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To cite this document : Southeast Asian Fisheries Development Center, Aquaculture Department
(1994). GATT issues and Philippine agriculture. Aqua Farm News, 12(6), 1-15.
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FARM NEWS
A publication of the SEAFDEC Aquaculture Department, Iloilo, Philippines
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adopted by the Central Bank in the ‘80s provided new body to supervise global commerce that
for the lifting of quantitative restrictions on fishery eventually became known as the International
products, importations have not been as signifi Trade Organization. When it was time for the US
cant as earlier projected. Congress to approve the ITO, President Harry
Importations have been mostly on the Truman, preoccupied with a plan for the US
canned fis h e ry health care
products which reform, failed
are co m p etin g to lobby vigor
evenly with local ously for the
s a rd in e s and ITO. Protec
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contradiction was a major factor underlying the to “bind”or set a minimum limit on tariffs to be
three-year deadlock in the Uruguay Round ne imposed on all aggie products. Developing
gotiations. member countries will then reduce these limits
The GATT Uruguay Round Agreement on by a minimum of 10% for each tariff line and by
Agriculture features five main areas of commit a simple average of 24% for all tariff lines within
ment. These are: ten years starting in 1995. On the other hand,
developed member countries will reduce these
1. The conversion of all quantitative restric limits by a minimum of 15% for each tariff line and
tions imposed on agricultural products into by an average of 36% for all tariff lines within a
tariffs six-year time frame starting in 1995.
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investments should be in research on pest and HOW WOULD THE PHILIPPINES BENEFIT
disease control, training, extension and advisory FROM THE GATT UR AGREEMENT ON AG
services, inspection services, marketing and RICULTURE?
promotion, and infrastructure services.
The GATT Secretariat in Geneva esti
4. Reduction of export subsidies mates an expansion in world trade by an aver
Export subsidies are payments made by age of 12% or an increase of roughly $745 billion
the government to its domestic producers to (in 1992 dollars) in the year 2005. Of this
permit them to reduce their cost of production, estimated increase in world trade, approximately
thus enabling them to compete more effectively 20% will accrue to raw and processed agricul
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in world trade. Prevalent in developed countries, tural products. Preliminary estimates indicate
these subsidies are provided to encourage the that the GATT Secretariat-projected expansion
export of farm products which are domestically in world trade as a result of the GATT UR
produced in large amounts as a result of the Agreement on Agriculture will translate into the
domestic production support. following net benefits for the Philippines.
A GATT member country will likewise as
sign monetary value on all export subsidies it 1. Increase in annual net trade earnings from
provides to specific agricultural products. A agricultural products by approximately 3.4
developing member country will reduce the billion pesos.
number of agricultural products receiving export By adhering to the GATT UR Agreement,
subsidies by 14% over a ten-year period starling the country stands to enjoy an annual increase of
in 1995. It will also reduce the total amount spent 11 billion pesos in the value of its agribusiness
on export subsidies by 24% over the same exports. However, based on historical trend,
period. A developed member country, on the agribusiness imports will also increase but to a
other hand, will reduce the numberof agricultural lesser degree. According to estimates, our an
products receiving export subsidies by 21 % over nual aggie imports will increase by 7.6 billion
a six-year period starting in 1995. It will also pesos. Together, these projected imports and
reduce the total amount spent on such subsidies exports indicate that the GATT UR Agreement,
by 36% over the same six- year period. will make the country a net exporter of
agribusiness products, earning a trade surplus
5. Harmonization of Sanitary and of some 3.4 billion pesos annually.
Phytosanitary measures
Sanitary and phytosanitary measures 2. Annual increase in agricultural gross value
necessary to protect human, animal, or plant life added (GVA) by 60 billion pesos
or health will be harmonized among GATT Agricultural gross value added (GVA) will
member countries. These measures will be increase by about 60 billion pesos annually.
based on relevant international standards,
guidelines or recommendations developed by 3. Additional 500,000 jobs generated annu
international organizations, including the Codex ally
Alimentarius Commission, the International Of About half a million jobs will be generated
fice of Epizootics, and other such organizations annually due to GATT-induced expansion in
operating within the framework of the Interna agribusiness activities. These new jobs will
tional Plant Protection Convention. account for almost half of the annual job require
ments of the country.
