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DTI wary of price spike in canned meat if tariffs revert to old level of 40%

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Prices of canned meat could rise by about 25% should mechanically deboned meat revert to higher import duties. -- BW FILE PHOTO

PRICES of canned meat could rise by about 25% should mechanically deboned meat revert to higher import duties, according to the Department of Trade and Industry (DTI).

“Looking into what’s best for the country and people, we should really keep the tariff at 5%. If not, we will all see higher major costing for the basic canned meat products that will push up prices of a basic commodity consumed by the mass-based market…” Trade Secretary Ramon M. Lopez told reporters in a mobile message over the weekend.

“My rough estimate, if the tariff goes up to 40% from 5%, costs and price of canned products will go up by around 25%. Assuming a P25 canned meat product, the price can go up to P31. We should not allow this thing to happen,” he added.

This estimated hike is due to the absence of local supply for mechanically deboned meat.

Price pressures on a basic commodity like canned goods are politically sensitive because of the impact on inflation.

Inflation in June spiked to 5.2%, the highest level in five years, exceeding expectations of both government and market analysts.

He said 40% tariffs will be “unfortunate” for manufacturers, who will bear the brunt of higher duties on one of its main ingredients, and ultimately force consumers to bear any added cost.

“Manufacturers may leave or reduce operations, leading to job losses,” he said, noting that it may be preferable for them to operate overseas and export products to the Philippines.

He added there is no evidence to blame manufacturers for causing inflation pressure, as prices of their products have been stable.

The DTI has long called for the current 5% duty levied for mechanically deboned meat imports to remain in place permanently even after a tariff regime is imposed on rice.

The tariff on mechanically deboned meat was supposed to revert to its original level of 40% since the commodity was among those offered at 5% in exchange for extending the quantitative restriction (QR) regime on rice.

The Philippines failed to legislate rice tariffs in time for the QR expiry, and economic managers instead, extended the validity of the QR waiver.

This allowed trade partners to continue bringing in some products at low tariff rates while the country was given more time to fulfill its commitment to the World Trade Organization.

The DTI’s position may not sit well with meat producers who have been lobbying for the imposition of higher tariffs on mechanically deboned meat to do away with technical smuggling. They claim that prime meat products are being misdeclared as mechanically deboned meat to take advantage of lower tariffs. — Janina C. Lim