FTAs raise stakes for exportable farm goods

By Jenina P. Ibañez

FORMER trade negotiator for agriculture Segfredo R. Serrano is calling for a shift to high-value crop exports and data-based negotiations as the Philippines enters into more trade agreements.

Mr. Serrano, who retired in April after 21 years of service at the Department of Agriculture (DA), represented the Philippine Task Force World Trade Organization Agriculture Renegotiations (TF-WAR).

The Philippines this year is taking on new free trade agreements (FTAs), as it looks to sign the Regional Comprehensive Economic Partnership (RCEP) among Southeast Asian countries and their major trade partners. The Philippines is also in negotiations with South Korea, and may begin talks for a trade agreement with the United States.

The particular details on the products that are at risk or could find more opportunities for export are not known yet — although the Philippines has been negotiating for reduced tariffs on banana exports to South Korea.

Mr. Serrano, in an interview in his Los Baños home in January, indicated that he supports the agreement. He noted that South Korea is a rich market for Philippine exports, but it imposes tariffs twice the level of Japan’s.

“We must be able to do an FTA not just within the ambit of ASEAN-Korea and ASEAN+3 negotiations,” he said.

As the Philippines moves forward with RCEP, he said that the country must boost its ability to supply exports.

“We should increase support and facilitative assistance to exporters and sectors that have vast potentials for export.”

DATA-DRIVEN FARMING
Mr. Serrano believes the DA must strengthen its trade negotiating position with data-based decision-making and industry consultations.

“We were able to extract, like extracting a tooth from a dental patient, zero tariffs for all tropical vegetables from Japan,” he said. But he said the country has not yet made full use of the concession.

A data-driven value chain analysis would give insights into which agricultural sectors and areas would be best for export, he said.

“There needs to be stronger engagement with private industry,” he said.

This means the Philippines and its trade negotiators need to know which sectors to target for market access in other countries.

“In order to be as proficient as the negotiators of Australia and China, you need to know the capabilities. You need to know the plan of the government and private sector when it comes to these products over the medium-term and beyond,” Mr. Serrano said.

“Similar to what happened in Japan — it was all ‘potentials,’ ‘demands,’ or ‘requests’ from the sectors. We had very scant data.”

DA Undersecretary for Policy and Planning Rodolfo V. Vicerra, who took over Mr. Serrano’s post and oversees the department’s trade negotiators, said in a phone interview on Friday that the DA is working on road maps — studying how best to use the country’s supply chain for trade.

“Mahirap ‘yung negotiation portion kasi meron na position mga (trade) counterparts natin (Negotiating is tough because our counterparts arrive with predetermined positions),” he said.

In the road map process, “We go back and find out where we can win… and our supply chain, we need to study it and fast because what the other countries are doing, they are more well-planned. Mas pinag-iisipan. Tayo nag-re-react lang (They have thought things through, while we are merely reacting).”

He said there has been a level of comfort in exporting certain crops and commodities that the country already produces, and the agriculture industry must improve the competitiveness of livestock exports and crops outside the well-developed banana industry.

Mr. Vicerra said the department’s strategy is to ask every major commodity producer to think through its next steps. He also said the country must move to exporting higher value-added products such as processed fruit.

This converges with Mr. Serrano’s view that support should not just be given to staples like rice and corn but also to high-value crops.

“We should be exporting a slew of coconut products,” he said.

FARM PRODUCTIVITY
Mr. Serrano said improving farm productivity will boost the country’s trade position.

He said the DA must have a multi-year budget proposal, with more funding allocated to the basic needs of the industry. These include research and development, technology promotion, access to markets, and a favorable regulatory environment. By doing so, he said the competitiveness of the sector will be enhanced both in the domestic and international markets.

He also prescribed better compliance with international standards, along with higher standards for domestic markets.

University of the Philippines agricultural economist Ramon L. Clarete said in a phone interview Thursday that he is not optimistic about the country’s upcoming trade agreements.

He said the disruption caused by the US-China trade war and the spread of the coronavirus means that trade agreements may make little difference.

“You can have a treaty but the trade will not follow. As expected I can do an analysis of the trade… whether it will be realized in this kind of environment? You have a trade war, you have the coronavirus. That’s a big challenge to the world trading system right now.”

The industry must have some degree of resilience, he said.

“We should just be focused about building our capability to comply with international standards on farm trade. You cannot export without complying to those standards,” Mr. Clarete said.

He said the US remains a potential big market for the Philippines, with penetration to improve with better farm capabilities and standards compliance.

PROTECTING DOMESTIC INDUSTRY
Mr. Serrano wants the DA to keep looking out for the farm industry as the Philippines lowers its trade barriers, exposing the sector to competition from imported farm products.

“Our negotiating theology was this: before you give in, the government should have done all the preparations to face the international competition of the sector.”

Mr. Clarete said the industry should not be afraid of imports.

“Other countries that are successful are also big, big exporters of farm products. Thailand is like that; Malaysia is like that.”

Mr. Serrano had last year criticized the passage of the rice tariffication law, which removed import restrictions on rice. Removing the quantitative restrictions on imports, he said then, hurts the agriculture sector.

Mr. Vicerra said “the shift will get us into open competition.”

“There will be lessons learned on how we can take advantage of our competitive advantages, how can we use that (because he wave advantages)…. the fact is most of our rice farmers are steeped in the old technologies.”

Mr. Serrano said farmers need better technology and called on the government to invest more in the industry.

“Improve productivity for farmers then their opportunities for higher income increases. When they have more income from agriculture, then they are more confident, (they have) better motivation to invest in newer technology. It’s a productivity spiral,” he said.