightly wrong,” he added. “As long as what you’re importing is being used for consumption, like food security, then it’s good since you’re giving food to the people.”
Mr. Gepty said that between 2018 and 2020, the Philippines mostly imported, at a deficit, cereals including rice, prepared animal fodder, miscellaneous edible preparations, meat and edible meat offal, and dairy products.
“We are at a deficit because we need them and we don’t have them here, so we import them,” he said. “Importing is good if you will use these inputs to farms or for further production.”
Trade Secretary Alfredo E. Pascual, speaking at the hearing, said that while he recognizes the concerns raised, “it is important to understand the bigger picture and view RCEP in terms of the opportunities it can bring to us.”
“We are situated in a dynamic region of the world and we cannot afford to remain out of its further economic integration,” he said.
“In any case, the government will continue to provide the needed support and level the playing field to help equip and sharpen the capacity of our businesses,” he added.
Mr. Pascual noted that RCEP provides a framework of rules that ensure regulatory consistency.
It creates a “conducive business environment that is key to ensuring the confidence of the business sector, and spurring further economic growth,” he said.
Mr. Pascual believes that the Philippines’ current linkages to the global supply chain may deteriorate if investors and businesses begin to look elsewhere for a better economic environment and opportunities.
“Considering that a number of key trading partners and competitors are also participating in this agreement, delays in Philippine participation will result in the diversion of trade and investments toward countries already within the regional bloc, at the expense of our industry and people,” he said.
“Even our exports could become less competitive, including electronic and agricultural products, as intermediate goods used as inputs for further production and manufacturing become more expensive in comparison to our competitors,” he added.
On the other hand, Mr. Pascual said the trade deal is expected to strengthen links in manufacturing, technology, agriculture, and natural resources with member states, as well as reinforce the participation of micro, small and medium enterprise participation in the global supply chain.
The Department of Trade and Industry (DTI) noted the Philippines’ readiness to accelerate the economic recovery and overall standing in the global trading environment through its accession to RCEP.
Senate President Pro Tempore Lorna Regina B. Legarda, who chaired the sub-committee hearing, said there must be “guidelines, policies, programs, funding, resources, commitments and oversight that will ensure that the agencies who negotiated for this and who are mandated to bring about a robust agricultural sector… will do… their best” upon the country’s accession to the RCEP.
She said the industries affected must be allowed to help draft the guidelines to be followed by the agencies pushing for the trade deal.
“This ratification will not change what’s been there for 40 years but if there is a window of opportunity given to Laos, Myanmar, and we’re the only one not included, I would not want that,” Ms. Legarda said.
RCEP, which started taking effect on Jan. 1, 2022, involves Australia, China, Japan, South Korea, New Zealand and the 10 members of the ASEAN.
The Philippines has yet to join RCEP as the Senate was unable to ratify the agreement before adjourning on Feb. 3. President Rodrigo R. Duterte signed the trade agreement on Sept. 2. — Alyssa Nicole O. Tan