RCEP deferral and damage control

Farmers, fisherfolk and agriculture stakeholders are asking for a deferral of the Senate ratification of the Regional Comprehensive Economic Partnership (RCEP). This is to partly implement damage control until necessary mechanisms are put in place for RCEP’s implementation.

An example is to strengthen measures to prevent a deluge of rampant subsidized smuggling of imports that will continue to kill our agriculture. We just have to reinstate a public-private sector task force that succeeded in decreasing the smuggling rate to 25 percent from 31 percent. All it needs is political will to implement this. Once transparency and private sector participation is ensured, the antismuggling drive can help prevent RCEP abuses.

Perspective

For the World Trade Organization (WTO) which we joined 28 years ago, countries like Vietnam did the necessary preparations and benefited from WTO. We neglected to do this. Up to now, we have not taken sufficient action, resulting in tremendous suffering for our farmers, fisherfolk and agriculture stakeholders. Our decision makers should interact with them some more, so they can better understand the reality of their situation.

With RCEP, this negligence is happening again. During official meetings at both the Senate hearings and the Department of Agriculture (DA) meetings, agriculture officials insist there are no RCEP threats, and therefore, there is no need to make preparations. As of last Feb. 3, 104 organizations have signed a letter strongly disputing this, and have asked for a meeting. So far, there is no DA response.

At the Jan. 5 semiannual meeting of the legislated public-private sector DA Philippine Council for Agriculture and Fisheries (PCAF), a recommendation was approved to call a meeting of the PCAF international relations committee that had previously abolished regular quarterly meetings for two years before the Senate committee RCEP hearing on international relations. The main purpose of this meeting was to hear the private sector identify RCEP threats that DA claims do not exist.

This meeting is scheduled on Feb. 11. But despite the officially approved PCAF recommendation, the identification of threats will not be accommodated in the agenda, and instead postponed to a later date. It is perplexing how the private sector is treated in an issue as important as RCEP.

Necessary steps

We are now considering immediately entering RCEP without three key preparatory elements: (1) the identification of threats and opportunities so we can take the necessary action; 2) agriculture subsector proposals, specially the endangered ones, for immediate implementation; and 3) critical defensive measures so we are not subjected to unfair trade practices, such as rampant smuggling. These are now more imminent, as some importers take advantage of the new RCEP opportunity with possible unfair trade practices that we are now not prepared to address.

Rice

Consider rice as an example. According to the Bureau of Customs (BOC), from March 29 to October of 2021, foregone tariffs from smuggling have reached P8.85 billion.

A proposal was submitted by Raul Montemayor, Federation of Free Farmers national manager, with four specific easy to implement steps: “a) importers’ declaration—require submission of full commodity specifications; validate commodity specifications; train BOC personnel in validating these specifications; b) BOC classification—complete reference values for freight on board and insurance; consistent tariff classification for rice grades; application of correct tariff rate; c) detection of undervaluation—automate flagging of undervalued imports; require the compulsory posting of a bond if undervaluation exceeds a threshold; and d) postaudit of transactions—sanction erring personnel, brokers, importers; blacklist erring exporters; and add collections and penalties to the rice fund.”

BOC has not responded as to whether they will do this or not. Meanwhile, Senator Risa Hontiveros has identified repeat smugglers as still not having penalized, making the antismuggling effort lacking in credibility.

In the midst of this, imported rice volume has increased by 32 percent from 2.1 to 2.8 million tons, when our rice gap is only 1.2 to 1.5 million tons. A misleading argument that has been repeatedly made is that rice tariffication decreased regular milled rice prices. While it is true that rice decreased by P7.72 from its unusual high price of P45.57 in 2018 because government did not import on time that unusual year, the rest of the information shows that prices of regular milled rice before and after the tariffication did not decrease: May 2017—P36.62; May 2020—P31.85; February 2022—P36.14.

From before tariffication in May 2017 to today, price has decreased by only P0.48, not P7.72. Rice tariffication is commendable because it minimizes corruption and incompetence. But DA was not equipped to implement the desirable and necessary safeguards to accompany the tariffication, which are encouraged by WTO and our law (Republic Act No. 8800). This lack of expertise in trade remedies should be corrected immediately before we are swamped with unfair trade practices which we are not ready to guard against with RCEP’s immediate ratification.

How does this affect people’s lives, which should be a primary focus of RCEP, specially as it affects our poor farmers and fisherfolk? The Philippine Statistics Authority reported that the rice farmers’ income per hectare decreased from P28,000 in 2017 to P23,242 in 2019 and P21,430 in 2020. On a per kilogram basis, this declined from P7.16 to P5.51 and P5.24. Imagine the impact on their already high poverty levels.

Conclusion

The farmers, fisherfolk and agriculture stakeholders ask for time and justice. After 24 years of practically no preparation since WTO accession in 2004, RCEP is nearing ratification, again with no preparation. We must now act as one nation, without the rich leaving the poor behind. Deferral not only means a critical need to do damage control, but the necessary steps we have to take for RCEP to be beneficial for our nation and our long neglected and abused agriculture sector.

The author is Agriwatch chair, former Secretary of Presidential programs and projects and former undersecretary of DA and DTI. Contact is [email protected].