MEETING WITH PHILIPPINE GOVERNMENT ON MINIMUM ACCESS

UNCLAS MANILA 000820 SIPDIS SENSITIVE SIPDIS USDA/FAS/ONA/BERTSCH USDA/FAS/OCRA/LUCHOK STATE PASS USTR/WEISEL/EHLERS/O'CONNOR/CLARKSON E.O. 12958: N/A TAGS: EAGR ECON ETRD RP SUBJECT: MEETING WITH PHILIPPINE GOVERNMENT ON MINIMUM ACCESS VOLUMES ¶1. (SBU) ON APRIL 2, USTR'S KARL EHLERS, ECONOFF, AGCOUNS AND LES MET WITH UNDERSECRETARY BERNIE FONDEVILLA OF THE PHILIPPINE DEPARTMENT OF AGRICULTURE (DA) TO DISCUSS THE STATUS OF THE REVIEW OF THE PHILIPPINE MINIMUM ACCESS VOLUME (MAV) GUIDELINES. ¶2. (SBU) FIRST, EHLERS THANKED USEC. FONDEVILLA, EXECUTIVE DIRECTOR OF THE DA MAV SECRETARIAT, FOR THE OPPORTUNITY TO MEET. EHLERS SAID THAT HE CAME TO MANILA TO DELIVER AN IMPORTANT MESSAGE OF CONCERN FROM USG AND INDUSTRY. SPECIFICALLY, HE WANTED TO FOLLOW UP THE STATUS OF THE REVIEW OF THE MAV GUIDELINES AND TO REITERATE THE REQUEST TO COMMENT ON THE DRAFT VERSION BEFORE IMPLEMENTATION, CONSISTENT WITH WTO OBLIGATIONS AND THE 1998 US-PHILIPPINES PORK AND POULTRY MAV MEMORANDUM OF UNDERSTANDING. HE ALSO SAID HE HAD THE HONOR OF SEEING SEC. ARTHUR YAP AT A BREAKFAST MEETING WITH U.S. INDUSTRY AND USG REPRESENTATIVES IN WASHINGTON LAST MONTH. SEC. YAP TOLD THEM THAT THE MAV REVIEW PROCESS WOULD BE COMPLETED BY THE SECOND QUARTER OF THIS YEAR AND ASSURED THAT THE DA WOULD NOTIFY THE USG AND THE WTO ABOUT THE CHANGES IN THE GUIDELINES. ¶3. (SBU) THE UNDERSECRETARY SAID THAT THE DRAFT VERSION WAS NOT YET FINAL AND THAT THE DA CANNOT POSSIBLY NOTIFY THE WTO AND THE USG OR CONDUCT CONSULTATIONS UNTIL THE RULES ARE COMPLETED, HOWEVER, AT THE SAME TIME ADMITTED THAT THEY HAVE BEEN CONSULTING WITH DOMESTIC STAKEHOLDERS. HE FURTHER REITERATED THAT THE USG AND THE WTO WOULD BE PROPERLY NOTIFIED AND CONSULTED BETWEEN SIGNING AND IMPLEMENTATION OF THE NEW GUIDELINES. HOWEVER, HE DID SAY THAT HE WOULD NEED TO CHECK FIRST WITH SECRETARY YAP. HE ALSO ENCOURAGED THE USG TO WRITE A LETTER TO SECRETARY YAP ABOUT ITS CONCERNS. ¶4. (SBU) EHLERS ASKED ABOUT A SUPPOSED ORDER TO SUSPEND THE ISSUANCE OF MAV LICENSES, EFFECTIVE APRIL 1, 2008. USEC. FONDEVILLA DID NOT CONFIRM OR DENY THIS, BUT SAID THAT HE WOULD LOOK INTO IT. ECON STAFF SUGGESTED THE POSSIBILITY OF A TIFA VIDEO CONFERENCE WITH USDA, USTR AND DA REPRESENTATIVES TO LOOK MORE CLOSELY AT THE REVIEW PROCESS AND TO COMPARE NOTES. ¶5. (SBU) ON APRIL 3, EHLERS AND ECONOFF INFORMALLY RAISED THE MAV ISSUE WITH STI SENIOR UNDERSECRETARY TOM AQUINO WHO WAS AWARE OF US CONCERNS AND SAID HE WOULD FOLLOW UP WITH DEPARTMENT OF AGRICULTURE ABOUT THE NOTIFICATIONS. ¶6. (SBU) COMMENTS: ACCORDING TO TRADE CONTACTS, THE DA HAS STOPPED ISSUING MAV CERTIFICATES TO REGULAR LICENSEES EFFECTIVE APRIL 1 PENDING THE COMPLETION OF NEW RULES. THIS HAS ALSO BEEN CONFIRMED BY CONTACTS AT THE DA'S MAV SECRETARIAT OFFICE. LOCAL TRADE GROUPS ARE VEHEMENTLY PROTESTING THE LATEST DA MOVE AND HAVE EVEN THREATENED TO TAKE THE DA TO COURT ON THESE CHANGES. THE LATEST SUSPENSION IN THE ISSUANCE OF MAV CERTIFICATES IS HIGHLY TRADE DISRUPTIVE AND IS CAUSING ANXIETY TO BOTH U.S. INDUSTRY AND LOCAL TRADERS ABOUT THE UNCERTAINTY OF THE SITUATION AND THE INCREASED COST OF BRINGING IN THE PRODUCTS OUTSIDE THE MAV (I.E., OUT-OF-QUOTA TARIFFS AND SPECIAL SAFEGUARDS). IN EFFECT, WITH THIS LATEST MOVE, THE DA HAS ALREADY BEGUN IMPLEMENTING MAV CHANGES WITHOUT PROPER NOTIFICATION AND CONSULTATION WITH TRADING PARTNERS. IN 2007, THE UNITED STATES EXPORTED ABOUT $20 MILLION OF POULTRY MEAT AND $14 MILLION WORTH OF PORK PRODUCTS TO THE PHILIPPINES. IT IS RECOMMENDED THAT FAS WORK CLOSELY WITH USTR TO DRAFT THIS LETTER TO THE DA AND TO PUSH FOR THE IMMEDIATE RESUMPTION OF TRADE UNDER THE OLD MAV REGIME PENDING THE COMPLETION, NOTIFICATION AND IMPLEMENTATION OF THE NEW GUIDELINES. KARL EHLERS OF USTR HAS CLEARED THIS MESSAGE. KENNEY