By Bernie Cahiles-Magkilat
Philippine manufacturers affected by the US-China trade war are seeking exemption from the imposition of higher tariffs, according to Trade and Industry Secretary Ramon M. Lopez.
These firms include Sunpower, Inc., which produces solar panel for exports, and producers of steel and aluminium products.
According to Lopez, Sunpower has already submitted position for exemption. Being a major export of solar panels, their exports will be affected by the imposition of 30 percent tariff on year 1 down to 15 percent on year four. In imposing higher tariff on this product, the US has invoked Sec. 201 of US Trade Act, which provides the US can impose duties and non-tariff barriers on products that injure or threaten to injure their local industries.
On steel and aluminium products, Lopez said the Philippines is not a major exporter of these items which the US imposed a 25 percent tariff on steel and 10 percent on aluminum products to address national security under Section 232 of the National Trade Act.
Philippine trade representatives are meeting with the US Trade Representative to also file for exemption because the Philippines exports of these products fall below the de minimis levels or below 3 percent of US imports.
Lopez further noted that the Philippines still currently enjoys (General System of Preference) GSP privilege with the US, covering 3,500 product lines that enter the US market at 0 percent duty. Moreover, we are enhancing trade arrangements with the US under the Trade and Investment Framework Agreement (TIFA), as a step toward a possible bilateral Free Trade Agreement (FTA).
Since there is no major impact on the Philippines, he expects the trade war to lead to moves by affected manufacturers to shift their production activities to other countries like the Philippines. DTI Exports group also reviewing product lists which ones can Philippines supply.
“As we see no major impact to Philippines, we may stand to benefit if other affected manufacturers in countries affected shift their production base to the Philippines to avoid facing higher tariff rates,” said Lopez.
In the case of China, Philippines, as part of ASEAN, has an FTA with China, thus has 90% of product lines entering the respective markets at lower or zero duty.
China is also showing its seriousness in helping balance its global trade surplus by unilaterally cutting, starting July 1, 2018, its MFN tariffs on footwear, headgear, kitchen supplies, apparel from 15.9 percent to 7.1 percent, cosmetics from 8.4 percent to 2.9 percent, washing machine and refrigerators from 20.5 percent to 8 percent, processed foods such as aquaculture and fishery products, mineral water from 15.2 percent to 6.9 percent.
Lastly, the trade chief said, pinned his hopes on the goodwill established by PRRD with Pres Xi Jinping to continue to open up huge market opportunities for Philippine products to enter the China market.