User:Cff.capuno/Trade Policy in the Philippines

Trade policy in the Philippines is based on laws contained in the Tariff and Customs Code of the Philippines (TCCP), a consolidation of all existing tariff laws in the country. The implementation of the TCCP, meanwhile, is led by government agencies aiming to efficiently collect all tariff revenues, assist in the country’s participation in international trade and economic negotiations, and validate and publish the country’s trade statistics.

Trade Statistics


Since the establishment of a relatively stable government in the Philippines in 1880, the country has already exchanged goods and services with other nations with a favorable trade balance (exports exceeding imports) until 1941, the period of World War I. However, in 1945, right after the Japanese occupation of the Philippines, the country’s balance of payments became unfavorable (imports exceeding exports). For the past 2 decades, Philippine total trade has increased from 20, 392.19 (F.O.B. value in million U.S. dollars) to 106,134.00 in 2010. Yet, the trade balance has been fluctuating, trending unfavorably except in 1999 and 2000. As of 2010, balance of trade in goods value remained unfavorable.

Export Products
As of March 2011, top export products in the Philippines are as follows: electronic products (51.46%), coconut oil (4.21%), articles of apparel and clothing accessories (3.42%), woodcrafts and furniture (3.27%), and cathodes and sections of cathodes, of refined copper (3.12%). If classified according to commodity groups, manufactures account for 81.32% of the export products followed by agro-based products (7.77%), and mineral products (5.96%).

Major export partners of the Philippines are Japan (receiving 17.49% share of total Philippine exports), the United States of America (13.99%), the People’s Republic of China (11.50%), Hong Kong (9.95%), and Singapore (9.48%). Apparently, most of Philippines’ trading partners are neighbors in Southeast Asian and East Asia with a few from Europe too (Republic of Korea, Taiwan, Germany, Netherlands, and Thailand).

As of March 2011, it is estimated that total exports has increased by 4.0% due to an increased rate of export of petroleum products (315.5%), coconut oil (78.5%), and bananas (52.5%).

Import Products
As of February 2011, top import products are the following: electronic products (32.21%), mineral fuels, lubricants, and related materials (20.58%), transport equipment (6.26%), industrial machinery and equipment (4.36%), and organic and inorganic chemicals (3.10%). If classified according to commodity groups, import goods are comprised of raw materials and intermediate goods (45.38%), capital goods (22.62%), and mineral fuels, lubricant, and related materials (20.58%). Most of these imported goods are also obtained from Philippines’ major export partners such as Japan (11.17%), United States of America (10.69%), Singapore (9.84%), Republic of Korea (9.39%), and People’s Republic of China (7.83%) v. Thailand, Taiwan, Singapore, United Arab Emirates, Malaysia, and Saudi Arabia are some. East Asian countries are still the most that account for the import. As of February 2011, it is estimated that total imports has increased by 20.1% due to an increased rate of import of mineral fuels, lubricants, and related materials (79.3%), non-ferrous metal (67.1%), and plastics in primary and non-primary forms (54.9%).

Trade Laws and Agreements
The following are various supranational organizations, countries, and other related entities with which the Philippines has extraordinary trade relationships usually in the form of trade agreements (also known as trade pacts) and the basic description of the said relationships. Also included are the Tariff Reform Program and Import Liberalization efforts undertaken in the Philippines.

Tariff Reform Program
The Tariff Reform Program is a project conducted by the Philippine government to modify the country’s tariff structure, limiting tariff protection across industries and leading the country in its export-led development.

TRP-I was conducted from 1981 to 1985, with the tariff modifications staged within a five-year period to lessen its impacts. The modifications included phasing out tariffs which were either excessive or obsolete and tariffs which allowed a cost of protection that was higher that the tariff’s returns. TRP-I resulted in a narrower tariff band of 10-50% and a reduction and leveling out of effective protection rates across industries.

TRP-II was implemented on August 24, 1991 with aims of leveling the tariff protection further, of giving better access to inputs with lower prices, and of enhancing the competitiveness of industries in domestic and export markets. Covering 80% of the Tariff Code, tariff modifications were undertaken; with tariff nomenclature also simplified, customs administration was made easier as well. TRP-II resulted in a decline in tariff rates in several industries, but tariffs in the agricultural sector received moderate reductions relative to changes in other tariffs to further provide protection to sensitive agricultural products. Also, TRP-II reduced the bias of tariff protection against agriculture relative to manufacturing, with the ERPs of the latter reduced to more reasonable levels.

TRP-III was implemented to reduce tariff protection to a more uniform level across industries and to promote global competitiveness, with the ultimate goal of modifying the tariff structure to provide a uniform tariff rate of 5% by 2004. TRP-III, which was implemented on July 1994, caused a further reduction in the average tariff rate to 13.43% in 1997 from 19.72% in 1994. Such as in TRP-II, the tariff protection bias against agriculture relative to manufacturing was further reduced.

TRP-IV was an evaluation of the impacts of tariff modifications on Philippine industries and a review of the tariff structure for possible revisions. It also aims to smoothen the pace of tariff reduction in specific sectors. TRP-IV was made effective on January 1, 2001 by E.O. 334, which also provided for an amended tariff schedule with a narrower tariff band of 0-5% by 2004.

