UN report says non-tariff measures ‘burdensome’

By Jenina P. Ibañez

PHILIPPINE companies reporting burdensome non-tariff measures (NTM) outnumber many of their Asia-Pacific peers who have similar experiences, according to a joint report of the United Nations Economic and Social Commission for Asia and the Pacific and the United Nations Conference on Trade and Development.

The 2019 Asia-Pacific Trade and Investment Report showed that the trade costs of non-tariff restrictions in the region now exceed double those of tariff measures.

As defined by the report, NTMs are policy measures other than ordinary customs tariffs that potentially have an effect on international trade in goods. Among others, NTMs include product requirements, sanitary and price-control measures, as well as border payment procedures.

“While at the outset Filipino exporters generally feel that all barriers are de facto non-negotiable, when prompted on costs, paperwork requirements and time frames, the exporters concede that some regulations are, in fact, burdensome,” the report said.

These “burdensome” NTMs are applied by either export partners or domestically.

Of the Philippine companies surveyed, 74% reported encountering “burdensome” NTMs, above the regional average of 56% of respondents.

The report noted that the level of trade facilitation, which involves simplification and streamlining of trade processes, may have also had an impact on survey results.

Department of Trade and Industry Export Marketing Bureau (DTI-EMB) Director Senen M. Perlada said that Philippine exporters face a burdensome regulatory environment even before the products leave the country.

Mr. Perlada said that application and documentation fees will be addressed by the newly formed Anti-Red Tape Authority.

He said that logistics costs also place a burden on Philippine exporters, including costs of importing raw materials and intermediate goods.

“We are squeezed in by international shipping lines. Dito tsina-charge ‘yung ibang costs (this is where other costs are charged),” Mr. Perlada said, while also citing port congestion and documentation charges in addition to ocean freight costs.

“The problem here is non-tariff [measures] because these are just practically hidden costs. Even if there are no tariff measures, the cost of doing business is what’s going to spell the difference.”

The lack of Filipino trade attachès posted in other countries also affects the Philippines’ negotiation capabilities in promoting its export interests abroad, said Philippine Confederation of Exporters, Inc. (Philexport) president Sergio R. Ortiz-Luis Jr.

“We don’t have presence [in other countries], and where we have presence there’s not enough of a budget. We have such a small budget in comparison to other countries,” he said in Filipino.

University of Asia and the Pacific economist George N. Manzano, who was a former tariff commissioner, explained that trade attachés in other countries also learn and communicate non-tariff standards.

He said that Philippine companies, especially small businesses, may not be familiar with technical standards and certifications of other countries.

“If you don’t have the information, you have difficulty complying with it because you don’t know the standards,” Mr. Manzano explained, adding that unlike tariff measures, NTMs are varied and not always transparent.

He said that the high standards of importing countries might also be costly to comply with, and that Filipino companies often don’t have the technical capability — or access to such — to check products for compliance before shipping.

The report also showed that the Philippines lower harmonization with other countries in the region when it comes to non-tariff measures.

Mr. Manzano explains that this may be a result of the Philippines not having adjusted to other countries’ import standards, or its weak bargaining power to ask others to harmonize.

He said that to help address the burden of NTMs on Philippine exporters, the government should provide compliance information to businesses, provide compliance testing facilities for products, and negotiate with other countries for a common standard.