DTI ready to ‘protect’ sugar producers with import fees

THE Department of Trade and Industry may consider imposing a sugar “import fee” equivalent to as much as seven times the current preferential tariff on Philippine sugar under the Association of Southeast Asian Nations’ Trade in Goods Agreement (ATIGA), as a safety net for farmers once sugar importation rules are eased.

Trade Secretary Ramon M. Lopez said a protective measure will still be needed with sugar being a “very sensitive” commodity to be dealt with especially with farmers involved.

Philippine sugar is levied a rate of 5% under the ATIGA. Thailand, an ATIGA member, has been a top source of the country’s sugar imports.

The preferential rate puts imported Thai sugar at a cost advantage compared to non-ATIGA members whose refined sugar is charged most-favored nation duties of as much as 50% to 65% respectively for in-quota and outquota shipments, depending on the form of the sweetener.

As such the DTI is considering a regulatory import fee for shipments from all sources to serve as a “tariff substitute” for the protection of farmers.

“There can be some kind of a fee, it’s like a non-tariff fee. You can put a probably minimum fee for importers. That fee can serve as a kind of protection... The farmers make it a sensitive issue,” Mr. Lopez told reporters on Friday after the department signed a memorandum of agreement with the Philippine Competition Commission.

Asked for an initial estimate of the fee, Mr. Lopez said: “Try to imagine it as the equivalent of a 35% duty. What is that equivalent in pesos?”

Mr. Lopez was referring to the maximum tariff rate levied on commodities under the highly sensitive list of ATIGA. Pushing for sugar’s inclusion in that list may require a negotiations with ASEAN counterparts.

As to the final size of the fee, the DTI will be in discussion with various agencies including the Department of Agriculture and the Tariff Commission.

Aside from the fee, the Trade Industry is also looking at a quota system under which annual import volumes will be auctioned to certain industry players.

The sugar industry is mobilizing to protect domestic growers and millers after proposals were floated by economic managers to liberalize sugar imports with rice tariffication as the model.

Mr. Lopez said the DTI in its review of possible options considers the most viable arrangement to be the imposition of a fee as this can generate revenue for the government.

PCC chairman Arsenio M. Balisacan said a quota system will have disadvantages.

“The problem with quotas is you really don’t know exactly how far prices will move because you don’t have complete information of the shortfall. You don’t know the exact location of your demand curve, your supply curve so how would you know much shortfall you can tolerate for a given price,” Mr. Balisacan told reporters.

“Even if you have a target price, determining that is difficult,” he added.

Mr. Lopez said the DTI hopes to present its position to the Cabinet by the second quarter of the year.

Mr. Lopez added that any alteration to the current importation guidelines may also need to go through the legislative process.

Asked in a text message if DTI plans to file a bill with Congress, he said no, noting that any policy reform in the sugar industry “will have to be worked out first with other agencies and Congress.”

The food industry has long been backing import liberalization for sugar to bring down the cost of the ingredient, which is cheaper to source overseas. —