Tuesday, July 26, 2005

Philippine Agriculture under the WTO: Gains, Losses, and Prospects

Policy Dialogue Series 2005:


29 July 2005, 1:00-4:00 p.m.
Balay Kalinaw
University of the Philippines
Diliman, Quezon City


The Agreement on Agriculture (AoA) is one of the most contested and criticized accord under the Multilateral Agreements on Trade in Goods subsumed in the GATT-UR Treaty. Although agriculture has always been covered by the GATT, GATT 1947 allowed countries to use export subsidies on agricultural primary products, which resulted in the proliferation of barriers to agricultural trade, including by means of import bans, quotas setting the maximum level of imports, minimum import prices, non-tariff measures maintained by state trading enterprises, etc. The AoA was, therefore, intended to amend this flaw in the old GATT in order to establish a fair and market-oriented agricultural trading system, as the agreement would improve predictability and security for importing and exporting countries alike.

The AoA hinges on increased market access through tariffication of all goods, the reduction of existing tariffs, and imposition of tariff rate quotas; reduction of government subsidies to producers considered as domestic support; and substantial decrease in export subsidy that comes in the forms of total budgetary outlays and the total quantity of export covered by government support. These trade mechanisms are identified to create an environment conducive to borderless exchange of agricultural products.

The argument against the ratification of the GATT-UR in the Philippines in 1994 was based on both ideological and pragmatic reasons. The removal of quantitative restrictions, the primary form of trade protection which Philippine agricultural producers received from government, would allegedly economically displace the millions of small farmers heavily dependent on the domestic agricultural markets for their livelihood. But noted economists maintained that the agricultural provisions of the GATT-UR treaty would be beneficial to the Filipino farmers for four reasons:

1. The GATT AoA initiates the worldwide process of putting agriculture within the discipline and rules of a multilateral agreement.

2. Built-in adjustment assistance mechanisms as well as measures against unfair trade and import surges are provided for in the treaty in order to minimize dislocation costs in agriculture.

3. Tariff barriers on agricultural products will be lowered in the developed world creating new market access opportunities for existing and emerging agricultural exports of the country.

4. Competitive enhancing measures will continue to be allowed under the AoA, which if implemented by the Philippines will enable the country’s farmers to maximize the benefits they can obtain under the GATT treaty.

In measurable terms, the gains from the WTO Agreement on Agriculture promised by government in 1994 were:

o annual trade earnings of P3.5 billion from agricultural products

o P60-billion increase in the agricultural gross value added (GVA)

o 500,000 jobs yearly

Discussion Questions

The presentations of the discussants will focus on the following questions:

1. How much of the commitments, pertaining to the AoA, have been implemented by the Philippine government?

2. How much of the promised benefits of WTO accession to Philippine agriculture materialized?

a. What were the actual gains and losses to Philippine agriculture?

b. What were the factors that may have contributed to this situation?

3. What has been the negotiating position of the Philippine government in agriculture since the treaty entered into force up to the WTO ministerial conference in Cancun?

4. What policies should be crafted, strengthened or repealed, in light of Philippine agriculture’s 10-year performance under the WTO-AoA regime?

Confirmed participants are:
Department of Agriculture Undersecretary Segfredo Serrano
Dr. Ramon Clarete
Dr. Cielito Habito
Mr. Manuel Quiambao
Mr. Oscar Francisco

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