It should be emphasized that these ben
efits are the minimum that the Philippines can
receive with the ratification of the GATT UR
Agreement. If the country provides the appropri
ate infrastructure and implements the necessary
policy reforms that would further enhance the monopolies and other regulations creating inef
competitiveness of its agribusiness exports, the ficiencies in shopping services and port man
country has the potential to significantly increase agement.
its estimated income and employment benefits
from GATT. WHAT WOULD THE PHILIPPINES HAVE TO
In ratifying the GATT UR Agreement on DO TO IMPLEMENT ITS COMMITMENT UN
Agriculture, certain infrastructure and policy re DER THE GATT AGREEMENT ON AGRICUL
forms need to be immediately implemented to TURE?
improve the prevailing marketing and invest To comply with the Agreement, the country
ment climate in the agribusiness sector. These has to do the following:
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agricultural commodities like corn and livestock 3. On the reduction of domestic subsidies
and poultry products the bound tariff rate is The Philippines currently provides do
100%. Those bound tariff rates will be reduced mestic subsidies to its rice, corn, coconut, and
to levels equivalent to at least ten percentage sugar sectors. These subsidies take the form of
points higher than the existing rates within ten production support measures such as fertilizers,
years starting in 1995. certified seed, and planting material subsidies,
In the case of corn whose tariff rate stands as well as price support mechanisms. The
at 20%, the initial bound rate is 100%. This rate computer aggregate measure of support (AMS)
will be reduced to 50% by 2005. On the other for any of these sectors fall below the de minimis
hand, the initial bound rate for meat of swine, level for developing countries of 10% of the total
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whose present tariff rate is at 20%, will be 100%. value of production. In fact, the rice sector which
This will be reduced to 40% by 2005. is heavily subsidized in the Philippines, merely
For agricultural products which do not receives an AMS of roughly 5% of its value of
enjoy protection through quantitative restrictions, production. As such, the Philippines is not
the initial bound rates will be ten percentage obligated to reduce its budgetary outlays for
points higher than existing tariff rates. domestic support to any of these sectors.
These bound rates will then be reduced by
the minimum requirement of 10% by the year 4. Reduction of export subsidies
2005. The Philippines does not provide export
For selected agricultural commodities subsidies and, therefore, does not have to com
whose tariffs are currently bound under the GATT ply with this reduction commitment.
Tokyo Round of negotiations, the initial bound
rates will be maintained at their existing levels. 5. On harmonization of sanitary and
These rates will then be reduced to the minimum phytosanitary regulations
requirement of 10% by the year 2005. Regulations imposed for sanitary and
These reduction in bound rates will enable phytosanitary purposes will remain. These
the Philippines to comply with the requirement of regulations will be harmonized with those of the
reducing tariff rates by an average of 24% for all rest of the world.
tariff lines within the ten- year period between
1995-2005.
growing. Pessimists, however, insist it will exac as the US. Other US opponents contend that the
erbate our poverty. Below are some common WTO would threaten American interests far more
myths which send chills down the spine on every than the UN, where, as one o f the five permanent
GATT fearing Filipino and the corresponding members on the Security Council, the US can
fact about the myth. veto any measure. American critics also com
MYTH: The GATT UR Agreement is a US- plain that the EU, Japan and Canada have
scheme designed to perpetuate its imperialist/ drawn up a list of more than 100 US laws that
capitalist interest to the detriment of Third World they intend to challenge in the WTO as con
countries like the Philippines. straining trade. One is a California statute that
FACT: Nothing can be farther from the requires warning labels on all products that might
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truth. How can it be an American scheme when cause birth defects or cancer. Others that could
even in the US, the Anti-GATT-WTO forces end up before a WTO tribunal involve US nutri
includes the left and the right? The likes of ex tional labeling requirements and minimum fuel
presidential candidate Ross Perot, consumer efficiency standards for automobiles. Environ
advocate Ralph Nader, ultra-conservative mentalists are particularly unhappy with a chal
Senator Jesse Helms and environment activists lenge to a US law designed to protect dolphins.
such as Greenpeace USA and the Sierra Club The fact is the GATT treaty is multilateral
are at their most vociferous self against GATT/ in nature, having been a product of a long and
WTO. They view WTO as a threat to US sover tedious process of negotiations, bickerings and
eignty. A majorobjection from the US opponents compromises among GATT participants. So it is
is that WTO would accord the US only one vote, wrong to pit the South against the North in the
placing it at par with 116 other members. They GATT debate. It is an accord negotiated and
couldn’t imagine obscure nations like St. Kitts signed by both developed and developing coun
would have the same voting power in the WTO tries.
