FTAs: Prospects for Agribusiness

Atty. ALLAN B. GEPTY

Assistant Secretary

Department of Trade and Industry

COVID 19 Pandemic

• Globalization is being challenged

• More digital economy– E-Commerce

• Power

• Logistics

• Telecommunication

• Self reliant economy– Agriculture

• Agricultural technology

– Robust local industries

• International trade– Complementarity

– More than market access

Philippines’ Trade

Profile 2018

Source: WTO

• Global ranking

47th exporter

34th importer

• Share of trade to GDP: 31.4%

• Total world trade: US$ 182.2 billiono Exports: US$ 67.5 billion

o Imports: US$ 114.7 billion

• Trade Deficit: US$47.2 billion

PH Trade

2019

Source: PSA

• Total world trade: USD 182.5B

Exports: USD 70.9B

Imports: USD 111.6B

• Trade Balance: (-USD 40.6B)

• Export markets: US, Japan, China, HK,

Singapore, SKorea, Thailand, Germany,

Netherlands, Taiwan

• Import sources: China, Japan, SKorea,

US, Thailand, Indonesia, Singapore,

Taiwan, Malaysia, Vietnam

PH Export Markets

(2019)

FTA Partners

64.35%

Non-FTA Partners

35.65%

Composition of PH Exports

(2019)

Composition of PH

Imports

(2019)

Top PH Agricultural

Exports

(2019)

Bananas, including plantains, fresh or dried

(USD 1,954M)

Crude coconut oil (USD 640M)

Sardines, in airtight containers for retail sale

(USD 356M)

Fresh or dried pineapples (USD328M)

Other cigarettes containing tobacco (USD265M)

Desiccated coconut (USD 257M)

Carrageenan (USD 212M)

Fractions of unrefined coconut oil (USD 195M)

Pineapples, otherwise prepared or preserved

(USD 187M)

Other pineapple juice (USD 128M)

Enhanced PH-US Trade

Relations

• How can PH boost its agricultural sector under an enhanced PH US trade relations?

• How can an FTA improve US trade with the PH in the agriculture and related sectors?

PH-US Trade

(2019)

• 3rd largest trading partner: USD 19.6B

• Top export market: USD 11.57B

Major exports:o Semiconductor devices manufactured from materials on consignment basis (USD 1.09M)

o Digital monolithic integrated circuits (USD 851.14M)

o Ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships (USD

569.46M)

o Storage units (USD 559.48M)

o Static converters (USD 555.81M)

• 4th import source: USD 8.01BMajor imports:

o Other digital monolithic circuits (USD 989.38M)

o Oil-cake and other solid residues, whether or not ground or in the form of pellets, resulting

from the extraction of soybean (USD 890.21M)

o Other wheat and meslin (USD 645.16)

o Materials, accessories and supplies imported on consignment basis for the manufacture of

dice of any material (USD 470.15M)

o Other materials, accessories and supplies imported on consignment basis for the

manufacture of semiconductor devices (USD 414.48)

• Trade balance remains in favor of the

Philippines: USD 3.49B steadily

increasing since 2016

Enhanced PH-US Trade

Relations

• What are the areas of opportunities in the Philippines?

– Market

• Population

• Preference of US products

– Young labor force

– Research and development

US Investments

in the Philippines

(2018-2019)

• 6th largest investor in PH in 2018

• (Php 2.86B approved investments)

• 2019 (Jan-Sept): Php 6.18B approved

investments

• By sector:o administrative and support services activities (Php 10.53B)

o accommodation and food service activities (Php 2.08B)

o manufacturing (Php 390M)

o real estate activities (Php 165M); and, information and

communication (Php 150M).

