The Centro Saka, Inc., a policy research and advocacy non-government organization warned that various bilateral and regional free trade agreements (FTAs) could hasten the demise of the Philippine Agriculture as these commits the country to slash tariffs on agricultural products to 0-5% by the year 2010.

Apart from the World Trade Organization (WTO), the Philippines is party to various bilateral and regional free trade agreements that promote faster liberalization. Under the ASEAN Free Trade Area - Common Effective Preferential Tariffs (AFTA-CEPT), all agricultural products are programmed to have their tariffs slashed to 0-5% by the year 2010, except for rice, which is considered a highly sensitive commodity.

"Philippine domestic production costs and prices for rice, corn, chicken, swine and onions are generally higher compared to our ASEAN trading partners. This puts Philippine agriculture in a largely defensive position. Given the high production costs and prices, these tariff rates would not be sufficient to provide the small agricultural producers with enough protection against imports. Hence, preferential tariff rates, as provided for under the AFTA-CEPT, can be expected to increase these sectors' vulnerability to import displacement because in a liberalized trading regime, the main motivation for importation will not depend on production volumes but on the price differential between a domestically produced good and its imported counterpart." explained Riza Bernabe, a research fellow of Centro Saka Inc.

Bernabe's study, dubbed "Potential Impact of Bilateral and Regional Trade Agreements on the Philippine Agriculture," showed that the costs and possibility of displacement due to progressive trade liberalization under the various FTAs are greater and more definite than the potential gains that can be derived from the opening up of new export markets. Rice, corn, poultry and swine commodity sub-sectors comprise a large chunk of the entire agriculture sector and are, in fact, direct sources of income and livelihood to millions of small men and women farmers and stakeholders.

"Agricultural export commodities constitute a only a small portion of total agricultural output, compared to the commodities above which are the main production drivers in the sector. Hence any negative impact of liberalization on these industries will affect more people and a greater segment of the agricultural sector," said Bernabe.

The study also showed that free trade agreements didn't lead to increased market share and improved trade balance. Instead, it worsened the Philippines' negative trade balance with different ASEAN countries for the last decade. "The Philippines has a generally defensive trade position with most of the countries in the various trade pacts. It has a consistent negative agricultural trade deficit with eleven out of sixteen partners in the different FTAs, namely Malaysia, Indonesia, Thailand, Singapore, Myanmar, Vietnam, China, Australia, New Zealand and the Unites States. It has a positive trade balance with Brunei, Cambodia, Japan, Korea and EU."

Centro Saka added that the similarities in the profile of products traded between and among ASEAN countries meant that its members are producing the same set of products and are, in fact, targeting the same market. "In this case, the opening up of markets can potentially lead to displacement as traders import products due to the price differential, regardless of the volume of local production."

Centro Saka stressed that due to government's neglect to provide public investment that would improve the agricultural sector's productivity and competitiveness, the agricultural sector is finding it hard to survive and flourish in a liberalized market. Bernabe recommended that, "The country's participation in each regional trade agreement should always be accompanied by a Competitiveness Enhancement Plan (CEP). The CEP should indicate the necessary public investment as well domestic policy support necessary to help improve competitiveness in the target market. This plan should be tailored specifically to the objective of helping the Philippines maximize gains from each trade agreement. The implementation of market access concessions should be calibrated vis-à-vis the CEP. This means that tariff reduction should be contingent on the delivery of support services and programs under the CEP."

For inquiries, you may call Ms. Jowen G. Berber at 928-7464/946-6607 or Riza Bernabe at riza_bernabe@yahoo.com.