MYTH: The GATT Agreement will worsen body blames inequitable distribution of wealth
the “dumping” of imported fish and fish products and income as the cause of much poverty,
in the country to the detriment of small, marginal particularly in the countryside. The conventional
fisherfolks. solution has been land and tenancy reforms.
FACT: The Philippines made no conces Land redistribution increases rural incomes, the
sions and committments on fish and other fish study notes, but “these (income) increases are
ery products. But the country has obtained trade not likely to substantially alter the picture of
concessions from our trading partners on tuna, aggregate poverty and inequality” in rural areas.
shrimps, and prawns. So the fear of dumping is Same thing with tenancy reforms. “Re
misplaced. Prices of “galunggong” are still high cent empirical and theoretical studies suggest
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and there seems to be no indication prices of fish that tenancy by itself is not an important correlate
and fishery products are going down. of poverty and inequality as expected. The
MYTH: The GATT UR may imperil food variation in incomes within tenure classes (re
security and sustainable agriculture flecting the effect of farm size, yield, cropping
FACT: With or without GATT, the greatest intensity, land quality, and access to technology
threat to the country’s food security is the current and markets) has been found to be much greater
policy and expenditure biases against agricul than the variation between classes.”
ture. This has been established in so many It stresses that “very promising areas for
studies. So far, the debate on GATT UR Agree poverty alleviation are in infrastructure develop
ment has crystallized the need to address the ment and human capital formation.” Providing
plight of the rural sector. Policy makers are now infrastructure in infrastructure-deprived regions
talking of “safety nets,” “efficiency enhancement reduces poverty without aggravating inequality.
measures,” and “short term adjustment meas In a simulation increasing the level of
ures” that are evolving into concrete programs, educational attainment of the population to at
policy reforms and real billions-of-pesos worth of least a high school course will reduce aggregate
investments in rural infrastructures and support poverty incidence by eleven percentage points.
services. The study concludes: “Policy makers need
All these measures are expected to en not form new agencies or go far in search of new
hance the country’s capability to realize its com models to effectively alleviate poverty, reduce
parative advantage. The GATT UR Agreement inequality and promote balanced urban-rural
and the current pre-occupation among policy growth. Much can be achieved by simply im
makers to institute important policy reform proving performance in traditional areas of de
measures and provide rural infrastructure and velopment management: the financing and pub
support services will enable the country to in lic sector coordination of investments in social
crease food productivity and at the same time and physical infrastructure, promotion of rules
allow imports to augment domestic production to ensuring incentive compatibility in government
meet the demands of the growing population. and in the private sector, maintenance of
MYTH: Besides policy reforms, the gov macroeconomic stability and pursuit of peace
ernment’s proposed “safety nets” or “competi and order, among others.
tiveness enhancing measures” generally focus MYTH: With the removal of quantitative
on providing rural infrastructure and support restrictions (QRs) on agricultural imports and its
services. However, they do not address the replacement with tariffs, agriculture surpluses
country’s structural problems, ” i.e,. poverty and from the West will “flood” the domestic market.
inequality. FACT: There will be no flood, for three
FACT: The wisdom of providing adequate reasons: (1) Rice is exempted from trade liber
rural infrastructure and support services as “safety alization for the next 10 years during the effectivity
nets” vis-a-vis GATT UR implementation is con of the agreement, (2) the maximum ceiling of
firmed in a latest study on “poverty and inequal tariffs on most agricultural commodities have
ity” by Balicasan and Bacawag (1994). Every been raised to 100% which should provide am
p le protection fo r our farmers, and (3) developed (1) Reprinting of books is allowed pro
countries will lower their tariffs on imported prod vided that (a) three years have elapsed after the
ucts and reduce their domestic price support and world’s original publication; and (b) presentation
export subsidies extended to theirfarmers. These of a proof of failure to acquire voluntary license
twin concessions will have the effect of bestow to publish. The latter can be obtained by the
ing our exports greater access to their markets simple expedient act of having an unanswered
while at the same time increasing the cost of their registered letter from the publisher within a 60-
products because of the reduction in subsidies. day period
MYTH: It is naive for the government to Moreover, GATT's IPR does not bestow
expect that the country’s export will automati exclusive reprinting right to a single publisher.
