Trade and Fiscal Incentives - National Agricultural and Fishery ...

Constraints to Philippine Agricultural Export Performance
4.2.20 AFMA was enacted in 1997 as an enabling legislation to enhance the
global competitiveness of Philippine Agricultural products. Before the enactment
of AFMA, the Philippines has become a member of the General Agreement on
Tariff and Trade – Uruguay Rounds (GATT-UR), now currently implemented by
the World Trade Organization (WTO). The implementation period of the WTO
agreement (1995-2004) overlapped with the implementation period (1998present)
of AFMA. Given this overlap, Philippine agricultural trade performance
can be viewed within the context of AFMA and the GATT-WTO, because by
definition the provisions of AFMA and the GATT-WTO were focused on how to
enhance the global competitiveness of Philippine agricultural products.
4.2.21 Two types of commitments were made by the Philippines in joining GATT-
WTO: external commitments of the Philippines in compliance with the
agreement, and internal commitments to Filipino farmers. Philippine
commitments to the external agreement include: enhanced market access,
removal of domestic support (13% reduction from 1995 to 2004 for trade
distorting support) and no use of export subsidies; tariffication of all quantitative
restrictions (QRs); prohibition of non-tariff measures (NTMs); minimum access
volumes (MAVs) of 3 percent of 1986 to 1988 consumption for 1995 and 5% of
1986 to 1988 consumption for 2004; reduction in tariff bindings by 24 percent
with minimum 10 percent cut per tariff line from 1995 to 2004; and plant variety
registration and protection (patent or sui generis system).
4.2.22 For its internal commitments to farmers, the Philippines promised to
provide an action and budget plan for GATT-UR adjustment measures (safety
nets); enactment of appropriate legislations (e.g. Agriculture and Fisheries
Modernization Act (AFMA)) to provide tariff reductions on inputs, as well as trade
remedies to act as safeguards against import surges, injuries to domestic
industries and dumping; reforms in the value added tax (VAT) for agroprocessors;
budgetary support to agriculture amounting to P73 billion from 1995
to 1998 under GATT-UR Action Plan; and support for irrigation, P28.4 billion from
1995 to 1998 and P6 billion/year from 1999 to 2004. The assessment of
Philippine compliance was substantial in terms of the external agreement but
mixed and inadequate under domestic or internal commitments, and less than
satisfactory under the AFMA (Habito, 1999).
4.2.23 Specifically, in the Philippine agricultural sector, the impact of globalization
(GATT-WTO) was generally a decline in global competitiveness among sensitive
Philippine agribusiness products as shown by selected studies of the STRIVE
Foundation (Gonzales, 1999; Gonzales et al., 2000). The global competitiveness
of 5 agricultural products (rice, corn, beef cattle, hogs, broiler and eggs) was
analyzed before (1994) and after (1999) accession to GATT-WTO under import
and export trade regimes and demonstrated decline in global cost
competitiveness.
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