Republic of the Philippines
HOUSE OF REPRESENTATIVES f/> RECEIVED
yy APR IB 207

Quezon City, Metro Manila

Seventeenth Congress
First Regular Session

HOUSE BILL NO. 544 3

Introduced by Representative Sharon S. Garin

EXPLANATORY NOTE

To date, the Philippines is the only country in the world that continues to
implement quantitative restrictions (QR) on rice imports. The QR works as a
protection to domestic rice farmers by limiting the volume of imported rice that enters
the Philippine market — all in the name of rice self-sufficiency. However, the QR
period, which has already been extended 3 times in the past by the World Trade
Organization (WTO), is set to expire on July 2017. With this impending expiration, it
is high time to look at other options when it comes to regulating rice imports.

Currently, a 40 percent duty on imported rice is imposed for importations below
the minimum access volume (MAV) of 805,200 metric tons (MT), while a 50 percent
tariff is imposed for importations above the MAV. Although the current system
provides ample protection to domestic rice farmers; it also keeps the price of rice
artificially high, due to the limited supply.

In a country where rice is considered the staple food and where millions of
people, or about a fifth of the population are considered poor and food-insecure,
perhaps the imposition of quantitative restrictions is too severe a system for our fellow
countrymen. It keeps more Filipinos than necessary below the poverty line, as rice
alone is the single biggest item in the average poor Filipino family’s budget. Increase
in the poverty rate can even be attributed not to falling incomes, but to higher rice
prices. What use is our stock of rice if our own people cannot afford it?

However, once the QR is lifted, the country would see an influx of cheap rice
imports from our South East Asian neighbors like Thailand and Vietnam, who are
much more adept at producing rice. And although this might be advantageous for
consumers, it can also be detrimental to our rice farmers. The rice industry itself
employs more than three million farmers and agricultural workers comprising about
30% of the total employed in agriculture. Domestic rice production contributed


P259.53 billion to the Philippine economy in 2015, constituting about 2.24% of the
country’s gross domestic product (GDP). Simply lifting the quantitative restrictions on
rice and providing for trade liberalization without ensuring financial and technical
support to the local agricultural sector, would not only endanger our food self-
sufficiency, but also negate the country’s economic growth and development.

A good balance must be sought to protect the interests of our poor and
marginalized people and the interests of our local rice farmers. This bill seeks to
provide such measure by: (a) subjecting rice imports to ordinary custom duties and
tariff; and (b) distributing the proceeds of such tariffs to the benefit of rice farmers.
This agricultural assistance may come in the form of infrastructure, better seedling
varieties, irrigation, drying facilities, farm-to-market roads, and other technology-
oriented, location, situation, and farmer-specific support services. This ensures that we
are able to keep the price of rice relatively low due to competing market forces, but
still provide adequate support for our own local farmers.

Lifting the quantitative restrictions may also lead to innovations and
advancements in the rice industry to keep up with the competition. This would result
to better yields, and greater productivity for our farmers, further ensuring food
security. Imposing appropriate tariff rates is also in line with our international treaties
and obligations, particularly, with our dealings with the World Trade Organization
(WTO) and the ASEAN Free Trade Area agreements.

We only have a short time to pass this bill before the July 2017 deadline
inevitably comes. Instead of looking at the lifting of the QR as a drawback, we should
look at it as an opportunity to rethink our rice policy, and craft a more comprehensive
program that looks after the interests of not only one but various sectors in our society.
For the foregoing reasons, this representation earnestly seeks the immediate passage of
this bill.



