For rice, the National Economic and Development Authority Board agreed to reduce the duty rate to 15% for both in-quota and out-quota rates from 35% until 2028.

NEDA Board OKs program calibrating tariff rates

June 4, 2024

  • The National Economic and Development Authority Board has approved a comprehensive tariff program aimed at calibrating the country’s current tariff rates until 2028
  • The move aims to ensure access and affordability to essential commodities while balancing the interests of consumers and local producers
  • The NEDA Board also agreed to merge tariff lines on certain chemicals and chemical products, textiles, machinery, and transport equipment
  • For rice, the NEDA Board approved the reduction of the duty rate to 15% for both in-quota and out-quota rates from 35% until 2028

The National Economic and Development Authority (NEDA) Board has approved a comprehensive tariff program aimed at calibrating the country’s current tariff rates until 2028.

In a statement on June 4, NEDA director general Arsenio Balisacan said this is “a strategic move to ensure access and affordability to essential commodities—while balancing the interests of consumers and local producers—which is crucial for fostering rapid, sustained, and inclusive economic growth.”

During its 17th meeting on June 3, the NEDA Board acted on the recommendation of the Committee on Tariff and Related Matters (CTRM) to maintain the current rates on more than half of the tariff lines covering various agricultural and industrial products that have relatively low applied tariffs, particularly for raw materials and intermediate inputs used in manufacturing.

The approval comes after a comprehensive review of the country’s entire tariff structure with the intention to further structure the tariff regime to have a more efficient competitive economy.

Balisacan said maintaining the current rates “will ensure access to inputs and support efforts to improve productivity and competitiveness,” and will help domestic industries by reducing the costs they incur for their inputs, enabling them to be more competitive, especially in the global market.

The NEDA Board also agreed to merge tariff lines on certain chemicals and chemical products, textiles, machinery, and transport equipment to simplify the tariff structure for more efficient customs administration and improve the ease of doing business.

The Board also approved the CTRM’s recommendation to reduce the tariff on certain chemicals and coal briquettes to improve energy security and reduce input costs. Balisacan said tariff reduction on coal will help ensure its availability at reasonable prices, thus supporting more stable electricity prices and supply in the country.

“Given our present energy constraints, this reduction will be timely as we steadily work toward implementing planned investments in transmission facilities and renewable energy infrastructure in the coming years,” he noted.

The chemicals proposed for reduction are inputs to manufacture antiseptics, detergents, and medical research. Reducing the tariff on these inputs will help lower production costs and improve consumer welfare, Balisacan pointed out.

The reduced tariff rates on corn, pork, and mechanically deboned meat under Executive Order (EO) No. 50 series of 2023 were also maintained until 2028 to ensure a stable supply of these commodities, help manage inflation, promote policy stability and investment planning, and enhance food security.

For rice, the NEDA Board agreed to reduce the duty rate to 15% for both in-quota and out-quota rates from 35% until 2028.

This decision aims to lower the price of rice further and make it more affordable, Balisacan said.

Based on the latest inflation report of the Philippine Statistics Authority in the past three months, rice contributed about two percentage points (or over 50%) to headline inflation.

The NEDA chief said reducing rice tariffs is expected to bring down rice prices for consumers while supporting domestic production through tariff cover and increased budgetary support to improve agricultural productivity, especially as global rice prices remain elevated.

Upward price pressures for rice are driven by the effects of the El Niño phenomenon that are felt worldwide, as well as increasing demand given our steadily growing population and economy.

“We note that even at the reduced rate of 15%, the rice sector continues to enjoy comparatively high tariff protection from competitive imports as the tariff is higher than for the 90% of the total 11, 484 tariff lines under the ASEAN Harmonized Tariff Nomenclature (AHTN) 2022,” Balisacan said.

Moreover, the NEDA Board retained the tariff cover for various other agricultural products. These include sugar, vegetables such as onions, shallots, garlic, broccoli, carrots, cabbage, lettuce, sweet potatoes, cassava, coffee substitutes, complete feeds, and feed preparations.

Balisacan explained: “This new multi-year tariff schedule aims to help our economy achieve and balance several critical policy objectives. The multi-year horizon seeks to promote transparency, predictability, and policy stability. It will enable our domestic industries to undertake medium- to long-term planning to enhance productivity and competitiveness, facilitate trade, and contribute to favorable outcomes in international trade agreements while ensuring consumer welfare and protection, especially in the near term as we still confront upside risks to inflation.”

He also noted that recommendations made by the CTRM to the NEDA Board were informed with extensive consultations and review by the Tariff Commission in line with the Customs Modernization and Tariff Act. The comprehensive tariff review is conducted every five years.

The new tariff program will be implemented through an executive order that will be issued by the President.

Source: https://www.portcalls.com/neda-board-oks-program-calibrating-tariff-rates/