US farm goods access seen as main sticking point in PHL tariff negotiations

THE US government’s main concern in tariff negotiations with the Philippines is market access for its agricultural commodities, while digital services taxes (DSTs), which have featured in other trading partners’ negotiating strategies, may be less of a concern, analysts said.

“The major concern is the quotas and restrictions on US agricultural imports,” Foundation for Economic Freedom President Calixto V. Chikiamco said via Viber.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said DST could be a potential issue in Philippine negotiations if “lobbied for by any affected US digital services company and raised to the US government.”

“But many other countries around the world, especially developed countries, especially in Europe, already do this, so it would also be based on acceptable international practices,” he added.

“It would depend on how affected US companies would lobby these DSTs,” he added.

US President Donald J. Trump signed a memorandum in February declaring his opposition to DSTs imposed by foreign governments on US companies.

Last month, Canada rescinded its DST in anticipation of a comprehensive trade arrangement with the US.

A Philippine delegation is in Washington to negotiate for a lower tariff after Mr. Trump announced a higher-than-expected 20% tariff on Philippine goods effective Aug. 1.

President Ferdinand R. Marcos, Jr. will also be visiting the US between July 20 and 22 in hopes of initiating bilateral trade agreement talks.

More than the VAT on digital services, Mr. Ricafort said the US has tended to focus on merchandise exports that are charged tariffs by other countries.

Mr. Marcos signed Republic Act No. 12023 into law last year, imposing a 12% VAT on digital services.

During the negotiations, Mr. Chikiamco said the Philippines should only offer duty-free access to all US goods as part of a bilateral free trade agreement.

“This will be good for the Philippines, as it would lead to lower food prices, especially on corn. Lower corn prices would lower the price of pork and chicken,” he said.

“The administration can deflect political blame by pointing out the need to access the vital US market for our garments, electronics, and commodities,” he added.