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No Free Lunch

Misguided reversal

/ 04:06 AM September 24, 2019

Would imposing “safeguard measures” and doubling tariffs on rice imports be a good solution to current difficulties in our rice sector as it adjusts to the more open trade regime established by the Rice Tariffication Act (RTA)? Appealing as it may sound to many, it is not. It goes against the interests of the wider majority of Filipinos, is unlikely to help the intended beneficiaries of such a move, and to top it all, would reward the very people in the rice business who are instrumental to the current difficulties.

World Trade Organization (WTO) rules permit members to impose temporary emergency restrictions on imports such as higher tariffs to deal with a surge in imports that causes injury to domestic producers. The rules provide that safeguard measures may be applied only after an investigation conducted by competent authorities according to established procedures. Among the topics on which affected parties’ views are required to be sought is whether or not a safeguard measure would be in the public interest.

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This is really the crux of the issue: Whether or not the rules allow us to do it, would imposing high import tariffs now, to the point of making them prohibitive (that is, stop imports altogether), actually be in the public interest? This would be tantamount to a complete reversal, albeit temporarily, of the RTA and what it seeks to achieve. Temporary or not, and whether or not WTO rules allow it, this would be an outright violation of the recently enacted law, hence cannot be done without an act of Congress. Let’s face it: Those who are pushing for the so-called safeguard measures are actually still hoping to reverse the law altogether.

As I have constantly argued, it would only mean a return to helping our rice farmers in a glaringly wrong way, via a perverse “shotgun” policy that imposes collateral damage of high rice prices on 104 million rice consumers, in order to help some 2 million rice farmers and their families—even as many of them could actually be competitive and thrive under a more open trading regime. Yet we could give them much more meaningful help in a more focused way. Taking rice trade out of government control was a move that had been overdue for decades, because it would bring domestic rice prices down and induce our rice industry into greater competitiveness. Meanwhile, we penalized our 22 million poor with expensive rice, leaving them little money left to buy other nutrient-rich foods.

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It’s no surprise, then, that the incidence of severe malnutrition, especially among our young children, has been unduly higher than in most of our neighbors enjoying lower-priced rice. The result has been impaired brain and physical development in a large segment of our population, condemning them to low productivity and persistent poverty.

What we have long needed, and what RTA should be spurring us to do now, is to use a “rifle”-focused approach to helping our rice farmers. Right now, the rifle solution urgently needed is to give emergency cash support to the farmers badly affected by lower rice farmgate prices. The need for this had always been anticipated, yet we somehow failed to plan ahead for it. Even so, if there’s a will, there ought to be a way.

Moving forward, government must get its act together in helping rice farmers right, to raise productivity and lower their production costs where feasible, or to shift to other lucrative crops where not. There’s tremendous opportunity for this from the large tariff revenues already being collected for rice imports, but we must make sure that our past history of massive agriculture funds finding their way into the wrong pockets will not be repeated. We must also organize government’s technical support for farmers better, by enabling and empowering our provincial governments to coordinate farm support services within their jurisdictions, under close tutelage and supervision by the Department of Agriculture.

Restricting rice trade anew would be ill-advised. Rather than stop the hoarders who have so far arrested the fall in rice retail prices, we would only play into their hands and make them, once again, the big winners in this long mismanaged sector.

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TAGS: Cielito F. Habito, No Free Lunch, Rice imports, rice prices, rice tariffication, World Trade Organizationo, WTO
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