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cally expand because of tariffs reductions in Anybody can publish the work as long as they
developed country’s markets as provided under pay the corresponding royalty of 3-5% of the
the GATT UR Agreement books selling price. In turn, this rate conforms to
FACT: The country’s exports as percent P.D. #285, the original law allowing reprinting of
age of GNP have been increasing at respectable imported textbooks. The effect of this non
rates since the 1980s at a time when some exclusive reprinting right is to lower the prices of
developed countries were mounting protection books because of competition among publish
ist barriers to exports from developing countries. ers.
Hence, trade experts agree that a liberal and Copyright covers only the expression of
transparent trading system under the framework an idea and not the idea itself. For example,
of the World Trade Organization (WTO) coupled when a foreign author discusses the law of
with appropriate policy reforms (e.g., adequate gravity, it is not the law of gravity which is
infrastructure, competitive exchange rate, etc.) copyrighted but rather, the way it was explained.
in the domestic front, could provide the much- (2) The pharmaceutical law has long been
needed boost to the country's export perform in existence since 1947. It has nothing to do with
ance. The private sector, particularly entrepre GATT except to uphold it. More importantly, our
neurs and exporters who are at the forefront of Bureau of Patents says that only 5% of pharma
foreign trade, can accurately gauge whether we ceutical products available in the market have
can expand trade as a result of the GATT UR existing patents on them. How can there be
Agreement. In most consultations nationwide, monopoly profits?
these sectors say “We can.” That is why they are But assuming a “miracle drug” to cure
supportive of GATT’s ratification. They are aware AIDS has been developed at an outrageous
of the vast opportunities offered by a more open, price, still, one can argue that its price is negligi
rules-based international trading system. ble compared to the lives that it can save and the
MYTH: GATT’s Agreement on Intellec billions of savings generated from expensive
tual Property Rights (IPR) will cause: programs meant to take care of AIDS patients.
(1) increase on the cost of books because (3) TNC’s raiding of our genetic stock can
of payment of royalties in view of the strengthen happen with or without GATT. Thus, it is up to
ing of IPR; our government to protect and maintain our
(2) prices o f pharmaceutical products will indigenous stock and their biodiversity. We can
shoot up; pass laws to achieve this and create the neces
(3) our indigenous genetic stock will be sary body for this job, and those will still be
raided by transnational corporations (TNCs) deemed in compliance with GATT.
which will patent them in order to capture profits It is also fallacious to argue that TNC’s will
emanating from their use or application; and control the supply of seeds in the country by
(4) the IPR will allow patenting of life virtue of holding patents to them. Most plant
forms, including animal and human life forms. breeding institutions in the country are public in
FACT: That’s a gross misrepresentation nature such as IRRI, PHILRICE, UPLB Institute
of GATT’s IPR provision.
of Plant Breeding and DA’s Bureau of Plant (4) This is not true. GATT’s IPR only
Industry. Thus, if there is going to be any provides for the patenting of microorganisms
patenting undertaken, most will be done by these and plant varieties. In both instances, we have
public breeding institutions and not the TNC’s. already acceded to this even before the imple
With local public breeding institutions hav mentation of GATT.
ing the patents to most crop varieties, Filipino The Philippines is a participant to both the
scientists will be properly compensated for their Union for the Protection of Varieties (UPOV)
efforts. And given the right incentives, they will held in 1978 and 1991. In fact, GATT’s IPR
be able to compete with TNC’s. Subsequently, accords us an alternative other than outright
with increased competition, local farmers will patenting of plants by adopting the so-called
benefit most as they can avail themselves of “effective sui generis” protection of these varie
more quality seeds at lower prices. ties. “Sui generis” means “locally developed”
It’s up to us to implement appropriate and thus, if our tradition and laws provide plant
mechanisms that would protect and sustain the varieties are the properties of public research
country’s biodiversity. It is suggested that a body institutions, we will still be considered complying
led by DOST be created to collect, classify, with GATT’s provisions on IPR.
