PH Exports Grow by 5.1% in Q3 2019

MAKATI – Amidst the backdrop of global uncertainty stemming from the US-China trade war, Philippine exports of goods and services remained resilient, as it expanded by 5.1% year-on-year (yoy) to US$ 25.0 billion in the 3rd quarter (Q3) of 2019. This export growth was even an improvement compared to its second quarter (Q2) 2019 yoy rate of 4.3%.

"President Rodrigo Duterte's directive of being a friend to all nations allowed the Philippines to grow our exports despite the ongoing US-China trade war, which may have caused the decline in exports of other countries." said Trade Secretary Ramon Lopez.

Sec. Lopez also said that the Philippines is pushing for the conclusion of free trade agreements like the Regional Comprehensive Economic Partnership (RCEP) and the Philippine-Korea Free Trade Agreement in 2020 to expand market access for manufactured goods as well as agri-based products.

He shared that the Philippines is also working on a free trade agreement with the United Arab Emirates (UAE) and is exploring new export markets in consumer-rich Africa. The trade chief advised that export marketing should be in tandem with increasing the supply to meet the demand of foreign markets.

The Q3 export growth performance was strengthened by an 8.6% yoy increase in services exports, which totaled US$ 11.1 billion for the quarter. It was also backed by the 2.4% yoy uptick in the goods exports valued at US$ 13.9 billion.

Growth in services exports was boosted by a double-digit increase in exports of travel services due to bigger international tourist arrivals. Aside from travel services, Information Technology and Business Process Management (IT-BPM) also contributed to the services exports’ good showing.

On the other hand, exports of electronics products, bananas, and forestry and mineral products contributed to the moderate increase in the exports of goods.

Goods and services’ exports climbed 3.7% yoy to US$ 70.4 billion on a cumulative basis spanning January to September 2019. Services exports rose by 7.7% yoy to US$ 30.6 billion driven by travel services as well as technical, trade-related, and other business services. Meanwhile, goods exports increased by 0.7% yoy to US$ 39.8 billion primarily because of fruits and vegetables.

WTO Panel Report in Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines

12th July 2019, a World Trade Organization (“WTO”) Panel upheld the Philippines’ claims that Thailand violated WTO law on customs violation. The dispute initiated by the Philippines in 2008 affects Philippine exports of cigarettes to Thailand.  Trade and Industry Secretary Ramon Lopez said that “this WTO dispute has been going on for more than ten years now, Thailand has lost all three panel and appellate rulings, and it is about time that Thailand accepts the rulings and implement the customs valuation reforms called for by those rulings.”

This decade-old dispute between Thailand and the Philippines concerns Thailand’s persistent failure to value Philippine exports consistently with the WTO’s Customs Valuation Agreement (“CVA”).  These measures threaten the viability of the private sector both in the Philippines and in Thailand, harm Philippine tobacco farmers, and are inimical to the overall export interests of the Philippines. It also places bilateral relations on a sour note. Mr. Lopez notes that “Thailand is a strong supporter of the WTO multilateral trading system, and currently chairs the WTO General Council. Thailand is also ASEAN host for 2019. Accepting the panel report in this dispute would be a clear demonstration of Thailand’s responsibility and leadership in the WTO and in ASEAN.”

This dispute was initiated by the Philippines in 2008, and is still ongoing because of Thailand’s repeated allegations of under-declaration of the customs value of cigarettes, which are all based on valuation determinations consistently ruled as illegal under WTO rules.  And these unlawful measures threaten criminal prosecution and even the imprisonment of a number of employees of the importer in Thailand, Philip Morris International Thailand (PMTL).

Thailand has now lost three WTO panel proceedings: 

• In the original proceedings, a WTO panel and the Appellate Body ruled in 2010 that the Thai customs valuation measures violated the CVA and other WTO rules. 
• Following this ruling, Thailand brought further new, WTO-inconsistent customs valuation measures against Philippine cigarettes and filed criminal charges against PMTL for under-declaration.  The Philippines successfully brought a first set of WTO compliance proceedings; in November 2018, the WTO compliance panel found that the new customs valuation measures and the first criminal charges violate the CVA. 
• While these proceedings were ongoing, Thailand issued a second set of criminal charges, forcing the Philippines to initiate second WTO compliance proceedings.  This latest WTO panel ruled on 12 July that these second charges also violate the CVA.  

Thailand has yet to implement the WTO rulings, amend its customs valuations policy and practices, and withdraw the two criminal charges which based, in the first instance, on WTO-illegal measures