IN CASE a “full trade war” erupts, average tariffs for Philippine exporters could rise to a worst-case 30% from their current level of 2%, putting the least competitive firms at risk, the United Nations Conference on Trade and Development (UNCTAD) said in a report.
The findings were contained in an UNCTAD report, “The Cost of a Full Trade War on Tariffs.”
“In case of a full trade war, the average tariff would be about 30%,” Alessandro Nicita, Chief of the Research Section in the Trade Analysis Branch of UNCTAD, said in an e-mail last week.
The economist said a full trade war is defined as “the case in which every country will set the tariffs unilaterally at levels that they deem optimal from a purely mercantilistic perspective.” Under such a scenario, preferential tariffs are not in place.
Asked how the Philippines will do relative to the region, Mr. Nicita said: “An informed answer to these questions will require a lot of analysis.”
“It would depend on how competitive Philippine exports are vs. other countries. In a full trade war, the least competitive suppliers are the one likely to be hurt more,” he added.
Mr. Nicita noted, however, that the escalating trade tensions between the US and China and other countries will not bring the world economy “even close” to a full trade war.
“In this regard, the numbers we put out were to give an idea about the most catastrophic outcome (in case the WTO was to collapse, together and regional agreements),” Mr. Nicita added.
“At the moment what seems most likely to happen is a series of distinct “regional trade wars,” with the US taking part in most of them,” Mr. Nicita said.
Trade Secretary Ramon M. Lopez had said that the steel industry will benefit in the ongoing trade war between China and the US.
The department is also exploring which other export commodities can gain from the trade dispute. — Janina C. Lim
