PH fails to take advantage of trade war – US Chamber

Published April 19, 2021, 7:00 AM

by Bernie Cahiles-Magkilat

The Philippines ranked the lowest among major  ASEAN countries in taking advantage of the tariff advantage in the US market following the US-China trade war. 

The “The Impact of Section 301 Tariffs on China: An Analysis of US Import Trends for Indonesia and Select ASEAN Neighbors since 2017”, prepared by the Trade Partnership for US Chamber of Commerce in partnership with APINDO in December 2020 and updated in March this year, showed the Philippines lagging behind its ASEAN neighbors in taking advantage of the low tariff advantage of its products due to trade war.

Javiera Gallardo, Director for Southeast Asia program at the US Chamber of Commerce Country lead for the Philippines, pointed out that the Philippines has 19 percent tariff advantage than the Chinese goods, which are slapped with 25 percent retaliatory tariff by the US since 2018 under the Section 301 tariffs during the Trump administration.

“Our study found that the Philippines has an average tariff advantage of 19% over Chinese exports coming to the US,” said Gallardo. 

The study showed the Philippines also recorded significant increases of travel goods, computer accessories and power cord exports to the US since the imposition of the additional duties on Chinese exports to the US.  However, the data showed that the Philippines has yet to fully maximize the advantages brought by the section 301 tariffs. 

The Philippines has been urged to maximize the benefits from the Section 301 tariffs especially as the Biden administration has no indication of lifting these retaliatory tariffs anytime soon. 

On products for List 1 of Section 301 Tariffs, it showed that imports from the Philippines declined by 30 percent while Vietnam went up by 38 percent followed by Thailand with 17 percent growth while Indonesia suffered a lower drop in exports of .6 percent, Malaysia with negative 10 percent and the rest of the world by 13 percent. 

Notably, the only product category from the Philippines that posted growth under the List 1 was radio/TV transmission equipment for $23 million or 224 percent increase but other its other products covered in the list slumped. 

For instance, the Philippine exports of external computers steeply declined by 42 percent to only $459 million while its automotive wiring harness went down by 19 percent to $104 million.

Under List 2, the Philippines also dropped its exports by 39 percent while Indonesia and Malaysia were up 14 percent each, Vietnam by 97 percent and Thailand grew the most with 51 percent. 

The Philippines posted negative growths in all its exports in the list including semiconductors to $660 million or 41 percent down; photosensitive semiconductor devices $46 million or 73 percent down, and electric motors to $30 million or a negative 64 percent.

For List 3, the Philippines posted an 18 percent growth driven positive growth in export of mattresses to $6 million, and container bags, cases, backpacks at $41 million.  The Philippines also posted 34 percent growth in computer accessories to $336 million; power cords and adapters for $123 million or 34 percent increase. But exports of prepared crab was down 57 percent to $60 million.

Under List 4, the Philippines suffered a 15 decline while its ASEAN peers posted growth: Vietnam positive 14 percent, Malaysia 29 percent, and Thailand 5 percent. Indonesia also decreased but at negative 9 percent only.

The Philippines was affected by lower exports of projectors at $79 million (-34%) and man-made fiber sweaters at $56 million (-51%).

The study concluded that ASEAN countries increased the most with Indonesia taking lead in benefitting from the trade war.