By Jasper Y. Arcalas, September 16, 2019; Business Mirror

Image Credit to Business Mirror

The Philippines has formally informed the World Trade Organization (WTO) that it has launched an investigation into the surge in rice imports following the plunge in the farm-gate prices of local rice to determine whether it should apply safeguard measures.

Manila submitted a formal communication to the WTO Committee on Safeguards (CoS) on September 12 to inform member-states that it has initiated a preliminary investigation into rice imports last September 11.

“Pursuant to Article 12.1[a] of the WTO Agreement on Safeguards [AoS], the Permanent Mission of the Philippines to the WTO hereby notifies the Committee on Safeguards of the initiation of a preliminary safeguard investigation on the imported rice from various countries,” read the notification, which was made public on September 13.

Manila said it initiated the safeguard investigation, as the decline in the farm-gate prices of unhusked rice continue, which caused farmers to incur losses, coincided with the jump in imports.

Rice imports rose after the Philippines implemented the rice trade liberalization law, which removed the quantitative restriction on the staple and eased import rules.

“[The] continued increase in rice imports coincides with the drop in farm-gate prices of paddy resulting in income loss for farmers,” the document read.

“Skyrocketing rice imports significantly affect the Philippines’s ending stock, subsequently affecting the positioning of local rice in the market,” it added.

Since the passage of the rice trade liberalization law, Manila argued that “rice traders abruptly shifted from buying local paddy to importing rice as the latter is now more convenient to do.”

WTO AoS Article 12.1 (a) stipulates that member-states shall immediately notify the CoS when initiating an investigation relating to the possible imposition of safeguard measures.

Farmers groups, including the Federation of Free Farmers Inc. (FFF), have been urging the Department of Agriculture (DA) to initiate a safeguard investigation as the farm-gate price of local palay continued to go down.

FFF argued that rice farmers have incurred losses amounting to at least P40 billion due to the 20-percent year-on-year decline in palay prices.

FFF National Manager Raul Q. Montemayor said trade remedies, such as safeguard measures and antidumping duties, would limit imports as it would become more expensive. This, Montemayor added, would prevent farmers from incurring more losses as domestic palay prices are expected to stabilize.

‘Record high imports’

From March 5 to August 30, the latest data from the Bureau of Plant Industry (BPI) showed that the total volume of rice imports has reached 1.304 million metric tons (MMT). Republic Act (RA) 11203, or the rice trade liberalization law, took effect on March 5.

During the period, traders, farmers’ cooperatives and importers have sought sanitary and phytosanitary import clearances (SPS-IC) for 2.776 MMT of rice from Thailand, Myanmar, Vietnam, Spain, India, Italy and Pakistan, according to BPI data.

In the month of August alone, rice traders applied for SPS-ICs for 735,127 MT of rice. The figure is the highest monthly volume of rice that the private sector sought to import since RA 11203 took effect.

BPI data also showed that the agency has issued a total of 3,115 SPS-ICs to over 228 eligible rice importers from March 5 to August 30. The United States Department of Agriculture (USDA) said the removal of the QR and the relaxation of import rules would cause increase the purchases of rice from abroad this year.

The USDA projected that the Philippines’s total rice imports this year would rise by 24 percent to a record-high 3.1 MMT, making the country the second-top buyer of the staple after China.