DOMINGUEZ: TARIFF, MAV OPTIONS WERE SUGGESTED BY EDC

FINANCE Secretary Carlos G. Dominguez III, as chairman of the government’s Economic Development Cluster (EDC), on Tuesday took responsibility for the twin proposals to reduce pork tariffs and increase minimum access volume (MAV), measures facing opposition from lawmakers.

In a letter to Senate President Vicente Sotto III on Tuesday, Dominguez disclosed that the EDC has instructed the Departments of Agriculture, and Trade and Industry to “work towards” the abolition of the MAV system and “set an appropriate rate of a tariff to regulate the importation of agricultural products.”

Furthermore, Dominguez, a former agriculture secretary, assured Sotto that the importation of pork under the proposed MAV plus of 350,000 metric tons will enter the country “inbatches,” according to his letter, a copy of which was obtained by the Businessmirror.

Earlier, Agriculture Secretary William Dar had given the House of Representatives similar assurance that import arrivals will be “calibrated” carefully to avoid the “flooding” of imports that the local hog sector fears will wipe out whatever is left from the impact of the African swine fever (ASF).

“As chair of the Economic Development Cluster [EDC] of Cabinet, I take responsibility for supporting and recommending that the President signs Executive Order 128, which temporarily modifies the rates of import duty on fresh, chilled, or frozen meat of swine,” Dominguez said in his later dated April 20.

“I also recommended that the minimum access volume [MAV] be increased to address the large supply deficit,” he added.

Sotto earlier issued a statement asking Agriculture Secretary William D. Dar to name who are the brains behind the pork tariff reduction and hike in pork MAV.

Sotto welcomes Dominguez letter

REACHED for comment on the dominguez letter, the Senate President confirmed he received the 7-page letter on Tuesday afternoon.

“I welcome Secretary dominguez’s effort to reach out to senators and explain” the long decision-making process by key members of the EDC on the issues surrounding the pork crisis, Sotto told the Businessmirror.

That said, the Senate President added“i will invite him [dominguez] to our next hearing of the Committee of the Whole so he can explain to the senators the basis and the arguments for their recommendations. ”sotto said he will share copies of the letter to his peers.

Sotto stressed he wanted dominguez to be heard by the senators because, “I’m not speaking for myself here. all the senators have weighed in on these issues” and it is important, he added, that they “hear all sides.”

The dominguez letter comes amid mounting calls from both the house and Senate for President duterte to voluntarily recall Executive Order 128 reducing tariff on imported pork, which dar said was needed to blunt the impact of inflation as supply tightens and prices soar.

Support the measure

DOMINGUEZ urged the Senate to support the twin proposals to address the current pork shortage and rising prices “so that some 100 million Filipinos who eat pork, especially the poor, will not be penalized by high prices.”

dominguez explained that data showed domestic pork supply “will remain inadequate for the needs of consumers” as ASF continues to ravage domestic farms.

“If left unresolved, poverty and malnutrition will increase. Elevated pork prices will add another problem to households whose incomes have already been heavily strained by the Covid-19 pandemic,” he said.

“Unless supply issues are urgently resolved, Filipinos will continue to suffer from higher pork prices,” he added.

Short-term measure

DOMINGUEZ argued that the EDC recommended the twin proposals as an emergency measure since ongoing mediumterm and long-term solutions “will not address the immediate price pressure that affects the consuming majority.”

duterte’s EO 128, issued earlier this month, slashed pork tariffs for in-quota imports to 5 percent and out-quota imports to 15 percent, for three months until July, before they increase to 10 percent and 20 percent, respectively, for the succeeding 9 months.

“The tenure of the tariff adjustment emphasizes that this is a short-term effort that does not aim to harm the domestic industry. In fact, it is complementary to the programs of [department of agriculture] in helping the industry to recover,” dominguez said.

“The President’s Executive Order to temporarily increase MAV and decrease tariff rates for imported pork will immediately address the abnormally high pork prices caused by the supply deficit. This will give some 100 million Filipinos who eat pork, especially the poor, access to adequate and affordable food amid pandemic,” dominguez added.

The National Economic and development authority (Neda) earlier said at a 5-percent tariff the retail price of imported pork would range from P215 to P222 per kilogram compared to a P256 to P277 price range if tariffs are kept at 30 percent to 40 percent rates.

The savings for consumers would be at P61.5 billion if they can buy pork at a retail price range of P215 to P222 per kg, or more than enough to offset the estimated P13.5 billion in terms of possible import revenue losses, Neda said.

Staggered arrivals

DOMINGUEZ pointed out that the entry of the proposed total 404,210 MT pork importation this year would arrive in staggered terms due to constraints in cold-chain storage capacity.

“The availability of cold-chain facilities in the country also serves as a physical barrier to surges in importation since the storage capacity for pork is estimated only at 268,000 MT. Since pork is a perishable good, the 404,210 MT proposed for importation will have to get into the country in batches.”

Abolish MAV system

IN his letter, dominguez disclosed that the EDC at its March 5 meeting, had said key commodities that contributed to higher inflation rate were a result of “government tariffs, low MAV quotas and non-tariff barriers to trade.”

due to this, the EDC instructed the da and the DTI to start the work of removing the MAV system and replace it with an appropriate tariff rate.

“likewise, the EDC requested agencies to undertake administrative measures to reduce barriers to importation,” dominguez said.

The MAV is a commitment of the Philippines to the World Trade Organization (WTO) under the Uruguay Round Final act.

Certain industry groups like the United Broiler Raisers association (Ubra) have long proposed the abolition of the MAV as certain in-quota tariffs for some agricultural commodities, like poultry, have reached parity with its out-quota tariff.

In its letter to Sen. Cynthia a. Villar last month, Ubra proposed to abolish both the MAV for pork and chicken as it is the “fastest way to get rid of corruption.” Ubra made the proposal anew following allegations made by Sen. Panfilo lacson of an alleged “tongpats” (kickback) in the MAV system of the government.

Industry experts told the Businessmirror on Tuesday that abolition of the MAV system would help curb technical smuggling as there will be“no incentive to misdeclare when tariffs are uniform.”

however, some industry players told the Businessmirror that abolishing the MAV without decreasing the high tariffs for pork and chicken would be useless.