By Joann Villanueva/PNA
MANILA — The implementation of rice tariffication will further bolster the Philippines’ advantages vis-à-vis its membership to the World Trade Organization (WTO).
In a reply to questions from the Philippines News Agency (PNA), IHS Markit Asia Pacific Chief Economist Rajiv Biswas explained that the law institutionalizing tariff on rice imports over the previous policy of maximum access volume (MAV) should be taken not just for its benefits to rice consumers but in terms of the country’s WTO membership.
He explained that for the country to benefit from global trade liberalization “it needs to comply with WTO laws”, which include removal of non-tariff barriers.
“This is a crucial consideration which has underpinned the decision of the Philippines government to legislate for rice tarrification,” he said.
Thus, the economist stressed that questions on whether the domestic economy will benefit from this legislation is just a minor issue since the primary consideration is how the country will benefit from being a WTO member.
“With almost every other country of the world being a WTO member, the answer globally seems to be a clear YES to the membership of the WTO, so therefore the Philippines is also likely to be a winner from the trade liberalization benefits of WTO membership,” he added.
The Rice Tariffication Law took effect in March this year.
Relatively, ING Bank Manila senior economist Nicholas Antonio Mapa projects better domestic inflation dynamics because of rice tariffication.
He said this measure “will go a long way to building the macroeconomic stability of the Philippines.”
This, as rice farmers are expected to get helped by the Rice Competitiveness Enhancement fund, which is specified in the law, to improve productivity and be at par with their foreign counterparts.
“The passage clearly helps anchor inflation expectations and should help BSP (Bangko Sentral ng Pilipinas) refrain from hiking rates in the face of rice induced inflation in the future,” he said.
Mapa explained that ensuring that BSP’s key rates are in accommodative territory “will go a long way to ensuring that growth is stable and robust.”
“Sustained growth will in turn help boost the PHL credit rating in both the near and medium term,” he added.
In 2018, the BSP’s policy-making Monetary Board (MB) increased the central bank’s key rates by a total of 175 basis points due to elevated inflation rate.
Inflation exceeded the government’s two to four target bank last year and peaked at 6.7 percent in September to October 2018.
However, it has decelerated, with the February 2019 figure already at 3.8 percent, with the help of non-monetary policy measures.
Monetary officials forecast this trend to be sustained in the coming months, with the full-year average projected at three percent for this and next year.