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By Aubrey Rose A. Inosante and Chloe Mari A. Hufana, Reporters
THE PHILIPPINES is receptive to reducingtaxes on certain imports from the US to zero as a part of tariff discussions with Washington, Finance Secretary Ralph G. Recto stated.
When queried if the administration might propose zero tariffs on US products — akin to Vietnam’s strategy, Mr. Recto answered: “Certainly.”
“Not for every product, but we have pinpointed a collection of items,” he informed reporters last week, without elaborating.
This happens as Philippine President Ferdinand R. Marcos, Jr. on Sunday left for an official trip to the US, where he is set to meet with US President Donald J. Trump.
Mr. Marcos is anticipated to discuss the proposed 20% US tariff on Philippine exports during his meeting with Mr. Trump on July 22.
In his send-off address at Villamor Airbase in Pasay City, Mr. Marcos mentioned that the Philippines is prepared to negotiate a trade arrangement with the US to foster “strong, mutually advantageous, and forward-looking collaborations” that will facilitate the country’s economic development.
“My primary focus for this visit is to advocate for increased economic collaboration, particularly through trade and investment between the Philippines and the United States,” he articulated, according to a memorandum from his office.
“I aim to convey to President Trump and his Cabinet officials that the Philippines is prepared to negotiate a bilateral trade arrangement that will ensure strong, mutually beneficial, and forward-looking collaborations that only the United States and the Philippines will be able to benefit from,” he elaborated.
Mr. Marcos’ visit to the US marks the first by a head of state from the Association of Southeast Asian Nations (ASEAN) since Mr. Trump took office in January.
Mr. Marcos highlighted that while defense and security matters will be addressed during his meeting with Mr. Trump, commercial and economic opportunities will take precedence in the discussions.
“I anticipate meeting with business leaders to investigate business prospects that will further stimulate our economy,” he stated.
Members of his economic team are already in Washington ahead of his arrival to arrange for investment discussions and trade negotiations.
Mr. Recto mentioned that the economic team has a “significant strategy” for the negotiations with the US. He expressed hope that the discussions could result in reduced tariff rates.
“I believe our relationship with the US encompasses not only trade but also security. I’m confident they’ll prioritize that as well,” he remarked.
Mr. Trump had previously imposed a 17% tax on Philippine goods, which is the second lowest rate among ASEAN nations. This was increased to 20%, despite prior attempts by Philippine negotiators to decrease the tariff rate. If no agreement is reached, the 20% tax will take effect on Aug. 1.
The Philippines is currently under pressure to secure a lower tariff rate than Indonesia and Vietnam, both of which have finalized negotiations with the US.
The US has decreased the tariff on goods from Indonesia to 19% from 32% previously.
“If it’s 19% for them, it ought to be 10% for us. The minimum is 10%, right? 11% is acceptable,” Mr. Recto stated shortly after news of the Indonesia-US agreement was made public.
Vietnam presently encounters a 20% tariff on its exports to the US, coupled with a 40% charge on goods transshipped through the country. This is considerably lower than the initially declared US tariff of 46%.
Thailand previously indicated it is willing to abolish taxes on 90% of US goods in an attempt to negotiate a lower tariff than the previously announced 36%.
Cambodia is also facing the same 36% rate and still lacks a finalized agreement.
FREE TRADE AGREEMENT
Meanwhile, Mr. Recto stated that a free trade agreement (FTA) with the US is also involved in the negotiations.
“We favor that. We aspire to establish one FTA. Not just with the US, but with Europe and several other nations. Increased trade should be advantageous,” Mr. Recto noted.
“We must broaden their markets. Attract more investments in manufacturing in the Philippines so that we can ramp up exports. Then we can revisit the final tariffs later.”
The Philippines is equally advocating to uphold the zero tariffs on semiconductor exports, a crucial element of its leading export commodity, the electronics sector.
“We aspire to minimize any duties they impose on our products. Ideally, we want it to be zero [on semiconductors],” Mr. Recto expressed.
Analysts remarked that the Philippines’ proposal to apply zero tariffs on goods from the US is unlikely to influence the Trump administration.
“It may not be sufficient on its own to reduce the 20% US tariff,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies communicated in a Viber message.
He indicated that the proposal would be perceived as a “strong goodwill gesture” and demonstrate the nation’s eagerness to engage constructively.
“The Philippines needs to supplement this proposal with a clear value proposition, such as enhancing supply-chain alliances, especially in critical areas like semiconductors and agri-processing,” he articulated.
Jonathan L. Ravelas, a senior advisor at Reyes Tacandong & Co., mentioned that a crucial factor to obtain a lower export levy is “reciprocity.”
“We must leverage US agricultural products. Specifically, wheat and soybeans. Which are primarily used in feeds. If we can import these at lower costs, it will bolster food security,” he stated in a Viber message.
Josue Raphael J. Cortez, who teaches diplomacy at De La Salle-College of St. Benilde’s School of Diplomacy and Governance, mentioned that the Philippines can maintain a healthy equilibrium between satisfying its security obligations to the US and pursuing economic independence by continually advocating for an independent foreign policy.
However, he cautioned that such a course bears risks amid the current geopolitical instability, pointing to the US reciprocal tariffs and escalating tensions in the South China Sea.
“The political-security and economic aspects may be interconnected, but our current approach appears to indicate that we highly value our security collaboration with the US while recognizing that dependence on a single partner is not advisable,” he explained in a Messenger chat.
Mr. Cortez articulated that the Philippines can enhance economic security by expanding partnerships in sectors where it holds strategic advantages, such as semiconductors, and by sustainably exploiting mineral resources like nickel, which is vital for electric vehicle batteries.
IBON Foundation Executive Director Jose Enrique A. Africa indicated that the administration has limited negotiating power as manufacturing currently constitutes the smallest fraction of the economy in 75 years.
“The delegation proposing to further liberalize the economy in exchange for reduced US tariffs will ultimately be counterproductive and perilous,” he expressed in a Viber message.
“The Philippines will bear responsibility for diminishing its already minimal leverage if it yields to the constraints set by the US. It’s never too late to adopt a domestic industrialization strategy, similar to what the US is executing, and to form strategic alliances within the region to alter the equilibrium,” he concluded.
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