Rice Trade Policy and Rice Tariffication Law

The Philippines is the world’s eighth-largest rice producer in the world.

Rice is a staple food for most Filipinos across the country.

Given the thinness of the international rice market,1 a small production

shortfall in an important rice producing country often results in a surge in import
demand and triggers a sharp rise in international prices, seriously hindering
importers' ability to secure affordable supplies on the world market. Despite the
general drift towards market liberalization, rice has remained among the most
protected agricultural commodities, with the sector often subject to direct
government intervention in domestic marketing, through state trading agencies, as
well as high tariff and non-tariff barriers.

The Philippines has pursued an active policy to raise rice production and

reduce dependence on imports, through extension, promotion of high yielding
hybrid varieties and irrigation. Consistent with this approach, new guidelines were
issued on "agricultural land inactivity and premature conversion" in 1999 to
prevent a diversion of agricultural irrigated land to other uses. The renewed
emphasis placed on rice production was reflected in the announcement of a new
target for hybrid rice cultivation, which is to be expanded from 600 000 hectares in
2000 to 1 million hectares in 2001, and a 12 percent increase in support prices in
1999, after three years of no change. In 1999, the paddy support price system was
modified based on a two-tiered mechanism, depending upon the cropping season.
As of January 2000, the National Food Agency (NFA), the state agency
responsible for domestic rice marketing and international trade, was also
empowered to pay an additional pesos 0.50 per kilo (US$ 12.4 per tonne) for
paddy delivered to the agency. The premium was paid in kind, through fertiliser
deliveries. From July 2000, it could also be exchanged for certified seeds. The
quantities of rice officially procured soared in 1999 and 2000 as prices started
falling, exceeding the previous peak of 1990.

As governments of exporting countries intensified their efforts to secure rice

sales, a large number of transactions were made under government-to-government
agreements, often in the form of barter trade arrangements. Recourse to such
arrangements was made between importers such as the Philippines.

Quantitative restrictions (QR) on rice imports have been a longstanding

instrument of the Philippine government that regulated rice imports in an effort to
protect rice farmers and promote rice self-sufficiency of the country. However,
with the passage of the Philippine rice trade liberalization law in February 2019,
the QR was lifted and replaced with import tariffs. This policy shift can have far-
reaching impacts not only to rice and agriculture but to the entire economy with
important implications to general welfare, nutrition and food security. 
Once self-sufficient in rice, the Philippines is listed by the US Department of Agriculture as the
world's top importer of milled rice for 2007, ahead of Nigeria, Indonesia and Bangladesh. Over the past
20 years or so, the country lost nearly half of its irrigated land to rapid urban development. The shortage
in the rice production of the Philippines has been augmented by imports from other Southeast Asian
countries, particularly Thailand and Vietnam. The Philippines imported no milled rice from the U.S. in
2007, according to a USDA Foreign agricultural Service report in February (BBC Southeast Asia).The
Philippines is the world's biggest rice importer, purchasing between 1 million to 2 million MT each year,
mainly from Thailand and Vietnam. This volume is equivalent to 10 % of the Philippines' total rice
consumption.

Based from the above situations and conditions, the challenge today is how will we be of help to
the crisis in our own ways? Many answers and opinions may arise from each individual, but one thing
made me encouraged that, even we, the younger generation (youth of today) can take part in creating
solutions to answer the call on global crisis. Small potatoes as we are, can also play a role in meeting the
world’s future needs by: 1. creating in us awareness and consciousness of the crisis experienced in the
present time and how to respond for the future; 2. bringing us into a common vision for the future of
the nation and the world as a whole; 3. emphatic emphasis on the importance of education- “objective
information or diffusion of knowledge” that is accessible to holders and to the public; 4. finding the
policies and strategies by an intelligent and creative management to the world’s agricultural systems,
and; 5. innovation and creative thinking to address serious issues that are taking place. Despite the fact
that researchers’ community had been developing and still searching to improve variety yet still not
enough. Thus, one solution to the rice shortage is to have an alternative foodstuff other than rice on
each meal, and consuming less amount of rice.

The Philippines maintains a two-tiered tariff policy for sensitive

agricultural products including rice, corn, pork, chicken meat, sugar, and
coffee.  These products are subject to a tariff rate quota (TRQ) and all imports
outside of the minimum access volume are taxed at a higher out-of-quota rate.
In-quota and out-of-quota tariff rates averaged 36.5 percent and 41.2 percent,
respectively, and have not changed since 2005.

