On the Application of European Union (EU) State Aid Rules in the Philippine Rice Sector

• Main Author: Ramos, Vincent Jerald R.
• Other Authors: YSI Asia Convening 2019
• Format: Conference or Workshop Item
• Language: English
• Published: H. : ĐHKT 2020
• Subjects: Rice Sector; European Union (EU); State Aid Rules; The Philippines
• Online Access: http://repository.vnu.edu.vn/handle/VNU_123/70563
• Institution: Vietnam National University, Hanoi

The National Food Authority (NFA) is a state-owned enterprise with the mandate of ensuring national food security and stable supply and prices of rice. NFA’s financial viability has been consistently questioned given its main market function of buying unhusked rice (paddy) and sells milled rice at set prices regardless of costs incurred. A sizable chunk of NFA’s operational expenses (25 percent on average from 2013-2017) are shouldered by two kinds of subsidies from the national government—income and tax subsidies. This paper attempts to look into the value and nature of the subsidy granted to the NFA with respect to the State Aid rules adopted by the European Commission. Using the EU Guidelines for State Aid Evaluation, the paper preliminary finds that the NFA has benefited from market-distorting Aid which is not available to other players in the sector and that alternative policy instruments which have less impact on market competition can be adopted. On top of the elimination of this Aid, reforms and effective law enforcement are necessary to effectively minimize market distortions in the rice sector. Further, the Association of Southeast Asian Nations (ASEAN) region, in light of its further integration, can look into how State Aid regulations can be integrated in the mandate of the national competition authorities and how Member States can advocate for and promote competitive neutrality in their Aid instruments.