United States (US)-based manufacturers and businesses have raised concerns about the Philippine government’s procurement scheme, which heavily favors local firms, labeling the policy as a major barrier to trade.

In separate submissions to the Office of the US Trade Representative (USTR) last month, seen by Manila Bulletin, the United States Council for International Business (USCIB) and Pharmaceutical Research and Manufacturers of America (PhRMA) tagged the Philippines’ New Government Procurement Act (NGPA) as a trade barrier.

The USTR, which oversees foreign trade policies, has invited comments from American industry and business groups on “unfair” trade practices perceived to undermine US competitiveness.

These submissions will inform the USTR’s 2026 National Trade Estimate (NTE) Report on Foreign Trade Barriers, which identifies trade barriers the US government aims to address.

The designation of the NGPA as a trade barrier by both USCIB and PhRMA suggests that the law may be included in next year’s report.

As indicated in the 2025 NTE Report, the Philippines’ government procurement system generally favors nationals or Filipino-controlled enterprises in awarding procurement contracts.

Under Republic Act (RA) No. 9184, or the Government Procurement Reform Act of 2002, at least 60-percent Filipino ownership is required for the procurement of goods, consulting services, and infrastructure projects.

During the bid evaluation process, domestic goods are also given preferential treatment over imported products.

The NGPA, enacted under RA 12009 last year, introduced amendments to enhance the public bidding process, including measures to promote greater transparency. The law retained provisions favoring Filipino products, specifically under Section 79.

“The procuring entity shall give priority and preference to Philippine products and services. The preference and priority for Philippine products shall be guaranteed at all levels of the procurement process, including raw materials, ingredients, supplies, or fixtures,” the law read.

The law also states that the government may award the contract to Filipino companies even if the bid is up to 25-percent higher than the lowest foreign bid.

PhRMA, which represents top pharmaceutical companies based in the US, said its members are concerned that multinational manufacturers “will be disadvantaged in the tender process.”

PhRMA said the NGPA creates “unnecessary barriers,” especially as it impedes access to medicines.

Under the law, preference for Filipino companies may be waived if applying such a scheme would result in inconsistencies with the country’s treaty obligations; if domestic production is insufficient or unavailable; or if the desired quality is not met, among other analogous circumstances.

Despite this, USCIB said American cloud service providers (CSPs) continue to face constraints that limit their participation, particularly in competing for government projects.

USCIB, whose members include multinational companies, law firms, and sectoral business associations, stated that the Philippines mandates government agencies to procure cloud computing services from Government Cloud (GovCloud).

The American industry group stated that last year, the Philippine government invited CSPs to join a new procurement catalogue, the eMarketplace of the modernized Philippine government electronic procurement system, which is expected to go live before the end of the year.

“As part of the onboarding process, US CSPs are required to furnish a certificate of reciprocity confirming that Philippine companies may compete, with limited exceptions, on an equal basis with US suppliers in US government procurement,” noted USCIB.

Further, it emphasized that CSPs are “effectively [forced]” to get local partners, despite this not being an explicit policy in the law.

For instance, USCIB explained that when selling cloud services to the public sector, one of the requirements for a foreign provider is a license to do business in the Philippines from the Securities and Exchange Commission (SEC). Since CSPs do not hold such a license, they would be required to work with local partners.

In its 2025 NTE Report, the USTR observed that the Philippines is not a party to the agreement on government procurement (GPA) under the World Trade Organization (WTO), although the country has been an observer since 2019.

According to the WTO, the main aim of GPA is to mutually open government procurement markets among its parties.

WTO’s GPA establishes policies that prescribe open, fair, and transparent conditions of competition to be ensured in government procurement.