Foreign Chambers Seek Extension Of Lower Tariffs

Three foreign chambers are urging the government to extend the effectivity of the executive order lowering tariffs on pork, rice and corn until next year, as a way of managing inflation concerns.

In a joint statement on Friday, Dec. 2, the American Chamber of Commerce of the Philippines (Amcham), Canadian Chamber of Commerce of the Philippines (CanCham) and the European Chamber of Commerce of the Philippines (ECCP) called on the administration to extend Executive Order No. 171 until next year.

EO 171, issued in May to address inflation concerns, extends the 15 percent in-quota and 25 percent out-quota tariff rates for pork imports under EO 134 until Dec. 31, 2022.

It also extends the reduced tariff of 35 percent on imported rice until the end of the year.

The EO also lowered the in-quota tariffs on corn imports to five percent from 35 percent and imposes zero tariff on coal until the end of the year.

The three groups pointed out that inflation has a major impact not only on the cost of doing business, but more dramatically on the expenses of Filipino households which ultimately bear the cost of rising prices.

“The impact is sharpest for those living near or below the poverty line. It is estimated that the poorest percentile of Filipino households spend up to 60 percent of their income on food, which has been a major driver of inflation these past months,” the three foreign chambers said.

It stressed that the extension of EO 171 would help temper the cost of important staples for Filipinos – pork, corn and rice.

“By keeping tariffs low, the country would be able to compete for cheaper global supplies of the same and passing on these lower prices to consuming Filipinos. The same logic applies to coal imports, an important input to our energy sector which itself is in a precarious position given the recent ‘red alert’ levels experienced in our grid lately,” they added.

On corn, the groups urged the government to consider expanding the Minimum Access Volume (MAV) of 216,940 metric tons to a level closer to the actual corn supply deficit, estimated at three to four million metric tons.

“Corn is a major input to the livestock and poultry sectors as a feed ingredient and today’s deficit is largely filled through substitutes, such as feed wheat. To be able to make a dent on prices of corn and its downstream livestock/poultry sectors, the reduced tariff rate of five percent should be allowed for a larger in-quota volume,” the foreign chambers said.

“We, therefore, recommend the Economic Development Cabinet Cluster along with the President to push for the extension of EO 171 for the entire 2023 and, in the case of corn, to expand the MAV volume closer to the actual deficit of local corn in the market today,” they added.

The joint statement was signed by AmCham president Frank Thiel, CanCham president Julian Payne and ECCP president Lars Wittig.

Last week, the Foundation for Economic Freedom (FEF) also called for the extension of lower tariffs on pork, rice and corn under EO 171, also to ensure the availability and affordability of these products.

“Given the continuing conflict between Russia and Ukraine that has pushed prices of key agricultural commodities to multi-year highs, the rising headline inflation (at 7.7 percent as of October 2022) where the food commodity group already contributes 45 percent of headline inflation as of October 2022 and the projected substantial local supply deficit of pork in 2023, there is a need to extend EO 171 until December 2023,” the FEF said.

The group noted that pork deficit is projected to reach 451,000 metric tons in 2023.

It also stressed that the high headline inflation, particularly food inflation, has already resulted in greater self-rated food poverty among Filipinos as of October 2022 at 34 percent, citing the result of a recent Social Weather Stations survey.

According to FEF, meat remains a major contributor to food inflation – at 24 percent from January to October 2022.

“Thus, extending EO 171 until the end of 2023, particularly lower pork tariffs, is imperative if the government wants to slow down the rate of increase in meat prices,” it said.

The group estimated that continuing the lower pork tariff rates until December 2023 would result in approximately P156 billion in total consumer savings or benefits next year.