On February 14, 2019, President Rodrigo Duterte signed into law the
Republic Act (RA) No. 11203 or “An Act liberalizing the importation,
exportation, and trading of rice, lifting for the purpose the quantitative import
restriction on rice, and for other purposes".  The law amends RA No. 8178 or
the Agricultural Tariffication Act of 1996 and replaces the quantitative
restrictions (QR) on rice imports with tariffs.  

Other tariff concessions given to trading partners have expired with

passage of the Rice Tariffication Law, with the tariff rates of several major
U.S. agricultural products (including frozen potatoes from 0 to 10 percent and
some dairy products) returning to their higher previous rates.

The Philippines is a signatory to the World Trade Organization (WTO)

and has lifted quantitative restrictions on imports of all food products, including
rice most recently.  Tariff-Rate Quotas (TRQs) still remain on a number of
sensitive products such as corn, poultry meat, pork, sugar, and coffee.

Sanitary and phytosanitary import clearances that serve as import

licenses are required prior to the importation of all agricultural commodities,
including feeds, live animals, meat and poultry products, plant and plant
products, seafood, and fishery items.  In addition, a minimum access volume
certificate is required for products entering at the lower in-quota duty such as
pork, poultry, corn, coffee, and coffee extract.  In all cases, imported meat,
fish, and produce require a registered importer to receive the shipment.

Sensitive Agricultural Products

Tariff rates for sensitive agricultural products were established in Executive
Order 313 of March 1996, which set varying in-quota and out-quota rates for
products considered important to domestic agriculture: pork, poultry, coffee,
sugar, rice and corn. In-quota rates apply to products imported within
established minimum access volumes (MAV).  Any imports in excess of the
MAV are assessed the out-of-quota rate. MAV products are those for which
the Philippine Government is committed to providing minimum market access
in exchange for the lifting of quantitative import restrictions in the WTO.

All shipments of regulated articles must be accompanied by a letter

declaring the shipment may or may not contain GMOs. This declaration is
issued by the shipper, importer, certified laboratory or responsible office in the
country of origin.

The Philippines became the world's biggest rice importer in 2019

with purchases estimated at a record 2.9 million tonnes. It usually buys
from Vietnam, but also imports rice from Thailand. The Philippines'
fresh rice demand comes at a time when export prices are at multi-year
peaks, particularly in Thailand.
The Philippines established formal diplomatic relations with Thailand
on June 14, 1949.[1] The relations between the two are described as warm
and friendly.[2] Thailand is one of the Philippines' major trade partners and
one of the Philippines' sources of rice through Thai exports.
 What does Duterte have to say? There is a need “to address the urgent
need to improve availability of rice in the country, to prevent artificial rice
shortage, reduce the prices of rice in the market, and curtail the prevalence of
corruption and cartel domination in the rice industry.”

What will the law do? The law essentially allows for the liberalization of
rice imports. It will remove the previously placed quota on rice imports, permitting
traders to import a near-unlimited quantity of rice.

Where will the tariffs go? The taxes will go to a Rice Competitiveness

Enhancement Fund (RCEF), which will allocate the revenue to programs for mass
irrigation, rice storage, and research initiatives.

Who will it impact? Local farmers are expected to be impacted the most as

the removal of quantitative restrictions will pit them against foreign competitors.
The National Food Authority (NFA) will also be directly affected as the law will
remove various functions from their role in food importation and distribution.

How will it work? In the basic rules of economy, the law of supply and
demand will dictate market prices. By allowing more competitors to enter the rice
market, the law will lower the price of rice by increasing supply.

Certificate of Product Registration from the FDA will be allowed for sale
in the Philippines.
The following is the list of requirements for the initial registration of food
products:
1.    Completed Integrated Application Form as prescribed by current FDA
regulations;
2.    Proof of Payment of Fees as prescribed by current FDA regulations;
3.    Clear and complete loose labels or artwork, as applicable, of all
packaging sizes, or equivalent as defined by FDA regulations except for bulk
raw materials, ingredients and food additives intended for further processing
or for distribution to establishments/manufacturers for further processing;
4.    Pictures of the product from all angles and in different packaging sizes,
and from at least two different perspectives allowing visual recognition of a
product as the same with the others being registered, as applicable.
5.    For food supplements, a sample in actual commercial presentation must
be submitted.
6.    As applicable, documents to substantiate claims, such as technical,
nutritional or health studies or reports, market-research studies, Certificate of

Trade Policies:
 Japan
China
Russia
Etc.

Exportation

Abaka
Copra
Mineral

Importation

Cars (Japan)
Oil Products (middle east)