February 4, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Marcos extends tariff cuts by 1 year

A vendor arranges pork products at a market in Sta. Cruz, Manila, Dec. 9 – PHILIPPINE STAR/EDD GUMBAN

By Kyle Aristophere T. Atienza, reporter

PRESIDENT Ferdinand R. Marcos, Jr. has given the go-ahead to extend tariff cuts on pork, corn, rice and coal by at least a year in the face of supply shortages and high inflation, Malacañang said.

The Palace said in a statement that Mr Marcos approved the National Economic and Development Agency (NEDA) Board’s recommendation to extend Executive Order (EO) No. 171, which reduced Most Favored Nations (MFN) tariffs on pork and corn, Rice and Coal, through December 31, 2023.

A copy of the new EO was not released by Malacañang.

EO 171, signed by then-President Rodrigo R. Duterte in May, had extended lower tariffs on pork and rice, as well as reduced tariffs on corn and coal, but only until the end of 2022.

The palace said the order aimed to ease inflationary pressures caused by the war between Ukraine and Russia, address supply issues and lower prices of key commodities.

Pork duty rates for in- and out-of-quota shipments will be kept at a reduced rate of 15% (from 30%) and 25% (from 40%). Rice duties are maintained at a lower rate of 35% for in quotas and 50% for out quotas.

Maize tariffs will also be reduced to 5% for quota imports (from 35%) and 15% (from 50%) for non-quota imports.

“Based on the recommendation of the (NEDA) Board, the reduced tariffs on pork, corn and rice meat will be reset to their original rates after December 31, 2023,” the palace said.

Malacañang said the zero tariff on coal will last beyond December 31, 2023.

NEDA Secretary Arsenio M. Balisacan said Saturday the extension will “provide relief to the poor and vulnerable sections of the Filipino population whose well-being is reduced due to high inflation.”

Rising food prices pushed inflation to a 14-year high of 8% in November, bringing the 11-month moving average to 5.6%.

Bangko Sentral ng Pilipinas (BSP) expects inflation to average 5.8% this year, well above the 2-4% target range. Inflation will average 4.5% next year, falling to 2.8% in 2024.

“Through this (tariff change) policy, we will expand our domestic food supplies, diversify our sources of staple foods and alleviate inflationary pressures arising from supply shortages and rising international prices for manufacturing inputs due to external conflicts,” Mr Balisacan was quoted as saying in the Palace -statement is called.

As tariff cuts expand, the country will “lose tariff revenue but achieve lower prices for millions of consumers,” Renato S. Reside, Jr., who teaches at the University of the Philippines School of Economics, said via Facebook Messenger chat.

Mr Reside said this will make markets more competitive.

“EO is good, but they have to provide farmers with subsidies,” Leonardo A. Lanzona, who teaches economics at Ateneo de Manila University, said in a Messenger chat. “Otherwise, while this benefits consumers and reduces inflation, producers will suffer losses.”

Asked when is the right time to end the tariff cuts, Mr Lanzona replied: “The answer is not to end the extension. The subsidies for shifting to other or cheaper productions are the decisive prerequisites.”

For his part, Mr Reside said lower tariffs should be scrapped if there was a “tax crisis”.

“We wholeheartedly welcome the move. We are committed to extending the reduced tariff, especially for meat. We see this as a win-win because the Philippines is primarily facing food security issues and fighting inflation,” said Chris Nelson, executive director of the British Chamber of Commerce of the Philippines, via Viber call.

Mr Nelson said the extension also gives the Philippines the opportunity to receive more “good quality” meat products from the United Kingdom (UK), which exported 28,000 tonnes of pork products to the Philippines in the first nine months of 2022.

“The EO is designed to boost supply in the Philippines,” he said. It will also strengthen long-term relationships between UK exporters and Filipino importers.

Meanwhile, local producers have expressed disappointment at the extension of lower tariffs, which they said could threaten the growth of the local agricultural sector.

“Only a few privileged importers and distributors have benefited from EO and will continue to do so. Not the producers, not the consumers, not the government,” Jayson H. Cainglet, executive director of Samahang Industriya ng Agrikultura, said in a Viber message.

In a statement, SINAG claimed that the extension was not necessary as there was no shortage of pork in the country.

“Government data would show cold stores for pork imports are overflowing. More than 110 million kilos plus (imported) every week – the largest recorded stocks of pork imports,” it said.

SINAG found that the farm gate price for live pigs is only 155 to 175 pesetas per kilo, while imported rice prices have been higher than domestic rice in recent months.

“Importers and distributors continue to dominate the retail market, making profits at the expense of producers, consumers and lost government revenue.”

Raul Q. Montemayor of the Federation of Free Farmers said Mr Marcos’ decision to extend the lower tariffs was “very disappointing given all his talk about promoting local production and prioritizing our farmers”.

“In the case of rice, there is no price increase, no supply problem, no crisis at all,” he said via Viber.

Mr Montemayor said that despite the reduction in non-ASEAN tariffs, the Philippines remains dependent on the Association of Southeast Asian Nations (ASEAN) countries.

“What was the reason for the extension of the tariff reduction? Only the importers and dealers will benefit,” he said.