KEY production sectors in the Philippines have identified specific non-tariff measures (NTM) they say raise the biggest obstacles to export and import flows and undermine the competitiveness of domestic industries.
The list of NTMs most prevalent and harmful for certain business segments is contained in a report by the International Trade Center (ITC), based on the outcome of focused group discussions (FGD) held with major segments of Philippine industry. ITC officials unveiled the findings at a discussion in Makati City recently.
NTMs are defined as policy measures other than ordinary customs tariffs that can potentially have an economic effect on international trade in goods, changing prices or quantities traded, or both.
For the garment sector, the main issue is complying with local content for certificate of origin requirements so as to fulfill rules of origin under the recently renewed GSP+ agreement with the EU, and the prevailing GSP agreement with the US that is due to expire in 2017.
Garment makers also voiced concern over exports to the US for products that have leather, shell, or endangered wildlife components requiring an Exporter’s Commodity Clearance certificate from the Bureau of Animal Husbandry or the Bureau of Fisheries and Aquatic Resources (BFAR).
Lack of test facilities
The paper also noted a comment from a hat exporter on the company’s difficulties in complying with Australian prerequisites: “Australia requires Australian Fumigation Accreditation Scheme (AFAS)-approved fumigation treatment of methyl bromide for exported products. I pay around P30,000 for testing, marking and supervision of the fumigation treatment.”
A future concern for apparel producers is the looming Trans-Pacific Partnership agreement, which the Philippines has not signed but which Vietnam, a country that dominates garments exports in the region, has.
The agri-food sector, meanwhile, mainly laments the lack of local testing facilities and product certification available in the Philippines, requiring them to ship goods to accredited testing companies abroad.
They also cite Halal certification, customs processing ordeals, the Food and Drug Administration’s accreditation and export clearance, and health certification under BFAR as being highly bureaucratic and subject to frequent delays, from three months to a year.
Exporters in regions such as Cebu or Davao mention additional layers of administrative red tape from regulating agencies based in Manila such as FDA and BFAR when services in the provinces are not adequate.
“Obtaining FDA product certification clearance (Certificate of Product Registration and License to Operate) for export is very difficult. I am based in Region 11, and there are only 2 people handling the processing which takes up to three years,” a chocolate exporter told ITC.
Another issue for agri-food stakeholders is the need to translate documents to European or East Asian languages, and the need to notarize documents at Middle Eastern embassies. For plant products, they claim that the Bureau of Plant Industry would ask for “unreceipted inspection fees” and overtime pay during product inspections.
The furniture sector mainly cites Department of Environment and Natural Resources requirements for suppliers’ contracts from exporters for the raw materials they use. The exporters say it is very difficult for suppliers to provide them these contracts, which also need to be notarized.
‘An understanding of companies’
Likewise, furniture manufacturers experience a wide variety of testing requirements for product properties, safety, quality, and traceability certifications. These include the EU Timber Regulation, which prohibits the import of illegal timber and timber products into the economic bloc, and the US Lacey Act, which bans trafficking in illegal wildlife.
“Export requires numerous tests for product quality and performance through Intertek, which costs $100-$200 per item. This used to be available from the Forest Products Research and Development Institute (FPRDI) for Php10-15,000 but this is closed now and there are no local testing facilities. Other tests include flammability, TBS 117, and prohibited chemicals, which can cost up to $5,000,” said a furniture exporter.
Results of the FGDs were included in a study, the “ITC Business Survey on Non-Tariff Measures in the Philippines, 2015-2016,” conducted by ITC in collaboration with the Department of Trade and Industry.
The report, said the ITC executives, allows Filipino companies to directly report the most burdensome NTMs and the way these affect their business.
“At the government level, an understanding of companies’ key concerns with regard to NTMs and POs [procedural obstacles] can help define national strategies geared to overcome obstacles to trade,” they said.
The ITC is a subsidiary organization of the World Trade Organization and the United Nations Conference on Trade and Development and provides trade-related technical assistance. (Philexport News and Features)