• Sectors for consideration– Agricultural research and development

– Agricultural technology

Opportunities for PH

Agricultural

Products

• PH FTAs

o Top agri-exports covered mostly by

FTAs in force ASEAN FTAs – 0-5%

AANZFTA – 0% for PH top 20 agri exports

(A & NZ)

RCEP – negotiations ongoing for other agri-

products not covered by ASEAN+1 FTAs

PJEPA and PH-Korea FTA - improvements

in preferential access including agri products

PH-EFTA FTA – concessions granted to top

PH agri exports

• Preferential Schemes

o US GSP and EU GSP+ accord duty-

free entry or reduced duty

Top PH Agri-products

exports under US GSP

(2019)

ProductsValue

(US$M)MFN Rates GSP

Rates

Other fruit juice 37.806 0.5₵/liter 0

Other cane sugar 36.037 1.4606₵/kg 0

Other non-alcoholic beverages 22.504 0.2₵/liter 0

Coconuts 21.495 1% 0

Bananas, other than pulp 15.739 0.80% 0

Other sauces and preparations

therefore

9.585 6.40% 0

Other bread, pastry, cakes, biscuits

and similar baked products and

puddings

8.540 4.50% 0

Other food preparations not

elsewhere specified or identified

6.575 6.40% 0

Pineapples, frozen 6.111 0,25₵/kg 0

Bananas and plantains, frozen 4.775 3.40% 0

Other prepared or preserved fish 4.543 6% 0

Soy Sauce 4.039 3% 0

US Tariffs for Agricultural

Products

Tariffs for Top PH

Agri-Exports

Top PH Agri ExportsValue in

MilUS$

ATIGA

ASEAN+1 FTAs PH Bilateral FTAs

AANZFTA ACFTA AIFTA AJCEP AKFTA PJEPA PH-EFTA

Bananas, including plantains, fresh or dried

1,954 0-5 0 0 Excl 0 Excl Fresh: 8Dried: 0

0

Crude coconut oil 640 0 0 0 Excl 0 Excl 7 0

Sardines, in airtight containers for retail sale

356 0 0 0 Excl Excl 0 0

Fresh or dried pineapples 328 0-5 0 0 Excl 0 Excl 0 0

Other cigarettes containing tobacco 265 0-5 0 25 Excl 25 Excl 4 0

Desiccated coconut 257 0 0 0 Excl 0 Excl 0 0

Carrageenan 212 0 0 0 0 0 0 0 0

Fractions of unrefined coconut oil 195 0 0 0 Excl 0 Excl 0 0

Pineapples, otherwise prepared or preserved

187 0 0 0 0 0 0 Pooled quota: 30

0

Other pineapple juice 128 0 0 0 0 0 0 0 0

Challenges

Agriculture is a sensitive and highly

protected sector

Non-tariff measures (NTMs)o Compliance with SPS requirements

Cumbersome customs processes

Limitations on increasing productivity

and supplyo Environmental concerns e.g., drought

typhoons

Government

Interventions

SPS requirements – provide

assistance to PH exporters in

coordination with DA and PTICs

Customs procedures – moving

towards more facilitative regime in PH

FTAs

Aligning agri-interests with PH trade

agenda

Specific Government Initiatives to

Promote

Agri-Sector

DA’s 8 Paradigms to Level-up Agriculture

Recovery and Post Covid-19

Prospects

PH supports the call for international

cooperation seeking to:

keep markets open for trade and

investment

ensure food security, sustain regional

supply chains especially for food,

medicines and medical supplies

strengthen logistics network

Recovery and Post Covid-19

Prospects

• Gradual re-opening of global economy

• Stimulus packages needed to cushion

the effects of the pandemic

• International initiatives:o cooperation and information sharing on

global health issues including Covid-19 and

other diseases

o ensuring uninterrupted global supply chain

Am Cham and the PH-US

Trade Relations

Advocacy and

information

dissemination

Identification

of win-win

mechanisms

for private

sector/industries

Advocate/

lobby for

reforms

Identify champions in

the US and PH for

possible FTA support

• Explore more opportunities

• Take advantage of PH FTAs in the

region

• Increase GSP utilization

• Advocate for an FTA that is unique with

precise objectives

• Continue advocating for reforms

Thank you!