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Republic of the Philippines
HOUSE OR REPRESENTATIVES
Quezon City, Metro Manila

Seventeenth Congress
First Regular Session

HOUSE BILL NO. 54 43

Introduced by Representative Sharon S. Garin

AN ACT

REPLACING QUANTITATIVE IMPORT RESTRICTIONS ON RICE,
WITH TARIFFS, AND CREATING THE RICE COMPETITIVENESS
ENHANCEMENT FUND, AMENDING FOR THIS PURPOSE
REPUBLIC ACT 8178, AS AMENDED BY REPUBLIC ACT 10848,
ENTITLED “AN ACT REPLACING QUANTITATIVE IMPORT
RESTRICTIONS ON AGRICULTURAL PRODUCTS, EXCEPT RICE,
WITH TARIFFS, CREATING THE AGRICULTURAL
COMPETITIVENESS ENHANCEMENT FUND, AND FOR OTHER
PURPOSES”

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 2 of Republic Act 8178, as amended, otherwise
known as “An Act Replacing Quantitative Import Restrictions on Agricultural
Products, Except Rice, With Tariffs, Creating the Agricultural Competitiveness
Enhancement Fund, and For Other Purposes,” is hereby amended, to read as
follows:

“Sec. 2. Declaration of Policy. — It is the policy of the State to make the

country’s agricultural sector viable, efficient and globally competitive.

The State adopts the use of tariffs in lieu of non-tariff import restrictions


re to protect local producers of agricultural products, [except in the case of

2 rice, which will continue to have quantitative import restrictions. ]
3 oe
4 SECTION 2. Item (a) of Section 3 of Republic Act 8178 is hereby

5 amended, to read as follows:

6 “(@ “Agricultural Products” shall have the same meaning as
7 agricultural products under Chapters 1-24 of [Presidential Decree
8 No. 1464, otherwise known as the Tariff and Customs Code of the
9 Philippines, as amended.] SECTION 1611 OF REPUBLIC ACT
10 NO. 10863, OTHERWISE KNOWN AS THE “CUSTOMS
n MODERNIZATION AND TARIFF ACT (CMTA).

2 XXX”

13 SECTION 3. Section 4 of Republic Act 8178 is hereby amended to read

14 as follows:

15 “Sec 4. Repeal —The following laws and all other laws or provisions of
16 law prescribing quantitative import restrictions or granting government
vv agencies the power to impose such restrictions on agricultural products,
18 [except rice,] are hereby repealed

19 XXX”

20 SECTION 4. Section 5 of Republic Act 8178 is hereby amended, to read

21 as follows:


“Sec. 5. Amendment. — Subparagraph (xii), paragraph (1) Section 6 of
Presidential Decree No. 4 (National Grains Authority Act), as amended,

is hereby further amended to read as follows:

coy

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“Sec. 6. (a) Powers. —

“(xii) to establish rules and regulations governing the importation
of rice FOR FOOD SECURITY AND NATIONAL BUFFER
AND STOCKING PURPOSES and to license, impose and collect
fees and charges for said importation [for the purpose of
equalizing the selling price of such imported rice with normal

prevailing domestic prices.]

“In the exercise of this power, [the Council after consultation
with the Office of the President shall first certify to a shortage
of rice that may occur as a result of a short-fall in production, a
critical demand-supply gap, a state of calamity or other
verified reasons that may warrant the need for importation:
Provided, That this requirement shall not apply to the
importation of rice equivalent to the Minimum Access Volume
obligation of the Philippines under the WTO. The Authority
shall undertake direct importation of rice or it may allocate

import quotas among certified and licensed importers, and the

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distribution thereof through cooperatives and other marketing
channels, at prices] AT CONDITIONS TO BE DETERMINED
BY THE COUNCIL [regardless of existing floor prices and the
subsidy, thereof, if any, shall be borne by the National

Government].”

SECTION 5. Section 6 of Republic Act 8178 is hereby amended, to read

as follows:

“Sec 6. Tariffication — In lieu of quantitative restrictions, the maximum
bound rates committed under the Uruguay Round Final Act shall be
imposed on the agricultural products whose quantitative restrictions are
repealed by this Act. The President shall issue the corresponding tariffs
beginning 1996 up to the year 2000. Provided, that the schedule of the
initial and final rates shall be consistent with the country’s tariff binding

commitments.

