2 April 2025
https://www.manilatimes.net/2025/04/02/business/top-business/ustr-flags-ph-barriers/2084263
AMID mounting concerns over US President Donald Trump's protectionist policies, the Office of the US Trade Representative (USTR) has flagged Philippine policies and regulations deemed as barriers to American exports of goods and services.
The country is among 59 key export markets included in the USTR's 2025 National Trade Estimate Report on Foreign Trade Barriers, released on Monday, which also identified hurdles to US foreign direct investments and electronic commerce.
For the Philippines, these include high tariffs on agriculture products, restrictions on foreign ownership, and the "pervasive and longstanding problem" of corruption.
"No American President in modern history has recognized the wide-ranging and harmful foreign trade barriers American exporters face more than President Trump," US Trade Representative Jamieson Greer said in a statement.
"Under his leadership, this administration is working diligently to address these unfair and non-reciprocal practices, helping restore fairness and put hardworking American businesses and workers first in the global market," he added.
Import policies
The USTR said that US agricultural exports were "significantly inhibited" by high tariffs — ranging from 30 percent to 50 percent — under the Philippines' minimum access volume (MAV) system, which covers products such as sugar, corn, coffee/coffee extracts, potatoes, pork and poultry.
While the Department of Agriculture (DA) has moved to address issues regarding the MAV, the USTR said that revisions to the rules had yet to be issued as of the end of last year.
Meanwhile, the regular review of lower tariffs on imported rice mandated under last year's Executive Order 62 was said to be causing market uncertainties as to whether the duty will be extended or modified.
The USTR noted that the Philippines still applied high tariffs on finished automobiles and motorcycles of 30 percent, but also recognized continuing duty-free treatment for imports of capital equipment, spare parts and accessories for auto manufacturers.
Also cited was the elimination of tariffs on electric vehicles in 2023 and the broadening of the coverage list last year. These perks, however, are set to expire in 2028.
As for non-tariff barriers, the USTR pointed out that the Philippines does not allow the importation of used motor vehicles except in certain cases, and that used car part imports are also regulated.
The DA was again tagged for not having acted on an April 2024 palace order to review and revise quantitative restrictions on fish imports, while one of its attached agencies, the Sugar Regulatory Administration, was also flagged for not having issued standard guidelines on sugar importation.
Technical barriers
While the Bureau of Customs launched a modernization program in 2021, the USTR said "reports of corruption and irregularities in customs processing are widespread, including incidents of undue and costly delays, irregularities in the valuation process, 100 percent inspection and testing of some products, and inconsistent assessment of fees."
The introduction of pre-border technical verification and cross-border electronic invoicing last year, meanwhile, was said to have raised concerns among stakeholders about increased costs, logistics delays, corruption and a deviation from standard industry practices.
The USTR said that the government had also yet to inform the World Trade Organization (WTO) about the move.
With regard to vehicle standards, the Philippines was said to have yet to follow through with a 2018 commitment to implement a US work program on automotive standards issues.
Meanwhile, a 2022 move by the DA's Bureau of Animal Industry to require importers to submit utilization reports for ingredients used to make animal feed was said to be viewed by stakeholders as "bothersome" and also yet to be forwarded to the WTO.
A DA requirement for time-bound and single-use import permits was said to add costs, complicate the timing of exports, and prevent the rerouting to the Philippines of goods originally intended for other markets.
"The length of validity and issuance appears to be based on the political sensitivity of the products, rather than on sanitary and phytosanitary risk," the USTR said, although it noted moves to limit the application of the rule and facilitate the issuance of permits.
Local government rules aimed at curbing the spread of African swine fever and bird flu, meanwhile, were said to exceed both national and international recommendations, but efforts to streamline the process and align local rules with global standards were recognized.
The USTR, meanwhile, flagged the government's policy of favoring Philippine nationals or Filipino-controlled firms for procurement contracts and prioritizing Philippine goods and services in the procurement process.
While the country is not a party to the relevant WTO agreement, the USTR noted the Philippines has been an observer of the WTO government procurement committee since 2019.
As for intellectual property protection, the US was said to continue to "have concerns, including its (the Philippines') limited enforcement activities." The US will also continue to monitor the country's implementation of commitments related to geographical indications, the USTR added.
Services barriers
Foreign ownership restrictions in mass media, financial services, insurance, professional services, advertising and retail were tagged, although amendments to the Foreign Investment Act reducing capitalization requirements were recognized.
As for telecommunications, the USTR said that no public bidding has ever been carried out to allocate spectrum despite the law's requiring such, with evaluations typically involving the submission of a request to the National Telecommunications Commission.
"This model is inherently non-transparent, constituting an administrative approach by which applicants are chosen based on the government's prioritization of certain criteria (like financial or technical capacity)," the USTR said.
Investment barriers
While limitations on foreign ownership were flagged, the USTR recognized changes to the Foreign Investment Negative list and the implementation of policies that allow 100-percent foreign ownership in power generation and renewable energy technologies.
It also noted incentives reforms under the Create and Create More laws for export enterprises.
Lastly, the USTR said that corruption was also another barrier to trade and investment in the Philippines, calling it a "pervasive and longstanding problem."
"National and local government agencies, particularly the Bureau of Customs, are beset with various corruption issues, it added.
"Both foreign and domestic investors have expressed concerns about the lack of transparency in judicial and regulatory processes."