Republic of the Philippines HOUSE OF REPRESENTATIVES Quezon City, Metro Manila FOURTEENTH CONGRESS First regular session House

Bill__

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Introduced by: HONORABLE DARLNENE R. ANTONINO-CUSTODIO

This bill seeks to extend the utilization period of the Agricultural Competitiveness Enchancement Fund (ACEF) established under Republic Act No. 8178 from 2005 to 2015, amending for the purpose the said Republic Act. The commitment of the Philippines to international cooperation paved the way to its becoming a signatory to the General Agreement on Tariffs and trade (GATT) and its membership in the World Trade Organization (WTO). Under the Uruguay Round, we agreed to open our agricultural markets to other WTO member-countries, promising, among others, a zero percent (0%) tariff rate on all agricultural products by 2004. To fulfill this commitment, Congress passed Republic Act No. 8178 on March 28, 1996 to among others-repeal seven (7) existing laws that either prohibited importation of agricultural products, or subjected such importation to stringent conditions. Thus, almost all agricultural products are now imported liberally into the country. Aware that opening up the local market to agricultural imports would place our farmers at a disadvantage, RA 8178 also provided for a gradual tariff quota scheme. Under this scheme, the government has reduced the tariff rates for agricultural imports on a yearly basis until it reaches 0% by the year 2004. This Tariff rate Quota (TRQ) scheme operates by imposing a ceiling on the volume of specified agricultural imports. Agricultural products imported within the ceiling enjoy a reduced tariff rate, compared to those imported in excess of the ceiling. For instance, a total of 1,000 tons of beans are imported into the Philippines 300 tons being the ceiling of these, 300 tons will enjoy a tariff rate of 35% while the remaining 700 tons will be subjected to a tariff of 80%. This 35% rate is called the In-quota tariff. The 80% rate is the out-quota tariff. The ceiling imposed on the product is called the Minimum Access Volume (MA V). But lowering the tariff rates for a certain volume of agricultural products also means lowering their competitive prices. This places local farmers at a district disadvantage. Thus RA 8178 further attempted to provide a solution: funds generated by

the in-quota tariffs would be pooled under the Agricultural Competitiveness Enhancement Fund (ACEF). According to official records, however, the in-quota duties of MAV tariff collections of the Bureau of Customs, from 1996 to 1998, were not credited by the Bureau of Treasury to the ACEF account, or Fund 183. Moreover, from 1999 to 2000, the Bureau of Customs claims to have collected an amount of only P250 Million out of an estimated collection target ofPl.73 Billion, based on the actual MAV licenses issued by the Department of Agriculture.

Congress was to have earmarked the ACEF funds for farm-to-market roads, irrigation facilities, and other projects, supposedly to cushion the adverse impact on our farmers of the availability of cheap agricultural imports. However, a subsequent Administrative Order 39, issued in 1999, provided that funding for farmers' project be subjected to the stringent requirements of the ACEF Executive Committee. And yet, even if a project was approved by the Committee, funds were not made readily available, but subject to the tight schedule of the Department of Budget and management (DBM). As a result, utilization of the ACEF fund has been very low. Only P447 Million pesos had been released thus far under the regular ACEF in 1999 alone. Customs collections amounted to Pl.3 Billion. Then too, a provision in RA 8178 limits the ACEF to a life of only nine (9) years. This means that the revenue collections generated for the ACEF account will revert to the general Fund by the year 2005. There is an urgent need, therefore, to extend the utilization period of the ACEF to allow government to continue providing assistance that will enable farmers to survive, and perhaps prosper, under a liberalized trade regime. Since low funds utilization defeats the very purpose for which the ACEF was established, there is also an equally compelling need to assure that assistance from the ACEF is made more accessible to farmers and the agricultural sector as a whole. In view of the foregoing considerations, immediate approval of this bill therefore, earnestly sought.
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Republic of the Philippines HOUSE OF REPRESENTATIVES Quezon City FOURTEENTH CONGRESS First Regular Session HOUSr~~{L

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Introduced by: HONORABLE DARLENE R. ANTONINO-CUSTODIO

AN ACT EXTENDING THE UTILIZATION PERIOD OF THE AGRICULTURAL COMPETITIVENESS ENHANCEMENT FUND, AMENDING FOR THE PURPOSE REPUBLIC ACT NUMBERED EIGHTY -ONE HUNDREDS AND SEVENTY-EIGHT, ENTITLED 4'AN ACT REPLACING QUANTITATIVE IMPORT RESTRICTION ON AGRICULTURAL PRODUCTS, EXCEPT RICE, WITH TARIFFS, CREATING THE AGRICYULTURAL COMPETITIVENESS ENHANCEMENT FUND, AND FOR OTHER PURPOSES" AND FOR OTHER . PURPOSES.

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled SECTION 1. Section 8 of Republic Act No. 8178, entitled "" AN ACT REPLACING QUANTITATIVE IMPORT RESTRICTION ON AGRICULTURAL PRODUCTS, EXCEPT RICE, WITH TARIFFS, CREATING THE AGRICULTURAL COMPETITIVENSS ENHANCEMENT FUND, AND FOR OTHER PURPOSES" is hereby amended, to read as follows: ""Section 8. Agricultural Competitiveness Enhancement Fund. To implement the policy enunciated in this Act, there is hereby created the agricultural Competitiveness Enhancement Fund, hereinafter referred to as the Fund. [ The proceeds of] THE FUND SHALL CONSIST OF ALL DUTIES COLLECTED FROM importation of AGRICULTURAL PRODUCTS UNDER THE minimum access volume (MAV) [ shall accrue to the General Fund and shall be deposited with the National Treasury] MECHANISM, INCLUDING UNUSED BALANCE AND COLLECTIONS FROM REPAYMENTS FROM LOAN BENEFICIARIES INCLUDING INTERESTS, IF ANY. THE FUND SHALL BE AUTOMATICALLY CREDITED TO SPECIAL ACCOUNT 183 IN THE GENERAL FUND OF THE NATIONAL TREASURY.

The entire proceeds shall be set and earmarked by Congress for: irrigation, farm-to-market roads, post-harvest equipment and facilities, credit, research and development, other marketing infrastructure, provision of market information, retraining, extension services, MICRO, SMALL AND MEDIUM SCALE ENTERPRISES (MSMSE) IN AGRICULTURE, AQUACULTURE AND FISHERIES SECTORS; YOUNG ENTERPRENEURS, OUT-OF-SCHOOL YOUTH, GRADUATES OF AGRICULTURE, FISHERIES, AND RELATED COURSES; AGRICULTURE AND FISHERY COOPERATIVES ENGAGED IN ECONOMIC ENTERPRISES and other forms of assistance and support to the agricultural sector. The Committed of Agriculture and Food, Appropriations and Finance of both Senate and the House of Representatives shall conduct a periodic review of the use of the Fund. The Fund shall [ have a life of nine (9) years] EXIST UNTIL THE YEAR 2015, after which all remaining balances shall revert to the General Fund. SEC.2. This Act shall take effect Fifteen (15) days after its publication in the Official Gazette or in at least two (2) newspapers of general circulation.