In case of shortages or abnormal price increases in agricultural products,
whose quantitative restrictions are lifted under this Act, AS AMENDED,
the President may propose to Congress, revisions, modifications or
adjustmnents of the Minimum Access Volume (MAY). Provided,
however, that in the event Congress fails to act after fifteen (15) days

from receipt of the proposal, the same shall be deemed approved.


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IN LIEU OF THE QUANTITATIVE RESTRICTION ON RICE,
THE MAXIMUM BOUND RATE SHALL BE SUBMITTED BY

THE PHILIPPINES TO THE WTO.”

SECTION 6. Section 8, Paragraph 1 of Republic Act 8178, as amended,

is hereby amended, to read as follows:

“Sec 8. Agrigultural Competitiveness Enhancement Fund —To implement
the policy enunciated in this Act, there is hereby created the Agricultural
Competitiveness Enhancement Fund, hereinafter referred to as THE
FUND. The Fund shall consist of all duties collected from the importation
of agricultural products, EXCEPT RICE, under the minimum access
volume (MAV) mechanism, including unused balances and collections
from repayments from loan beneficiaries including interests, if any. The
Fund shall be automatically credit to Special Account 183 in the General
Fund of the National treasury; Provided, that fund release shall not be
subject to any ceiling by the Department of Budget and Mangement

(DBM).

XXX”

SECTION 7. A new Section 9 is hereby inserted after Section 8-B of

Republic Act No. 8178, as amended, to read as follows:


“See 9. RICE COMPETITIVENESS ENHANCEMENT FUND —
THERE IS HEREBY CREATED THE RICE COMPETITIVENESS
ENHANCEMENT FUND, HEREIN REFERRED TO AS THE
“RICE FUND,” FOR THE PURPOSE PROVIDED HEREIN. THE
RICE FUND SHALL CONSIST OF ALL DUTIES COLLECTED
FROM THE IMPORTATION OF RICE UNDER THIS ACT AND
THE MINIMUM ACCESS VOLUME (MAV) MECHANISM FOR

FIVE (5) YEARS FROM THE START OF THE EFFECTIVITY OF

THIS ACT. THE RICE FUND SHALL BE AUTOMATICALLY
CREDITED TO A SPECIAL ACCOUNT IN THE GENERAL
FUND OF THE NATIONAL TREASURY: PROVIDED THAT,
FUND RELEASE SHALL NOT BE SUBJECT TO ANY CEILING
BY THE DEPARTMENT OF BUDGET AND MANAGEMENT
(DBM). ANY REMAINING BALANCE AT THE DATE OF
EXPIRATION OF THE COLLECTION OF DUTIES FOR THE
RICE FUND SHALL NOT REVERT TO THE GENERAL FUND
BUT SHALL CONTINUE TO BE USED FOR THE PURPOSE FOR

WHICH IT WAS COLLECTED AND SET ASIDE.”


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THE RICE FUND SHALL BE SET ASIDE UP THE RICE FUND

SHALL BE SET ASIDE AND RELEASED TO:

(A) ENHANCE PRODUCTIVITY AND INCOME OF RICE
FARMERS;

(B) MODERNIZE FARM AND MARKETING
PROCESSES AND STRENGTHEN THE COMMODITY’S
VALUE CHAIN;

(©) ENHANCE RESEARCH, DEVELOPMENT, AND
EXTENSION ON RICE;

(D) EXPAND INSURANCE COVERAGE FOR RICE

(E) EXPAND CREDIT TO INCLUDE ACQUISITION AND
ESTABLISHMENT OF PRODUCTION, POSTHARVEST,
AND PROCESSING MACHINERIES, EQUIPMENT AND
FACILITIES OF RICE FARMERS AND THEIR
COOPERATIVES AND ASSOCIATIONS AND MICRO AND

SMALL-SCALE ENTERPRISES.

