Apec, services, agriculture

LAST May 24, the trade secretaries/ministers of the member-countries of the Asia Pacific Economic Cooperation endorsed the Philippine-initiated proposal to make services a major part of the Apec agenda.

This has a significant impact on agriculture, because poor services often mean the failure of agriculture.

Apec was founded in 1989. In 1996, when the Philippines under President Fidel Ramos hosted Apec, we gained the distinction of making sustainable development the Apec centerpiece.

As we host Apec in 2015, we may have the added distinction of championing the inclusion of services as a prime Apec focus. This is because, across the Apec’s 20-member economies, services constitute an average of 60 percent contribution to Gross Domestic Product (GDP). And yet it is only after 26 years that services will now get the focus it deserves.

In the Apec preparatory meetings in Boracay, where the Alyansa Agrikultura was an invited and active participant, the services sector took center stage.

Led by Apec 2015 Chair Foreign Undersecretary Laura del Rosario for the government and Apec Business Advisory Council Chair Doris Magsaysay-Ho for the private sector, several discussions took place that highlighted the importance of services.

Apec sessions

In the opening session on “Services and Inclusive Growth,” it was shown “how enabling services can help traditional sectors….such as agriculture…transform into modern and efficient and globally competitive industries. It added that “trade and investment in services can lead to job creation and integration of the population into the economic and social mainstream.”

In the session “Agriculture-Related Services,” the following statement received widespread agreement:

“Services play a key role in enabling trade and agriculture. Agriculture related services, such as logistics, food chain services, and agriculture research and development, are crucial in ensuring modern agriculture production processes, as well as the smooth movement of agriculture from the producer to the consumer.”

We stated earlier that the often quoted 12 percent agriculture contribution to our 2014 GDP growth rate may be misinterpreted in evaluating agriculture’s importance. This is because the food sector, which is the largest sector in manufacturing, derives its input from agriculture. Similarly, a large part of the service sector exists because of agriculture. Therefore, to discuss agriculture without its industry and service links is foolhardy.

The Alyansa Agrikultura had follow-up private discussions with two prominent speakers from the Agriculture-related Services forum. Ian Ferguson, Department Science Adviser of the New Zealand Ministry of Primary Industries (which includes agriculture), demonstrated that effective agriculture-linked services are a pre-requisite for competitive agriculture.

Christopher Findlay, executive dean of the University of Adelaide in Australia, identified trade centers as a significant contribution to improve farmer incomes. He will provide the Alyansa with information on other countries’ trade centers that can serve as models for our own centers.

This kind of interaction with Apec can certainly help Filipino farmers, especially with the new Apec emphasis on agriculture related-services.

Corn situation

One such agriculture related-service is consulting and advisory assistance.

At the Apec meeting, Rod Bioco, a founding Alyansa Agrikultura member representing the corn sector, said that after all his efforts, he could do nothing to address the entry of Argentina corn that was harming the livelihood of corn farmers. The tariff on Argentina corn is 35 percent to 50 percent. However, since the corn was transshipped through Vietnam to the Philippines, the rate this corn received was only 5 percent—the appropriate rate for Asean trade. Bioco said this violated WTO rules of origin. But he had been told the farmers could do nothing about this.

With support given for international trade and advisory services for poor farmers, this situation can be corrected. In addition, Apec support can add to the effectiveness of organizations like WTO in addressing cases like this.

In a separate high level round-table discussion on Apec structure reform, the Alyansa recommended that developing countries take active leadership positions to promote inclusive growth, which necessarily involves agriculture.

There are five clusters identified for structure reform. One cluster will recommend a 2016-2020 “Apec new strategy for structure reform.” During the round-table, the United States and Australia were identified as this cluster’s two leaders. The Alyansa recommended that a developing country like the Philippines should be included in the cluster’s leadership to help ensure the inclusive growth dimension.

This was unanimously approved. In this leadership capacity, the Philippine private sector, especially those from agriculture, must now work for 2016-2020 Apec structure reforms that will build on the Apec successes so far. (The author is chair of Agriwatch. For inquiries and suggestions, email [email protected] or telefax (02) 8522112).