NONTARIFF measures (NTM) remain a “major hurdle” for exporters in the Philippines and other Asia-Pacific countries, according to a joint report by the International Trade Centre (ITC) and Economic and Social Commission for Asia and the Pacific (ESCAP).
According to the report published in February 2023, two-thirds (66 percent) of the reported nontechnical measures are rules of origin (ROO) requirements.
“Exporters find ROO regulations burdensome largely due to associated procedural obstacles such as having to present many documents, high fees, delays, and informal payments while obtaining the required certificates of origin,” the report stated.
For instance, garment-exporting countries with “less vertically developed value chains” find it difficult to comply with local content requirements. Meanwhile, in the case of the Philippines, the report traced the hardship largely to the increased local use of imported textiles in their markets.
According to the joint report of ITC and ESCAP, non-tariff measures are “policy measures, other than custom tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both.”
Meanwhile, the report also noted that other NTMs such as charges, taxes and price control; quantity control; and finance measures together make up 18 percent of the reported non-technical measures. It said most of these measures are “intra-regional.”
In the Philippines, importer clearance certificates (ICCs) are required by the Bureau of Internal Revenue to start operations but are often delayed by up to a month subject to additional documentary requirements and need to be renewed yearly. These lead to procedural obstacles (POs) such as delays, additional costs and paperwork, the report stated.
Further, the report divulged that a common measure includes customs valuations, which it said is prone to “bribe-seeking” behavior.
“Customs valuation irregularities are a common issue with customs agencies, with exporters complaining about the arbitrary imposition of import tariffs on goods,” the report noted.
For instance, the report said, “In the Philippines, the Bureau of Customs (BOC) uses a three-month rolling period methodology that overvalues the product by up to a hundred times the original price, significantly increasing import duties.”
“Other regulations relate to charges, taxes and para-tariffs, as well as quantity control measures that are more prevalent in agri-food sectors,” the report added.
Meanwhile, the report stressed that the lack of capacity of authorities to properly enforce trade regulations in some countries has led to “informal payments” becoming a standard operating procedure for both importers and exporters.
“Cultures of patronage, coupled with complex and often outdated regulations and customs clearance mechanisms, have reinforced this behavior,” the report said.
For instance, it said, in the Philippines, a law requires the use of a customs broker to mediate transactions between exporters and customs agents, implying that there will always be an “extra administrative layer of possible corruption and bureaucracy for all trade procedures,” the report pointed out.