Philippines Rice Law Tariffs – Still A Bad Idea But Better Than Before

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The Philippines is at least moving in the right direction with its changes to the varied protections for the rice industry in the country. It’s a simple and general rule that if something needs to be rationed then it should be rationed by price. If there are to be import protections then it is better that they are in the form of tariffs – price that is – than quantitative restrictions on the volume of rice that can be imported. So, this is a step in the right direction:

A BILL that would further open up the country’s rice market more than 20 years after Manila put in place import restrictions is now awaiting the signature of President Duterte. According to Presidential Legislative Liaison Office Undersecretary Ryan L. Estevez, the bill, which seeks to convert the quantitative restriction (QR) on rice into tariffs, was transmitted to the Palace on Tuesday. It’s long been a goal of intern

ational trade organisations – GATT first, then WTO – that all countries should move all of their import restrictions to such a system. Use the clear and obvious price mechanism, not the more hidden and inflexible volume one. Quite apart from anything else if the restrictions are by volume then an individual permit to import some weight becomes itself valuable- a source of ever more potential corruption as people compete to be granted those valuable permits.

But not all is entirely dandy here:

One of the key feature of the bill is the creation of the Rice Competitiveness Enhancement Fund with an initial appropriation of P10 billion, according to one of the bill’s authors, Senator Cynthia Villar said.

They’re going to go and spend the tariff revenue on rice farmers which isn’t quite the point. If they need protection then the tariff is the protection. Or if they need finance then give them finance. Both is overdoing it. But what’s not dandy at all is the very idea of the protection in the first place.

For who are we running the economy for? For consumers of course, not producers. The tariffs do – are aimed at making – rice more expensive within the Philippines. This makes rice more expensive for Philippine consumers. Tariffs are, as they always are, thus against the consumer interest. That is, we shouldn’t be having any import restrictions at all.

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