store, and protect our indigenous species and Likewise, we are a signatory to the 1982
varieties. Budapest Convention on the Patenting of Micro
organisms. Thus, whatever GATT’s IPR stipu been rejected and assuming that our major trad
lates on this area is something that we had ing partners have imposed a 5% to 10% tariff
agreed to long before the GATT negotiations increase on our products, we will lose approxi
took place in 1986. mately 17.42% and 28.99% of our yearly ex
Microorganisms are used to produce ports. Translated into dollars, this means a loss
vaccines, food, and other products useful to of US$1.78 billion for a 5% tariff increase and
mankind. They are part of nature. It is not, US$2.96 billion for a 10% tariff raise.
however, the microorganisms per se which are In the case of deferment of the ratification
being patented, but rather, their application or of GATT, estimates show that in year 2 (the
modification so that they could be of use to man. impact of a year’s deferment will be felt in the
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MYTH: GATT- WTO is a supersovereign, second year of GATT), we will lose exports
secret and anti-democratic body that will under amounting to more than US$1.7 billion. If we
mine the sovereign rights of member countries, postpone our decision for another year, we will
particularly Third World countries like the Philip lose around US$1.9 billion worth of exports.
pines. It should be rejected. Those estimates are still on the conservative
FACT: There is no sell-out of sovereignty. side for two reasons. One is that once our
It will not override national legislatures or na exporters lose their buyers for the first year, it
tional legislation. The Philippine Congress will might be difficult to regain them. Business is
always have the right to act on the best interest based on confidence, and reliability is a foremost
of the country. Should GATT provisions prove criterion. Because we are not a GATT member,
inconsistent with our best interest, we can rene we cannot enjoy the tariff concessions given to
gotiate. W e also have the free choice to withdraw our competitors such as Malaysia, Thailand,
from GATT-WTO. and Indonesia who are all GATT members. We
The WTO is no mystery to anyone. The will lose our buyers while senators are mulling
terms have been on the table and in the public whether or not to ratify the treaty. Once we lose
domain for more than a year. If it is a secret, it is our sukis, they’re lost forever. And second, since
the worst-kept secret of all time. All important our products will not enjoy tariff concessions,
issues in the WTO will be decided by consensus investors will prefer placing their money in coun
(i.e., with no motion dissenting). Every decision tries which are GATT members. Most likely
will follow thorough discussion. Voting will be a Malaysia, Indonesia, and Thailand. Adriano’s
rarity. research team predicts that if GATT is rejected,
This is a deal that brings security. Security we will be confronted with an economic crisis
for businessmen who needs stable markets in similar to the dying years of the Marcos regime.
which to invest or trade. Security for consumers The costs are staggering. The global community
in the form of lower prices and more choice in the will push through with the GATT-WTO. It will not
shops. Security and relief for taxpayers because wait for us. And as the global trading community
the WTO deal is the equivalent of an interna prepares to ride the waves of the new world
tional tax cut. And security in the most basic trading order, the only question to us will be: Are
sense, by bolstering world peace and order. you in or are you out?
Without the WTO, the prospect would be
increased tensions and far more inward-looking,
protectionist trading blocs seeking to outprotect GATT: IN BRIEF
one another.
As for rejection, we can’t afford to do that. GATT: PRO’S AND CON’S
Employing the SMART trade model formulated
by the United Nations Conference on Trade and The Uruguay Round of the General
Development (UNCTAD), Economist Dr. Fermin Agreement on Tariffs and Trade (GATT), the
Adriano and his colleagues came out with the eight series of multilateral trade talks, is said to
following results: in a scenario where GATT has be the most ambitious of all.
It seeks to expand world trade through garments and textile exports from the Philip
wider and deeper tariff cuts. It brings in new pines and other Asian countries.
areas that were not touched by the previous CON: Long-assured of a market under
rounds. The eighth round of talks started way the US quota system, Philippine garment and
back in 1986. textile producers may lose out to more competi
Highlights of the agreements and their tive exporters once the quota system is phased
implications for the Philippines follows: out. Local manufacturers need to retool and
improve productivity.
Reduction in taxes on imports
Stricter standards on intellectual
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