Processors wants low sugar tariff

Food processors and exporters have strongly opposed the move of sugar producers and millers to maintain the 38 percent tariff stressing the tariff protection has not redound to cheaper sugar prices but only protected the interests of sugar barons that refused to reinvest to make their operations efficient.


This was stressed by Roberto Amores, president of the Philippine Food Processors and Exporters Organization Inc., following the filing of a petition by the Philippine Sugar Alliance with the Committee on Tariff and Related Matters to retain tariffs on sugar at 38 percent.

Under the Philippine commitment in the Common Effective Preferential Tariff scheme of the ASEAN Free Trade Area, the current 38 percent tariff on sugar should go down to 28 percent by next year.

"If we do not oppose their petition then that means we are favoring the sugar planters and millers and not the food processors who have not benefited from the quedan sugar at lower prices," Amores said.

According to Amores, Philfoodex and the PSA entered into a memorandum of agreement two years ago allocating 4,000 metric tons annually of sugar at world market prices. Amores said they did not get a single allocation from the PSA.


Instead, sugar producers are selling at P1,500 per 50 kilogram bag. Imported sugar is also pegged at P1,250 per bag but because of the tariff, the total price reaches up to P1,700 per bag.

"This means the local prices of sugar is 20 to 30 percent more expensive than the world market," he said.

Big exporters, however, can import on their own without being slapped with the duty as an incentives for their exports but Philfoodex is fighting for the small food exporters and indirect exporters, who are at the mercy of local millers and planters.

In addition, Amores said that sugar is the last protected commodity. Sugar plantation and mills are also owned by sugar barons, who refused to make their operations efficient.

"Why insist on tariff protection when the World Trade Organization is pushing for trade liberalization. What is the purpose of not allowing the entry of more sugar, why encourage smuggling instead of a competitive price," Amores said.

The irony is that the country is prioritizing the export of sugar to the U.S. because it offers better prices than the domestic market.

In addition, Amores noted the surplus local sugar production and yet prices have remained high and sugar producers are still asking for tariff protection.

In its petition, sugar producers would like to maintain tariff rate next year at 38 percent and transfer the classification of sugar to highly sensitive category to ensure tariff protection at least until 2010 under the CEPT.

Sugar producers were able to transfer sugar to the sensitive category a few years ago from the regular list. Now, the PSA wanted to transfer the sugar category under the highly sensitive list to avail of the continued tariff cover at least by 2010.

At present, the country’s only product listed under the highly-sensitive category is rice.

Indonesia, a sugar producing country, is the lone ASEAN country that listed sugar under the highly sensitive list.

Under the CEPT, most tariffs on products traded in ASEAN have no more tariff by 2010 with only a few remaining items under the highly sensitive list having 0-5 percent tariff. All tariffs have sunset clauses.

But ASEAN also allows member countries some leeway as in the case of the petrochemical industry where the Philippines was given relief by delaying the tariff reduction schedule.

In seeking for longer tariff protection, the official said the sugar producers have some issues to reckon with including milling efficiency, harvesting efficiency, transport cost and antiquated facilities.(BCM)
source:mb.com