The maneuvering of the world’s biggest rice exporter Thailand to get the Philippines, the world’s biggest rice importer, to speed up liberalization of its rice sector during the ASEAN summit meeting this weekend highlights the hazards of entering into free trade deals from a position of weakness. The local economy is under threat not just from First World countries like the United States, Japan and the European Union but also from other Third World countries. Thailand is understandably out to promote its export interests even if this is at the expense of the Philippines.

In the run up to the ASEAN summit meeting this weekend Thailand threatened that it would not ratify the ASEAN Trade in Goods Agreement (ATIGA) unless the Philippines opened up its rice sector further to Thai rice exports. The Philippines is under pressure to concede greater tariff-free import quotas for Thai rice, or maybe even its equivalent in other goods of export interest to Thailand.

Yet Thailand itself has long actively supported and protected its domestic rice industry. State intervention in the rice sector includes fertilizer subsidies, cheap credit brought down to half market rates, loan guarantees, crop intervention prices, and government payments for storage and quality control. Rice imports were for years prohibited unless specifically approved by the Ministry of Commerce. Import controls included strict licensing arrangements, special requirements for case-to-case approval, local content rules and outright prohibitions.

Such active state support in Thailand has been central to making it the world’s biggest rice exporter and one of its most efficient producers. In recent years it has exported up to 10 million tons annually and accounted for over a third of global rice exports. The Philippine National Food Authority (NFA) imported an average of some 350,000 tons of rice annually from Thailand in 2007 and 2008.

Indeed, even as Thailand is pressing the Philippines to liberalize its rice sector it is already drafting strict rules on rice imports, among others, as regional free trade agreements such as under ASEAN are implemented and expanded. Among the non-tariff barriers to rice being proposed are strict quality controls, limiting import custom stations and allocating import licenses.

Pursuit of national self-interest is the nature of all free trade deals and why it is vital that they are entered into only if there is domestic capacity to begin with. The Philippines has to have a minimum level of agricultural and industrial strength to take advantage of opportunities abroad and to hold up against competition from imports.

Yet the country’s domestic productive sectors are generally ill-prepared to deal with further foreign competition after having suffered mounting decades of government neglect and the absence of coherent policies for agricultural or industrial development. In particular the neglected rice sector is going to be undermined by Thailand’s aggressive moves to open it up further with adverse income and welfare effects for 11.5 million Filipino rice farmers and their family members.

The ASEAN Free Trade Agreement (AFTA) aims to cut tariffs on most farm products to between zero and 5% by 2010, although the Philippines proposed to classify rice as “highly sensitive” to allow import tariffs to stay at 40% until 2015 when it would have to be cut to 35%.

As it is, one out of every ten spoonfuls of rice Filipinos eat is imported from abroad. Food security must be a government priority and the appropriate resources must be allocated. Filipino rice farmers can produce sufficiently for the needs of the nation if only they are given the chance. The state has to provide rice farmers the means to be productive: higher buying prices for their palay, subsidized credit, irrigation, farm inputs and post-harvest facilities. They must also be given the opportunity to become productive and not subjected to destructive waves of competition.

Sonny Africa is the Research Head of IBON Foundation