VZCZCXYZ0020
OO RUEHWEB

DE RUEHML #0434/01 0580822
ZNR UUUUU ZZH
O 270822Z FEB 09
FM AMEMBASSY MANILA
TO RUEHRC/USDA FAS WASHDC IMMEDIATE 1433
RUEHC/SECSTATE WASHDC IMMEDIATE 3326
RUEHGV/USMISSION GENEVA IMMEDIATE 2236

UNCLAS MANILA 000434 
 
SENSITIVE 
SIPDIS 
 
USDA/FAS/OCBD/SHEIKH 
USDA/FAS/ONA/BERTSCH 
USDA/FAS/OCRA/RADLER 
STATE FOR EAP/MTS, EAP/EP 
STATE PASS USTR/WEISEL/EHLERS 
 
E.O. 12958: N/A 
TAGS: EAGR ECON ETRD RP
SUBJECT: MINIMUM ACCESS VOLUMES ISSUE RESOLVED 
 
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National Pork Producers Council (NPPC) has withdrawn its petition to 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National Pork Producers Council (NPPC) had officially withdrawn its 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 (www.nppc.org) 
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 
system. 
 
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 
Secretary 
 
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 
     Philippines 
 
End text. 
 
KENNEY