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Exporters fear fallout from 19% Trump tariff

Exporters fear fallout from 19% Trump tariff

Provided by Philippine Daily Inquirer.

Mediation pushed as business dispute resolution mechanism 
PHOTO: Philexport website/philexport.ph



MANILA, Philippines —The 19-percent tariff imposed by the United States on Philippine goods will prompt exporters to explore other markets, as it has intensified competition with neighboring countries, according to the Philippine Exporters Confederation Inc. (Philexport).

Philexport president Sergio Ortiz-Luis Jr. said on Monday that the latest tariff structure made it more challenging to compete with other nations in Southeast Asia.

“It was comfortable when all our competitors were slapped with higher tariffs than us. But now, some countries have lower rates and others are at the same level as us. It’s no longer comfortable, of course,” Ortiz-Luis said in a phone interview with the Inquirer.

READ: Seeing the bright side of 19% tariff on PH exports to US

Ortiz-Luis said certain countries in the regions were better positioned to navigate the US market than the Philippines because of sufficient government support.

“I guess we just have to find other markets. I don’t think we can compete with them on that basis because they are all supported by their governments, unlike [Philippine] exporters, almost none,” Ortiz-Luis said.

“Can you imagine? How do you compete with Japan, South Korea, Thailand that have the same or lower tariff rates than us?” he added.

Last week, US President Donald Trump signed an executive order resetting the tariff on 68 countries and the European Union, including the Philippines, effective Aug. 7.

The 19-percent import duty on Philippine exports is the same tariff that the Trump administration levied on Cambodia, Indonesia, Malaysia and Thailand.

Other countries in the region are slapped with higher tariffs: Brunei at 25 percent, Laos at 40 percent, Myanmar at 40 percent and Vietnam at 20 percent.

READ: World economies reel from Trump's tariffs punch

Trump said he had issued the order due to “the continued lack of reciprocity in our bilateral trade relationships,” necessitating the imposition of “additional ad valorem duties on goods of certain trading partners.”

Washington made the pronouncement as Washington and Manila continue to firm up the fine print of the trade accord.

“On the part of the Philippine government, we will continue with our talks with the US, and hopefully we can come up with a mutually beneficial deal the soonest possible time,” Trade Secretary Cristina Roque said on Friday.

In a recent interview, Trade Undersecretary Allan Gepty said the parties were finalizing the fine print of the trade agreement that goes beyond market access.

“... If you will read the pronouncements of the US, more than market access, they’re also interested in a lot of measures that basically affect trade. So, that’s why we have to address also those measures, like the nontariff barriers,” he said in an interview earlier.

19% rate could be “deceiving”


Government negotiators previously said key sectors such as agriculture and manufacturing are excluded from the concessions, although zero tariffs will apply to certain goods usually sourced from abroad, such as automobiles, soy, wheat and pharmaceuticals.

Economist Joey Salceda, a former lawmaker and governor of Albay, said the headline rate of 19 percent could be “deceiving.” He estimated that only around 31 percent of Philippine exports are subject to such rate. The rest—products under electronics, wood, metals, fuels and chemicals—are subject to preferential tariff rates already existing under multiple trade agreements because of exemptions under Annex II of Mr. Trump’s Executive Order No. 14257, as amended.

“Effective tariffs on Philippine exports were just at 6.65 percent, thanks to exemptions negotiated prior to President Marcos’ visit. That is the second lowest in the Association of Southeast Asian Nations next to Malaysia,” Salceda said in a commentary published on the Inquirer.

“After President Marcos’ visit, effective rate was reduced further to just 6.3 percent (versus Indonesia at 12.4 percent), despite having little room for downward adjustment,” he added. INQ

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