THE 19-percent tariff to be imposed by the United States will not be a “game changer” for Philippine exports, the country’s biggest business group said on Friday.
“Every percentage point counts,” Philippine Chamber of Commerce and Industry (PCCI) President Enunina Mangio said in a statement, referring to the reduction from the 20 percent announced earlier this month.
“However… while the reduction is helpful, it is not a game changer,” she added.
“The impact will be most felt by specific industries already exporting the affected goods.”
The PCCI said that other factors such as logistics costs, production challenges and non-tariff barriers (NTBs) “often have a far greater impact on export volumes than a single percentage point tariff change.”
It urged the government to negotiate deeper and more comprehensive tariff relief across a wider range of products and also address the issue of NTBs.
Locally, the PCCI said reforms were needed to improve business and trade, lower logistics and power costs, promote digital infrastructure and increase incentives.
“We hope this is just the start,” Mangio said.
She called on the government to negotiate for reduced tariffs on more products, tackle regulatory hurdles, restart talks for a more comprehensive bilateral trade agreements or deeper integration with existing frameworks and negotiate for the expansion of preferential trade programs.
‘The best we can give’
Trade Secretary Maria Cristina Roque, meanwhile, said the government was hoping that the details of the US-Philippines trade deal would be finalized before Aug. 1.
She said that while they could ask that the 19 percent be lowered, “since it was already announced by [US] President [Donald] Trump, then it’s final.”
Amid criticism that negotiators had failed to protect key Philippine industries, she reiterated that agricultural products were not part of the deal and that there would be no more concessions.
“Whatever we offered them was already all out. That’s the best we can give,” Roque said.
She insisted that the Philippines would still have an edge as other Asean countries faced higher tariffs, but also said that the outcome highlighted the risks of depending on just one market.
“Never put our eggs in one basket,” she said.
“I mean, [the] US is one market, [but] we have the whole world as the entire market. The world should be our market. We should be supplying to the world.”
She said the government was pursuing free trade agreements with the European Union, likely to be finalized by next year, and was waiting for the signing of the Comprehensive Economic Partnership Agreement with the United Arab Emirates.
The Philippines has also applied for membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Roque said.
The CPTPP is a multilateral trade agreement that currently covers Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United Kingdom and Vietnam.
On Thursday, meanwhile, the Philippine Exporters Confederation Inc. (Philexport) said that it appreciated that President Ferdinand Marcos Jr. had taken accountability for the outcome of the trade talks, which “may not be as much as we want in terms of tariff reduction.”
“[I]t is a good, reassuring and comforting signal of his concern for the export industry and economy,” the business group said in a statement.
Sectors opened up to the US will likely not harm Philippine manufacturers as they do not produce those goods, it added, while some P3 billion in US aid would help mitigate the impact of the 19-percent duty.
The negotiations, Philexport continued, “likewise opened doors for continuing discussions… particularly for a free trade agreement with the US and other future concessions for our industry and agriculture sectors.”
‘Foregone revenues’
As this developed, the Federation of Free Farmers (FFF) demanded that the government fully disclose the details of the tariff talks with the US amid conflicting statements and growing speculation on the actual outcomes.
Trump, in a social media post, said “the Philippines is going open market with the United States and zero tariffs,” but Philippine officials later said this would only apply to select US imports and that key agricultural commodities would not be compromised.
“Unfortunately, these claims by our government officials have not been corroborated by the US government, which may later on insist on a wider range of affected products or a blanket application on all products, as what [was reportedly] imposed on Indonesia and Vietnam,” FFF National Manager Raul Montemayor said.
He also said the Philippines could have granted additional commitments such as the loosening of import quarantine regulations, higher minimum access volumes for certain products and maintaining low tariffs on rice, pork, corn and other commodities.
Montemayor warned of the potential negative impact of duty-free imports of US agricultural commodities such as soya, feed wheat and barley, “which can displace corn and copra meal, and high fructose corn syrup, which is a substitute for domestic cane sugar.”
The 1-percent reduction is “not only disproportionate to our zero-tariff concession, but also harmful to our export trade prospects,” he added, with the Philippines still losing out to competitors like Indonesia, Thailand and Vietnam in terms of quality, supply consistency and competitiveness.
The FFF claimed that some US importers of Philippine coconut products were already demanding price reductions from local exporters to offset 19-percent tariffs.
The group is also worried that tariff revenues allotted for the country’s corn, dairy, livestock and poultry sectors could face a severe drop if US imports are subjected to zero tariffs.
“The $60 million (P3 billion) funding assistance for economic and maritime security that the US gave us as a sweetener to the trade deal is minimal, compared to our foregone revenues and losses that Philippine exporters may incur due to the 19 percent US tariff,” Montemayor said.
WITH A REPORT FROM GISELLE P. JORDAN
Be the first to comment