US, EU tariff proposals in WTO meet detrimental to RP agriculture — NGO

Agricultural tariffs being proposed by economic giants European Union and the United States will be detrimental to Philippine agriculture whose existing tariff rates are already very low, civil society groups said.

"If the country’s negotiators agree to proposals on agriculture of the developed countries, existing low tariff rates on agricultural commodities will further be reduced and there is no saying what this would do to our domestic farmers," said Joseph Puruganan, economist of the Focus on Global South (FGS) and Stop the New Round! Coalition (SNR), a coalition of non-government organizations opposing the World Trade Organization (WTO) 6th Ministerial conference in Hong Kong this December.

Purugunan noted that the US’ market access formula calls for four bands for developed and developing countries and percentage cuts for each band.

Under the US proposal, tariffs of zero to 20 percent will be cut between 55 percent and 65 percent; tariffs of 20 percent to 40 percent will be cut further to 65 percent and 75 percent; tariffs of 40 percent to 60 percent will also be subject to cuts between 75 percent and 85 percent, while tariffs of 60 percent onwards will be subject to an 85-percent to 95-percent cut.

The same bands apply to developing countries but they will be subject to slightly lesser reduction commitments.

Purugunan said this proposal will hurt Philippine agriculture since existing agricultural tariffs are already quite low. He explained that the country’s average bound rate is at 34 to 35 percent with about 90 percent of these falling between the 0 to 40 percent range.

"Our applied rates are even lower, averaging only around 10 percent and 87 percent of which fall within the 0 to 30 percent range," he said.

He said that with the US proposal, the country‚s tariff lines for agriculture between 0 to 40 percent will be subject to anywhere between 36 to 50 percent cuts over a 10-year period.

"This means that our average bound rates will fall to as low as 17 to 20 percent," said Purugunan.

Bound rates refer to the maximum allowable tariff rates that could be set by member countries of the WTO while applied rates refer to the actual tariff rates being imposed on imported agricultural commodities.

The economist noted that the reductions on bound levels are substantive.

"This means that by going the US proposal, Philippine bound tariff levels for vegetables would not by higher than 22 percent. While it may be argued that the proposed cuts will only affect our bound levels and not the applied rates, the experience of the vegetable sectors show that increasing the applied tariffs from a low of seven percent to 25 percent in 2004, did not address the issue of income losses for farmers. Vegetable farmers in Benguet province for instance complain that their products cannot compete with cheaper vegetable imports," he noted.

Purugunan said that the reduction of bound rates constitute an erosion of the much sought-after policy space that the Philippine negotiators have vowed to safeguard.

At the same time, the negotiations are moving farther away from the special and differential treatment provisions that developing countries are pushing.

"What is actually happening is that the formulas for tariff reductions applies to all, and with very little differentiation between those for developed and those for developing countries," said Purugunan.

Another FGS/SNR economist, Dr. Walden Bello, called for a "no-deal in Hong Kong" saying economic giants EU and US are bent on pressuring developing countries to agree to compromise modalities for agriculture that will only be detrimental to the interests of poor countries.

"Developing countries are being set up. What will only turn out at the ministerial conference in Hongkong is more of a hollow ministerial text because up to now, there is no agreement on practically every point, be it in agriculture, NAMA and general agreement on trade and services or GATS," said Bello.