Philippine Standard time

Welfare Effects ofA Shift in the Trade Policy Regime for Rice

Based on guidelines of the World Trade Organization (WTO), the quantitative restrictions (QR) on rice imports expired last June 2017, and the process of shifting to a tariff regime was expected to commence. To complete the process, however, specific provisions of Republic Act 8178 or the Agricultural Tarrification Act of 1996—which repealed all laws prescribing QR on agricultural products except rice—need to be amended. After 22 years under the QR regime, the rice industry has remained largely unprepared for competition, and has imposed economic cost both on consumers and rice farmers, many of whom are also net consumers of rice. The paper argues that converting QRs to tariff will generate broad economic gains. For one, the government will collect higher revenues under a tariff regime. For 2017 alone, estimated revenues at 35.0% tariff rate will be at P6.25 billion based on actual import data. These additional revenues will be ploughed back as subsidies to the Filipino rice farmers to assist them to transition to a more open rice trade environment. Second, this reform will provide rice consumers, especially, poor households, greater access to cheaper rice products. Lower rice prices will also help cushion inflationary pressure from the TRAIN law. This reform policy has been long overdue. In the immediate term, the government should comply with the WTO rules as it is only politically and legally prudent to do in order to avoid possible disputes with our trading partners, and to actualize the benefits of a tariff regime. Finally, it is imperative that government establish the right policy environment that will balance the need to protect our rice farmers, and ensure affordability of rice to all Filipinos.


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Dec 11, 2018