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1. What is the Agreement on Agriculture?
The Agreement on Agriculture is the agreement covering agricultural products (HS Chapters 1 to 24 less fish and fish products plus certain products in Chapters 29, 33, 35, 38, 41, 43, 50) negotiated during the Uruguay Round of Multilateral Trade Negotiations (MTN) of the WTO.
2. What are the objectives of the Agreement?
The objectives of the Agreement on Agriculture are to establish a fair market-oriented agricultural trading system and to reform trade in the sector through the progressive reduction in agricultural subsidies and protection granted through tariffs and non-tariff measures.
3. What are the obligations/commitments of members?
The members of the Agreement on Agriculture, including the Philippines (having ratified the Final Act Embodying the Results of the Uruguay Round of MTN in December 1994), entered into binding commitments on market access, domestic support, export competition, and the agreement on sanitary and phytosanitary issues.
4. Specifically, what is the binding commitment on tariffs?
The new rule for market access in agricultural products is “tariffs only.” Before the Uruguay Round, agricultural imports were restricted by import quotas, import licensing, import prohibition and other non-tariff measures. Under the Agriculture Agreement, all quantitative import restrictions (QR’s) have to be removed and converted into ordinary customs duties corresponding to their ad valorem equivalents. This is the process known as “tariffication”.
5. How does tariffication of agricultural products operate?
The tariffication system operates through a mechanism called “tariff quotas.” Minimum Access Volumes (MAVs) which are pre-negotiated are set for products which can be imported at lower tariff rates, also called “in-quota tariffs.” Volumes to be imported outside of the MAV’s are levied higher rates set at more-or-less the equivalent level of protection afforded by the QR which was removed. These higher rates are called “out-quota-tariffs.”
6. What are the sensitive products covered by the MAV’s and their corresponding in-quota tariffs?
The agricultural products for which MAV’s are provided are those reflected in Section I-B Tariff Quotas of Schedule LXXV - Philippine Schedule of Tariff Concessions under the WTO. The initial and final bound rates of duty are also shown in this schedule.
7. What Philippine laws implement these bound tariff commitments?
Republic Act No. 8178 entitled “ An Act Replacing Quantitative Restrictions on Agricultural Products, Except Rice, with Tariffs, Creating the Agricultural Competitiveness Enhancement Fund and For Other Purposes” was enacted into law on March 27, 1996 to implement the tariffication of agricultural products.
As to the specific products whose QR’s were tariffied and the applicable tariffs to be levied on their importation, these are specified in Executive Order No. 313 which took effect on May 3, 1996.
8. What is the tariff treatment of rice under the WTO?
As special treatment to developing countries, the predominant staple in the traditional diet of a developing country shall be exempted from tariffication. However, MAV’s have to be provided corresponding to one percent (1%) of the base period domestic consumption of the product concerned increasing over time up to four percent (4%) of domestic consumption in the final year of implementation.
Rice, as the basic staple grain of the Philippines, was not tariffied during the Uruguay Round. The National Food Authority retains the first right to import rice in accordance with our food security policy. The existing rate of duty on rice remains at fifty percent (50%).
The Philippine government filed for the extension of the Special Treatment on rice until 2012 since the 10 year rice quota under Annex 5 of the WTO Agreement on Agriculture expired on 30 June 2005. As a result, negotiations with interested WTO member countries were initiated.
In line with this, EO 627 was signed by the President on 15 June 2007. EO 627 reduced the MFN rates on certain agriculture products (i.e., Mechanically Deboned Meats) to compensate other WTO member countries for the requested seven (7) year extension of the special treatment on rice.
9. What is the implementation period of the tariff concessions?
As a developing country entitled to special and differential treatment, the tariff concessions/commitments of the Philippines will be implemented over a ten-year period from 1995 up to 2004. This means that the out-quota tariffs which are really tariff ceilings will have to be reduced by a minimum of ten percent (10%) for each tariff line and by a simple average of twenty-four percent (24%) for all tariff lines within ten (10) years.
In contrast, developed countries have to cut their tariffs by a minimum of 15% per product and by an average cut of 26% for all products over six (6) years from 1995 to 2000.
10. What are the measures to be taken in case of import surges that injure domestic farmers?
Article 5 of the Agreement on Agriculture provides for special safeguards (SSG) action in the form of an additional duty that may be imposed on a temporary basis on top of the existing tariffs in cases (a) where the actual import volume exceeds a base trigger level, or (b) where the import price falls below a base trigger price.
The level of additional duty to be levied shall not exceed 33% of the level of the ordinary customs duty applied on imports of the product in question at the time of importation.
The SSG inscriptions of the Philippines cover tariffied agricultural products as shown in Section I-A Tariffs of Schedule LXXV.
11. What are the out-quota tariffs on non-sensitive agricultural products?
Out-quota tariffs on non-sensitive products which are set and bound at higher rates (also known as “tariff ceilings”) are set forth in Section I-A Tariffs of Schedule LXXV. The rates range from a minimum of 10% to a maximum of 100%, to be reduced over time to the level of the final bound rate also indicated in the schedule.
12. In case of commodity shortages or abnormal price increases of MAV products, what action can be taken?
R. A. 8178 provides for a mechanism called MAV Plus which authorises the President to increase the MAV’s with the concurrence of Congress. In effect, the in-quota volumes of products which have been forecast to be in short supply, or where their domestic prices have risen abnormally during a given year, will be increased to pre-set levels based on prevailing demand and supply conditions.
13. Who administers the MAV?
A MAV Management Committee (MMC) composed of the Secretary of Agriculture as Chairman, with the Secretaries of Agrarian Reform, Finance, Science and Technology, Trade and Industry, and the Director-General of NEDA as members implements and administers all importations under the MAV scheme.