Sotto, Dominguez to meet on pork tariff compromise

Senate President Vicente Sotto III and Finance Secretary Carlos Dominguez III are expected to meet soon to finalize a compromise on the much-criticized move of President Duterte to lower tariffs and raise the minimum access volume (MAV) for pork that many have warned would lead to the collapse of the local hog industry.

Sen. Manny Pacquiao disclosed the upcoming meeting following a closed-door caucus of senators wherein they discussed the Senate’s

official stand on the matter to convince Duterte to revise his Executive Order 128 that lowered the tariffs and his directive to raise pork imports under MAV to 350,000 metric tons (MT).

“We’re trying to strike a balance on avoiding (high) inflation… it’s as if we’re killing our local hog raisers and we favor too much importers. It’s not acceptable to us in the Senate. Senators don’t agree,” Pacquiao told reporters in Filipino and English during an online press conference.

He said Sotto and Dominguez will disuss the proposed levels of tariff and MAV that would be acceptable to all stakeholders, including hog raisers and economic managers, who are concerned that a spike in inflation will further aggravate the pork shortage in Luzon.

Under the EO, the tariff on pork imports under MAV quota is reduced to five percent for the first three months of the order’s validity and to 10 percent for the fourth to 12th month.

For imports outside the MAV, the duty is reduced to 15 percent on the first three months, and 20 percent for the fourth to 12th month of the EO’s effectivity.

Pacquiao said senators are looking at proposing a range of 15 to 20 percent tariffs. He did not say whether the proposed levels are for imports within MAV or outside MAV, or both.

But for him, he said tariffs outside MAV should remain at the current level of 40 percent.

Sotto last week confirmed that a compromise is being worked out but declined to give details.

Sen. Panfilo Lacson earlier said it is up to Dominguez whether or not he would accept what senators would lay on the table.

“As a matter of fact, as we speak, some back channeling efforts are underway to work on that compromise… Hopefully, we can find a middle ground that will bring out a win-win solution, or terms that are acceptable to all parties concerned,” Lacson said last week.

The decision of the chamber to offer a compromise tariff rate came after two hearings of the Senate committee of the whole, where alleged multibillion-peso corruption at the Department of Agriculture on pork imports was uncovered.

Local hog raisers said they are not opposing raising the MAV to address the shortfall, which is limited to Luzon only, but only to around 100,000 MT, a figure initially proposed by experts at the DA.

Excess cheap imported pork would likely spread to the Visayas and Mindanao, which are both still experiencing surplus in production and are currently augmenting supply in Luzon, they said.

If that happens, hog raisers in the Visayas and Mindanao would also collapse, industry representatives told senators during the hearing.

The industry also strongly opposed any reduction in tariffs as importers already profit at least 120 percent in 12 months under the present setup.

Auction

Sen. Imee Marcos urged economic managers to consider auctioning pork imports to ensure their transparent allocation among traders when the increase in the MAV is finally decided.

Marcos, who chairs the Senate committee on economic affairs, said the public auction of pork imports will help dispel suspicion that the impending increase in the MAV would only result in the issuance of import permits to favored meat traders who want to take advantage of a supply shortage while African swine fever continued to afflict local hog raisers.

“Auctioning pork imports will add a measure of transparency and accountability that can discourage rent-seekers. Government will even derive additional revenue from issuing these import permits,” she said.

She added the Philippines can ensure its obligations to the World Trade Organization are met by crafting “very well-delineated auction IRR (implementing rules and regulations), so that the de facto duty does not exceed the bound rate.”