PROVIDED THAT:

(1) PREFERENTIAL ATTENTION SHOULD BE GIVEN
TO RICE FARMERS ADVERSELY AFFECTED BY THE
TARIFFICATION OF THE QUANTITATIVE

RESTRICTION ON RICE;


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@) THE USE OF THE RICE FUND SHALL BE
CONSISTENT WITH THE POLICIES AND PRIORITY
THRUSTS UNDER REPUBLIC ACT 8435, AS AMENDED,
OTHERWISE KNOWN AS THE AGRICULTURE AND
FISHERIES MODERNIZATION ACT VIS-A-VIS THE
MEDIUM-TERM PHILIPPINE DEVELOPMENT PLAN
(PDP); AND

(3) THE USE OF THE RICE FUND SHALL BE
COMPLEMENTARY AND SUPPORTIVE OF VARIOUS
AND CURRENT FUNDING ASSISTANCE WINDOWS OR
PROGRAMS OF THE DEPARTMENT OF AGRICULTURE

AND OTHER GOVERNMENT INSTITUTIONS.”

TO ENSURE THE ATTAINMENT OF THE OBJECTIVES OF
THE RICE FUND, THERE IS HEREBY CREATED AN RCEF

EXECUTIVE COMMITTEE, COMPOSED OF:

(A) THE SECRETARY OF AGRICULTURE, AS CHAIR;
(B) THE PRESIDENT OF THE LANDBANK OF THE
PHILIPPINES; AND

(©) A REPRESENTATIVE OF RICE FARMERS

ASSOCIATIONS AND COOPERATIVES.


THE COMMITTEE SHALL PROMULGATE THE POLICIES
AND GUIDELINES NECESSARY FOR THE PLANNING,
ADMINISTRATION, COORDINATION AND MONITORING OF

THE UTILIZATION OF THE RICE FUND.

THE CONGRESSIONAL OVERSIGHT COMMITTEE ON
AGRICULTURAL AND FISHERIES MODERNIZATION
(COCOAFM) SHALL CONDUCT A PERIODIC REVIEW OF

THE USE OF THE RICE FUND.”

SECTION 8. A new Section 10 is hereby inserted after the new Section 9

of Republic Act No. 8178, as amended, to read as follows:

“Sec 10. RICE INDUSTRY ROADMAP — UPON THE
ENACTMENT OF THIS ACT, THE DEPARTMENT OF
AGRICULTURE (DA) TOGETHER WITH RELEVANT
AGENCIES SHALL BE GIVEN A MAXIMUM OF 180 DAYS
TO FINALIZE THE RICE ROADMAP TO RESTRUCTURE
THE GOVERNMENT’S DELIVERY OF SUPPORT
SERVICED FOR THE SECTOR. AS PART OF THE
ROADMAP, A FIVE-YEAR (5-YEAR) RICE PROGRAM

SHALL BE IMPLEMENTED TO PROVIDE ALTERNATIVE


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LIVELIHOOD FOR THOSE WHO WILL BE AFFECTED
BY THE SHIFT IN THE IMPORT POLICY. THE DA
SHALL PROVIDE A LIST OF FARMERS IN THE
GOVERNMENT’S TRANSITION PROGRAM IN WHICH
THEY WILL EVENTUALLY GRADUATE INTO A MORE
APPROPRIATE INDUSTRY.”

SECTION 9, Sections 9, 10, 11, and 12 of Republic Act No. 8178, as
amended, are hereby renumbered accordingly.

SECTION 10. Separability Clause — If, for any reason, any section or
provision of this Act is declared unconstitutional or invalid, the other sections or
provisions not affected thereby shall remain in full force and effect.

SECTION 11. Repealing Clause — All other laws, decrees, executive
orders, issuances, rules and regulations, or part thereof inconsistent with this
Act are hereby likewise repealed or amended accordingly.

SECTION 12. Effectivity — This Act shall effect fifteen (15) days after
its publication in the Official Gazette or in at least two (2) newspapers of
general circulation.

Approved,