RP seeks compensation for tariff losses from EU

GENERAL SANTOS CITY, South Cotabato — The country’s tuna sector will be seeking compensation from the European Union (EU) for the loss of the preferential tariff for its canned tuna exports when the world’s largest economic bloc expanded its member nations to 25 from 15 last year.

"The addition of new members to the EU meant the market grew to some 450 million consumers when 10 additional members acceded to its composition. However, the Philippines now face even greater problems accessing the market because new members had to standardize their tariff schedules to MFN or most favored nations rates at 24 percent from 12 percent duty for canned tuna," said Francisco Buencamino, executive director of the Tuna Canners Association of the Philippines (TCAP).

The new EU members include Estonia, Latvia, Slovakia, Lithuania, Slovenia, Malta, Cyprus, Poland, Hungary and the Czech Republic.

He said the World Trade Organization (WTO) has been slow in processing the Philippines’ compensation claims. In contrast, Thailand, the world's biggest tuna exporter, already received a compensation of more than 1,800 metric tons (MT) of canned tuna at export duty.

"The Philippines is waiting in line, if there is a line at all," said Buencamino.

He said that the proper compensation for the local tuna exporters would be for the EU to grant its request to raise the country’s annual export quota to 13,000 MT from 9,000 MT at the lower tariff of 12 percent or even possibly lower.

"The quota volume was initiated at 9,000 MT and was raised by three percent for the second year. No volumes were established for the third to the fifth year and that a review of the market situation was promised. The EU’s expansion of membership was the basis for our argument for a bigger quota, but discussions for the last year will only be reopened this month for the quota year of 2007-2008," explained Buencamino.

The EC earlier rejected the Philippines’ request for a higher tuna allocation at the reduced tariff of 12 percent. The lower tariff for Philippine exports of canned tuna to the EU market was projected to boost the country’s shipments by as much as 20 percent annually.

Currently, the EU allocates a tariff rate quota of 25,000 MT annually at 12 percent duty for imports of canned tuna from the Philippines, Thailand and Indonesia. The Philippines’ share of the quota is 9,000 MT, 13,000 MT for Thailand, 2750 MT for Indonesia and 250 MT for others. Beyond this allocation, tuna exporters pay a 24 percent duty.

Tuna canners also noted that because of the stronger Euro currency, trading in the EU market has become more expensive for weaker economies like the Philippines.

"This development renders us less competitive in this market with all the requirements for market promotions and trade schemes. What the recent years show us is that we are losing ground where we were stronger when the EU members were only 15," noted Buencamino.

While seeking compensation for the loss of the Philippines preferential tariff, tuna exporters will continue to push for the elimination of restrictive tariff rates and non-tariff barriers in the form of overly rigid sanitary and phyto-sanitary (SPS) measures.

Marfenio Tan, chair of the just-concluded 8th National Tuna Congress and president of the Socksargen Federation of Fishing and Allied Industries, composed of seven organizations involved in tuna fishing, tuna canning, processing and aquaculture, said that industry players have in the last year, sunk in aggregate investments of about P30 million to upgrade their facilities to ensure these comply with EU’s SPS measures.

"We are hoping that the EU inspection team would push through with the scheduled visit this October because we are very confident that the steps we took since the last inspection in 2005 would satisfy their standards," said Tan.

Tan said the tuna processors and other fish processing operators want to be accredited by the EU to ensure their exports are not interrupted.

The industry, together with government agencies like the Bureau of Fisheries and Aquatic Resources have established a Hazard Analysis Critical Control Points internal audit team to guarantee the soundness of the accreditation process.

"All these activities are costing the industry huge investments in retooling, rehabilitating, and reorienting their plant operations to the satisfaction of the BFAR and EU inspectors. Yet, our tuna products will still come in at 24 percent duty compared to EU-affiliated sources such as the member states who have the capability of fishing anywhere in the world because their vessels are EU-accredited," said Buencamino.

He said the Philippines will have to be more aggressive in shattering EU’s protectionist policies.