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R.P. welcomes WTO decision on farm subsidy
Economists over the weekend expressed support for the World Trade Organization’s (WTO) landmark trade agreement on Sunday committing to remove farm subsidies in developed countries, citing that it would level the playing field in global agriculture trade and make the Philippines’ farm products more competitive.

They also expressed support for the WTO’s decision to cut trade barriers by removing quantitative restrictions (QRs) on commodities such as rice, citing that it would also remove opportunities for corruption. While the economists favored higher tariff duties instead of an outright restrictions on farm imports, they also urged the government to provide safety net for farmers, a commitment they said has been reneged on.

The WTO on Sunday approved the plans to end farm export subsidies and cut import duties across the world, a contentious issue that snagged talks among WTO member-nations seeking to protect their respective agriculture sectors which they feel are not ready to be opened up to competition. Global talks held in Cancun, Mexico, last year reached an impasse as countries like the Philippines refused to give concessions on key agricultural issues, like the removal of QRs on rice.

“Generally, it [the WTO decision] would mean that the highly developed countries, like those in Europe, have agreed to cut their subsidies given to their farmers,” Action for Economic Reforms (AER) coordinator Filomeno Sta. Ana told Today. “While the subsidies these countries give are far greater than what developing countries like us give to our own farmers, it’s generally a welcome development.”

President Arroyo has said she is in favor of retaining the QRs, which will expire next June, while AER and some other trade advocates are supporting their removal and are batting instead for higher tariffs to protect two million rice farmers in the Philippines.

AER’s position is shared by other economists like Rolando Dy of the University of Asia and the Pacific’s Center for Food and Agri Business. Dy, who is also board director of the Philippine Chamber for Food and Agriculture Inc., has forecast that 2004 and 2005 are growth years for palay production, “considering the intensified drive toward more planting of hybrid and certified seeds.”

“The [rice] industry’s direction may be affected depending on the result of the negotiation for the extension of the QRs on rice,” Dy told reporters in a briefing on Thursday. “Personally, I am for imposing higher tariffs on rice imports than QRs.”Sta. Ana emphasized that if there is any resistance to the WTO deal, it’s because the government has reneged on its commitment to provide safety nets to rice farmers to improve their productivity, such as providing appropriate infrastructure. He thinks that protection given by the WTO to vulnerable sectors in agriculture should even be the last resort.

“The best means of protecting farmers is providing them with means of increasing their productivity,” Sta. Ana said. “We shouldn’t even be relying on the QR, for example. Trade protection should be the last step to be taken by the government because there are so many ways to protect the farmers.”

According to a report conducted by Dy, agricultural imports in 2002 totaling $2.8 billion represented nearly 8 percent of the total value of the country’s total imports, while agricultural exports at $1.8 billion accounted for 5 percent of the country’s total exports that year.

AER emphasized that “the safety nets should be there in the first place.”

“The AER’s starting point is to support the farmers and the best means of supporting them would be for the government to put in place these safety nets, like farm-to-market roads, and the like,” Sta. Ana said. “It is understandable for, say, rice farmers to rely on the QR, kasi wala namang ginawa ang gobyerno [because there is nothing the government is really doing] to protect them when these imports arrive in the market.” Sta. Ana also cited that QRs provide opportunities for corruption. Usually, for instance, 200 traders compete for 100 cavans of rice, reflecting the type of import ceilings QR’s pose for the commodity, which often lead to favoritism. Imposing high tariffs, on the other hand, would abolish “rent-seeking,” since there would be no caps on how many cavans of rice could enter the domestic market, so long as suppliers pay the tariff, he said.
MGR Archive 3.8.2004
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