Tricky tariff twists
As the sugar shortage, which is artificial as claimed by planters, heads toward a resolution with prices of the commodity trending down and the Sugar Regulatory Administration finally getting its act together to allow the domestic use of sugar allotted for export to the US under a tariff rate quota, new problems are cropping up.
Sugar importation was the first litmus test of the administration of President Ferdinand “Bongbong” Marcos over Sugar Order 4 which would have allowed the importation of 300,00 metric tons of sugar had it not been barred by the President.
Subsequently, three officials, former Agriculture Undersecretary Leocadio Sebastian, former Sugar Regulatory Administration administrator Hermenigildo Serafica, and SRA board member Roland Beltran resigned their posts over the controversy.
The unused sugar supply allotted for the US quota scheme became controversial after the officials refused to grant the conversion for domestic consumption and instead the SRA opted for massive imports.
On 7 November, a draft Sugar Order 4 covering the crop year 2022 to 2023 seeks the conversion of all domestically produced Class “A” and “D” outstanding export sugars into class “B” sugar for domestic consumption.
“A” sugar is intended for the US market and “D” is for other export destinations and “B” is for domestic consumption.
Industry leaders said prices have indeed subsided from their highs in October as the 2022 to 2023 sugar harvest season gets underway but projections in the industry are not encouraging.
In Sugar Order 1 released last 13 September 2022, the SRA projected 1.876 million MT of sugar production this crop year, far short of the projected 2.4 million MT annual domestic consumption.
Industry players expect a big risk of another massive shortage situation during the off-season months unless the SRA plans a properly-calibrated importation program ahead of time.
Draft Sugar Order 4 raises several issues that the SRA ought to clarify such as its terms in which SRA wanted planters who did not produce the export sugar subject to conversion are wed to dictate the price of the conversion fee.
The producers will be issued by the SRA a conversion rights certificate. For the holders of the export quedans to convert their export sugar to Class ‘B’, they will have to buy these conversion rights certificates at a price fixed by planters or producers.
“They are also the same producers who, for years, profited on massive sugar import margins from the SRA’s export replenishment program. Under these questionable programs, traders who exported the raw sugar were granted the right to import the same volume of raw sugar by paying the producers, who sold the exported sugar to these traders, a substantial amount in exchange for signing the traders’ import rights certificate,” a prominent industry figure said.
Another tariff-related controversy is about a warning from industry sources that the Philippines stands to lose its bid for the renewal of the European Union’s Generalized System of Preferences Plus privileges amid an order by the Department of Labor and Employment to cancel the deposit of the instrument of Ratification of the International Labor Organization Convention 81.
The ILO Convention 81 is one of the six additional conventions proposed by the European Commission for GSP + renewal. It is the only convention the Philippines has yet to completely ratify for its reapplication under the new GSP + framework.
Last June, former President Rodrigo Duterte signed the instrument of ratification of ILO Convention 81 which was set for deposit with the IL O Director General in Geneva, Switzerland last July.
However, diplomatic sources revealed a top Labor official ordered the Philippine Overseas Labor Office in Geneva to cancel the deposit of the ratification instrument.
Contrary to earlier reports that the DOLE is working on the ratification process of ILO Convention 81, informants said Labor Undersecretary Benedicto Ernesto Bitonio has directed POLO-Geneva to backtrack from the deposit of the instrument.
The same sources said Bitonio’s action was at the behest of Labor Secretary Bienvenido Laguesma but without clearance from President Ferdinand “Bongbong” Marcos Jr.
“Industry leaders said prices have indeed subsided from their highs in October as the 2022 to 2023 sugar harvest season gets underway but projections in the industry are not encouraging.
“Sugar importation was the first litmus test of the administration of President Ferdinand “Bongbong” Marcos over Sugar Order 4 which would have allowed the importation of 300,00 metric tons of sugar had it not been barred by the President.