Sep 192014
Reference ID Created Released Classification Origin
2009-02-27 08:22
2011-08-30 01:44
Embassy Manila


DE RUEHML #0434/01 0580822
O 270822Z FEB 09



E.O. 12958: N/A

REF: A) Manila 00249, B) 08 MANILA 00820

¶1. Summary: (SBU) Post has successfully convinced the Philippine
Department of Agriculture not to unilaterally change its World Trade
Organization (WTO) and 1998 US-Philippine Memorandum of
Understanding (MOU) commitments on minimum access volumes (MAV)
rules for imported agricultural products. In response, the U.S.
National Pork Producers Council (NPPC) has withdrawn its petition to
USTR to cancel trade preferences for the Philippines, and along with
other U.S. stakeholders has expressed satisfaction with the
resolution. End summary.

Serious Trade Issue Now Eliminated

¶2. (SBU) On February 24, 2009, Philippine Department of Agriculture
Undersecretary Segfredo Serrano hand-delivered to our Agricultural
Counselor and Agricultural Attache a letter from Department of
Agriculture Secretary Arthur Yap to U.S. Department of Agriculture
(USDA) Secretary Tom Vilsack (full text of letter in para 7) in
which Secretary Yap conveyed a clear assurance that the current
minimum access volumes (MAV) (i.e., tariff rate quota, TRQ) regime
will be maintained with no changes initiated by the Department of
Agriculture. Serrano began the meeting by saying that Secretary Yap
would like to start with “a clean slate” with the new U.S.
administration and that hopefully this letter would put to rest the
concerns of the U.S. government and stakeholders about the MAV
regime. He also reiterated Secretary Yap’s invitation to Secretary
Vilsack to visit the Philippines and lead the U.S. agribusiness
trade and investment mission on May 11-14, 2009 (reported ref A).

U.S. Stakeholder Ends Retaliation Threat

¶3. (SBU) On February 26, 2009, Post received confirmation that the
National Pork Producers Council (NPPC) had officially withdrawn its
petition for a review of the Generalized System of Preferences (GSP)
status of the Philippines after learning of Secretary Yap’s decision
on the MAV issue. A statement on the NPPC website (
publicly announced that it had withdrawn the GSP petition.

Background to a Crisis Averted

¶4. (SBU) In October 2007, the Philippine Department of Agriculture
announced plans to change its MAV regime, ostensibly to improve
transparency, widen participation, minimize unused quota, and
eliminate the indefinite holding of quota. Post quickly recognized
the imperative that any changes to the MAV regime must be in
accordance with WTO principles and adhere to commitments under a
1998 Memorandum of Understanding on the implementation of MAV
between the U.S. and the Philippines (see ref B). Over the past
year, Post has engaged heavily on this issue and arranged numerous
discussions with the Department of Agriculture and as well as with
the Department of Trade and Industry. These discussions have
included digital video conferences between Philippine and U.S.
officials and a face-to-face meeting in Washington, DC. Despite
these discussions, local importers of U.S. agricultural products
experienced long delays in obtaining quota licenses throughout 2008
due to the uncertainty over pending changes to the MAV regime. U.S.
pork and poultry products were most affected. In response to these
delays the NPPC filed a petition with USTR for a country practices
review, which, if accepted, could have removed the Philippines from
the U.S. GSP and dealt a serious blow to Philippine exports to the
United States.

¶5. (SBU) In his first letter dated January 6, 2009, Secretary Yap
wrote to the USDA Secretary assuring him that no changes would be
implemented until the concerns of trading partners and stakeholders
were addressed. On February 3, Secretary Yap published in the local
media MAV allocations for 2009 that are consistent with the existing
MAV regime.

A Satisfying Result

¶6. (SBU) The president of the Philippine Meat Importers & Traders
Association informed Post’s Foreign Agriculture Service that local
importers and U.S. meat and poultry exporters were satisfied with
the measures implemented by Secretary Yap and do not foresee any
serious trade disruptions for the remainder of the year. Moreover,
the Association President stated that he firmly believes that new
MAV regulations will not be imposed next year, due to Philippine
elections in 2010 and ASEAN free trade agreements coming into
effect. Regional representatives of U.S. Meat Export Federation and
U.S.A. Poultry and Egg Export Council were likewise pleased with the
outcome and belive that trade can now flow smoothly again.

¶7. (SBU) Text of the Yap-Vilsack letter follows.

Begin text:

24 February 2009
Hon. Tom Vilsack
United States Department of Agriculture
Washington DC 20250

Dear Secretary Vilsack:

Allow me to congratulate you on your confirmation to the helm of the
USDA, and to extend my best wishes on your tenure.

I am writing with regard to the Minimum Access Volume (MAV) or TRQ
system, in which the Philippines was looking at changing certain
provisions to assure greater transparency in the availment of
in-quota volumes for commodity importation. Our objective does not
contemplate amending the volume of imports but the process of
allocation which we intend to democratize and make more efficient.
Since last year, the proposed changes to the MAV rules have been the
topic of bilateral discussions between the U.S. and Philippine
authorities. However, the United States wants some time to have
provisions clarified.

We recognize the fact that pursuing the changes in the MAV system at
this time may not provide the best conditions to be able to obtain
the desired result of the changes, considering the clarification the
US wants and the current global economic crisis. We are likewise
mindful that the new U.S. administration is still in the phasing-in
process and, as a working partner, we should try to remove possible
controversies. I would also like to take this opportunity to inform
you that we appreciate the efforts made by the U.S. Embassy
representatives here in Manila, especially those from the USDA-FAS,
and in Washington DC, in trying to understand our proposals as well
as in explaining the U.S. positions, with a view to coming up with
options in resolving the MAV and related issues.

In this regard, I am pleased to inform that in order to resolve the
MAV issue, I am ready to provide assurance that while I am the
Secretary of Agriculture, the MAV rules and regulations under DA
Administrative Order (AO) no. 8, series of 1997 as amended by DA AO
no.1, series of 1998, and as agreed under the 1998 RP-US MOU, will
remain and that no changes will be initiated by DA in the MAV

I hope that this would put to rest the concerns raised by the U.S.
authorities and stakeholders, particularly the pork and poultry
industries. I also look forward to working with you towards
strengthening the US-Philippine economic relationship, especially on
agriculture-related endeavours.

Very truly yours,
Atty. Arthur C. Yap

Cc. Hon. Peter B. Favila, Philippine Department of
Trade and Industry
Hon. Peter F. Allgeier, U.S. Trade Representative
Hon. Kristie A. Kenney, U.S. Ambassador to the

End text.




Sorry, the comment form is closed at this time.