April 21st, 2024
The Philippines has among the highest rates of protection for its domestic goods, with a protection level of around 27% as a share of farm receipts across all agricultural goods. With such levels of trade protection, we should not be surprised why food is expensive in the country. Such protection levels also do not directly accrue to the agricultural sectors they are supposed to protect. They also incentivize those who can completely disregard the law or corner domestic trade.
Apart from the RCEF, there is currently no extant mechanism for directly supporting a domestic sector through tariff revenues. We hurt consumers with high trade barriers, but we also do not support farmers directly with tariff revenues.
The AO by President Marcos is a step in the right direction. If implemented fully by the DA, it will open sugar imports to direct industrial users. That could end the stagnation of the food manufacturing sector. Right now, sugar prices in the Philippines are the highest in ASEAN.
The AO will also poke holes in speculative bubbles in the price of fish, which has high levels of non-tariff protection, such as the Certificate of Necessity to Import.
Of course, tariffs still play a key role. The next step is to adopt measures that earmark tariffs directly to domestic producers and consumers.
I filed HB 2471 which earmarks all agricultural tariffs directly to their corresponding domestic agricultural sectors. Apart from that, we are also preparing to submit a technical working group report on the Livestock, Poultry, and Dairy Competitiveness Act. The proposal will earmark meat and dairy import tariffs towards the domestic sector. We are doing something similar for corn.