The Cabinet-level Committee on Tariff and Related Matters (CTRM) has decided to retain the 5-percent tariff on mechanically deboned meat (MDM) of chicken despite the opposition of local poultry stakeholders and the Department of Agriculture (DA).
Agriculture Undersecretary Segfredo R. Serrano confirmed the decision of the CTRM to the BusinessMirror almost a month after the committee convened in December.
“They made the decision over my vehement objection,” Serrano said in an interview. Serrano represented Agriculture Secretary Emmanuel F. Piñol in the CTRM meeting held last month.
Serrano said only the DA opposed the retention of the 5-percent tariff while the economic managers and even the Department of Trade and Industry pushed for it.
The CTRM is chaired by the Trade and Industry Secretary and co-chaired by the National Economic and Development Authority (Neda) Director General.
Its members include the Executive Secretary, the Secretaries of Agriculture, Budget and Management, Labor and Employment, Agrarian Reform, Finance, Foreign Affairs and Environment and Natural Resources. The Central Bank governor and the chairman of the Tariff Commission are also part of the CTRM.
The CTRM’s decision is only recommendatory and would be submitted to the Neda Board, according to Serrano. The CTRM is one of the inter-agency committees under the Neda Board and is tasked to advise the President on tariff and other related matters and the effect on the Philippines of various international developments.
Serrano said the DA would still write a memorandum to President Duterte to express the position of the agency and agriculture stakeholders on the matter.
‘Not inflationary’
Serrano disclosed that the Tariff Commission found that reverting tariffs on MDM imports to its 2012 level of 40 percent would not have a “substantial” economic impact. The government slashed the tariff on MDM to 5 percent as a concession to the country’s trade partners for allowing Manila to extend its special treatment for rice.
The DA official added that the Bangko Sentral ng Pilipinas (BSP) has already factored in the 40-percent tariff on MDM in its inflation forecast. Citing the BSP’s study, he said the government would still achieve its inflation targets even if the tariff level on MDM imports would go back to its 2012 level.
“Why would agriculture have to pay just so they could get few more basis points [off] the inflation rate? There is no substantial reason to maintain [the 5 percent tariff],” he added.
Serrano said maintaining the 5-percent tariff on MDM imports would prolong the prejudice to the poultry subsector.
“It was a concession made at a cost to a sector so that [injured] sector should get relief,” he said. “The protection should be reinstated. Now they want to continue the prejudice against the sector.”
United Broiler Raisers Association President Elias Jose Inciong expressed disappointment over the CTRM’s decision and pointed out that lower tariffs on MDM would mean continued technical smuggling of meat products.
“That is very unfortunate. It is consistent with the government policy since 1995 to favor importers ostensibly to benefit consumers,” Inciong told the BusinessMirror. “The sad fact is that imports have only fattened the pockets of traders with no benefit to the consumers. It also undermined local industries.”
Serrano also said that if the government decides to keep the 5-percent tariff on MDM imports, it could set a precedent for other trade-partners to seek for the retention of concessionary rates on other commodities covered by Executive Order 23.
‘Not fatal’
However, Philippine Institute for Development Studies (PIDS) Senior Research Fellow Roehlano M. Briones said the CTRM decision “will not be fatal” to the local poultry and livestock subsector.
Briones added that lower tariffs for MDM means cheaper products for consumers of food items, such as hotdogs. These consumers are usually low-income households.
“[This has been in effect since] 2015, but the growth of the hog and fresh meat sector did not contract. So any prediction of catastrophe is completely unfounded,” Briones told the BusinessMirror in a phone interview.
“Buyers of hotdogs [and users] of MDM get to enjoy lower cost of processed meat products. So on the balance, I think [lower MDM tariffs] is good for the economy,” he added.
Former Tariff Commissioner George Manzano said the primary purpose of imposing higher tariffs is to protect the local sector and allow them to become more competitive.
Manzano said, however, that if a protection is given and the local sector do not take the opportunity to modernize their processes, invest in their production facilities and increase their production, consumers will also be at the losing end.
Currently, he said the Philippines does not have a comparative advantage in meat production. This is usually the domain of countries like the United States and those in Europe.
