Impact of the GATT－ UR on Agriculture Membership in the GATT alone offers a country numerous

benefits. It offers greater opportunities for increasing exports and export earnings. It also results in
improved planning and implementation of investment and trade activities as a result of stable and
transparent trading rules. Finally, it assures countries with lesser political stature and economic
resources fair, nondiscriminatory treatment in the conduct of international trade. The approval as well
as implementation of the UR agreement will have varied impacts on various economies. As to be
expected, the approval of provisions specially on agriculture will be most difficult in developed countries
such as Japan with no comparative advantage in －10－ agriculture but where heavy subsidies promote
agricultural production and even exports. For developing economies like the Philippines, however, these
provisions will be a welcome move to level the playing field in world trade since they are expected to
benefit through greater opportunities and higher agricultural incentives as opposed to the present
situation. It should be mentioned that the present agricultural trading system worldwide is gravely
distorted in favor of developed countries which have been subsidizing their agricultural sectors. Such
system has gradually eroded markets for products of agricultural producing countries and has
transformed agricultural importing countries into subsidizing agricultural exporting countries. For the
past decades, the agricultural policies of most developed countries isolated their internal markets for
their own producers using quantitative import restrictions and providing them with price supports. A
vivid example of this is the protection accorded by Japan to its rice industry. These policies have been
actually costly and have led to over production of farm products. Surpluses from the US and European
countries in particular have found their way into world markets, causing the prices of major agricultural
goods to decline steadily. Agricultural producing countries like the Philippines have not only faced
declining world prices but have also absorbed fluctuations in the prices of farm products as a result of
production and trade distorting policies. The UR agreement on agriculture, therefore, is a major step
towards checking unfair trade practices through the imposition of a rules-based agricultural trading
system. Compliance with GATT－ UR Requirements . Like all contracting parties, the Philippines has to
comply with the UR provisions. It will be required for instance to lift all existing quantitative restrictions
on all agricultural products, except rice which is the country’s staple food. This necessitates
amendments of some inconsistent policies or laws such as the Magna Carta of Small Farmers (Republic
Act 7607) which states that “importation of agricultural commodities that are locally produced in
sufficient quantities (including corn, poultry and meat products thereof, except beef) will not be allowed
to protect local producers from unfair competition”. In lieu of quantitative restrictions, higher tariff rates
will be imposed on agricultural commodities. For critical agricultural products, the increase will be more
substantial reaching the maximum allowable limit of 100 percent under the existing Philippine tariff and
customs law. For instance, in the case of corn and pork, whose current tariff rates stand at 20 percent,
the initial －11－ bound rate will be 100 percent for both commodities. Tariff rates will be reduced to 50
and 40 percent, respectively, by 2005. Table 3 shows the schedule of tariffs on Philippine imports of
selected agricultural commodities per the UR agreement. In recognition of food security concerns, the
Philippines has availed of the flexibility of the UR agreement of retaining quantitative import restrictions
for staples, in this case, rice. Import restriction on rice will remain for the next ten years. In exchange,
however, a minimum import access quota for rice will be allowed amounting to one percent of the
country’s domestic consumption or about 59,730 MT in 1995 to four percent or 238,940 MT in 2004 at
50 percent tariff. The country is not required to reduce its budgetary outlays on domestic support for
agricultural products to comply with the provision on the removal or elimination of domestic subsidies.
While it currently provides domestic subsidies to its rice, corn, coconut and sugar sectors in the form of
production support measures such as fertilizer, certified seeds, planting material subsidies as well as
price support mechanisms, the computed aggregate measure of support (AMS) for these sectors fall
below the de minimis level of 10 percent for developing countries. In rice, for example, which is the
heavily subsidized sector, the total AMS is only 5 percent of its value of production. Likewise, the
Philippines will not be affected by the provision on export subsidies as it does not provide any. Possible
Impacts of GATT . There are diverse views as to how the UR agreement will affect the agriculture sector
of the Philippines. Considering, however, the liberalization of world agricultural markets from distortive
production and trade policies, the Philippines is seen to benefit a lot from the GATT. Increased market
access and exports. The country’s accession to the GATT－ UR agreement can regain the
competitiveness it has lost due to declining world prices of agricultural products. With the lifting of
quantitative restrictions in all GATT contracting parties, the country will benefit in terms of increased
volume of exports and wider global market access opportunities. Exports of major agricultural
commodities, in particular, are expected to improve due to the phasing out of quotas in major export
markets and the elimination of production and export subsidies in other countries. With transparency
and predictability realized through tariff bindings and harmonization of sanitary and phytosanitary
measures, exports will be secured and lower transactions costs will be achieved in trading.