Wednesday, July 19, 2006

Rice quotas forever

According to this report, the Philippine Department of Agriculture has bucked (again) a recent call for rice import liberalization. The proposal mind you is far from free trade: it simply proposes to convert current import quotas to tariffs from July to September, which is the cropping season (waiting time for the rice harvest). The move will earn government some much-needed revenue. It would also extend practically the same protection to our precious "food security" as the current restrictions.

The DA opposes it ostensibly because it would send a "mixed signal", undermining our WTO negotiating stance. What exactly is the position our negotiators are defending? That of quantitative restriction on rice right up to 2012 (under the Uruguay Round, the right to impose quotas for the basic staple expired in 2005). Of course it begs the question of whether the position is right in the first place - if not, then it is only proper to correct the position as early as possible.

Incredibly, the reporter swallowed the line right up to the sinker: "Volume limits are intended to protect farmers especially during harvest seasons, as imports may result in a glut that would cut selling prices." And I thought that the very rationale of importing was to take advantage of a cheaper foreign price!

Now what's the real reason why the DA is opposed to the innocuous move? Simple - the removal of quotas would transfer the monopoly rents earned by the National Food Authority to the general revenue fund. Now since the NFA is government-owned, one would think this should hardly matter. In fact though the distinction matters the world for the NFA. Incidentally, negotiations towards continued rice quotas are led by - surprise - the NFA chief.

In the Philippines, dogs (and monkeys) have tails - but the body is the one wagging.

1 comment:

t11s said...

Well, looks like you caught this about two years before the crisis started:

"The Philippines has temporarily lifted quotas on rice imports amid growing concerns about the price of the staple food...
...Prior to the temporary lift on quotas, the state-run National Food Authority was in charge of almost all of the 300,000 ton annual import quota."