Import Liberalization
Another pivotal programs enacted by the Philippine government in order to cure the ails brought about by decades of destructive protectionism was the Import Liberalization Program, which sought to encourage the nation’s industries to produce in areas where the Philippines had a comparative advantage both for local and foreign consumption at competitive prices. The program attempted to break the barriers of imported goods, with a first stage of transferring import licenses to the government as tariffs and a second as a lowering of tariffs (hand-in-hand with the TRP) and thus free industries to grow in these sectors. The Program, however, had much of its progress briefly derailed by the balance-of-payments crisis of 1983.

World Trade Organization

 * See World Trade Organization

The end of World War II saw the need for a multilateral agency related to world trade, leading to the de facto organization of the General Agreement on Tariffs and Trade (GATT), and while this worked provisionally, in 1995 the world saw the need of a new, institutional approach on an agency dealing with a globalizing world, and thus the World Trade Organization was founded.

The World Trade Organization (WTO) fulfills two main functions and many others besides, with the former two being that of administering the laws made in the different trade rounds such as the current Doha Development Agenda, as well as providing a forum for talks and the settlement of disagreements. Examples of issues tackled in this manner by the Philippine state are complaints by the United States and European Union on the Philippines’ taxes on spirits, or the settlement by the WTO on the issue of allegedly overbearing fiscal and custom measures by Thailand on Filipino cigarette imports.

Asia-Pacific Economic Cooperation

 * See Asia-Pacific Economic Cooperation

The Asia-Pacific Economic Cooperation is a 21-country forum that promotes ideals such as free trade and economic development and cooperation between its member countries. Besides acting as a forum for its member economies, APEC funds projects for Business Facilitation, Study Consortiums, as well as a Business Advisory Council.

APEC’s efforts have also been helping the reduction of the cost of business transactions in the region by 6% over the 2002 to 2006 period thanks to the APEC Trade Facilitation Action Plan (TFAPI), and hoping to improve on this, the new Trade Facilitation Action Plan is being endorsed.

A concept currently in speculation is that of the Free Trade Area of the Asia-Pacific (FTAAP) which would be conceivably larger than the free trade occurring in the ASEAN plus three region due to the inclusion of the United States, however, issues such as trade imbalances and market conflicts exist within such a large proposed bloc, and as such this issue would take a lot of negotiation and time to get off the ground.

Association of South-East Asian Nations

 * See Association of South-East Asian Nations

The Association of South-East Asian Nations (ASEAN) is a supranational organization of ten countries throughout Southeast Asia. Its aims include economic growth, cultural development, and social progress amongst its members and the Philippines is one of the organization’s founding members and ‘six majors’, or one of its six largest economies. The ASEAN Free Trade Agreement (AFTA) and the Common Effective Preferential Tariff (CEPT) aim to make the region into a competitive production base and attract foreign direct investment.

Bureau of Customs
The Bureau of Customs is mandated to implement effective revenue collection, facilitate in the entry of vessels and goods involved in foreign trade, prevent smuggling, and enforce the Tariff and Customs Code of the Philippines. In line with these goals, the Bureau of Customs handles the processing of import and export transactions as well as other airport operations. One of the Bureau of Customs’ major undertakings is the Run after the Smugglers (RATS) program, launched in 2005. From July 22, 2010 to May 5, 2011, the Bureau of Customs, through RATS, has filed cases against at least 32 smugglers, with total dutiable value of PHP 52,858,377.55.

Committee on Tariff and Related Matters
The Committee on Tariff and Related Matters (CTRM) is a cabinet-level agency under the administration of the National Economic Development Authority. It is composed of various cabinet secretaries, with the Secretary of Trade and Industry and the Director-General of NEDA as chairman and co-chairman, respectively. The CTRM was formed to advise the President on tariff-related issues and on possible effects on the country of developments in international trade, and is also tasked to recommend national positions for international economic negotiations. The committee also reviews potential changes in existing tariff rates and approves recommendations for new or modified tariffs.

Philippine Tariff and Trade Commission
Republic Act 911 created the Tariff Commission on June 1953, with goals of investigating the administrative and industrial effects of tariff laws in the country, examining tariff relations between the Philippines and other countries, and performing a comprehensive review of the Philippine Tariff System for possible revisions.

The Chairman of the Tariff Commission is also part of the CTRM, an agency tasked to counsel the President on concerns regarding tariffs and international trade advancements. Currently, the Tariff Commission also performs investigations on cases relevant to the implementation of the Philippine Tariff Code, such as violations of the anti-dumping law and extensions of the safeguard measure on some imported products.

International Trade Group
The International Trade Group, under the jurisdiction of the Department of Trade and Industry, maintains the country’s foreign economic and trading relations and promotes international commerce through the nine offices under its authority. These offices include the Bureau of Import Services, which administers import regulations and monitors import levels and prices, the Bureau of Export Trade Promotion, which provides frontline assistance and consultation to potential and established exporters, and the Bureau of International Trade Relations, which represents the country in trade and investment negotiations outside the country.