-
The World Trade Organization recognized the strides made by the Philippines in improving the trade sector in the past seven years in its latest Trade Policy Review for the country
-
At the same time, it recommended continued reforms such as the complete rollout of the National Single Window and a revival of the Unified Logistics Pass for cargo trucks
-
It noted that trade costs, particularly logistics, remains high due to archipelagic geography and continued regulatory inefficiencies
-
Overall logistics cost in the Philippines is 20% higher than the average within the ASEAN
The World Trade Organization (WTO) has recognized the strides made by the country in improving the trade sector and recommended continued reforms such as the complete rollout of the National Single Window and a revival of the Unified Logistics Pass (ULP) for cargo trucks.
“During the review period, the Philippines has taken solid steps to reduce trade costs, attract investment, and promote the development of MSMEs (micro, small and medium enterprises),” WTO said in its sixth Trade Policy Review of the Philippines, which was based on an independent report by the WTO Secretariat and one from the Philippine government.
“To maintain this momentum, it is essential to advance trade facilitation reforms,” it added.
The specific reforms listed are: improving the onboarding of the NSW, establishing non-preferential rules of origin, and reviving the ULP initiative.
READ: National Single Window to cut red tape, lower costs, says DOF
These actions, WTO said, would further strengthen the country’s trade regime, reduce costs, enhance competition, and take better advantage of the benefits of trade.
The ULP, a standardized digital code featuring a QR code intended for a seamless movement of cargo trucks, was not mentioned in the Philippine report. It was launched in 2022 but its full implementation has somewhat stalled.
READ: Unified Logistics Pass for 2023 nationwide rollout
In the past seven-year period, WTO noted how international trade has played a key role in the Philippines’ economic development and poverty reduction, with trade in goods and services generally representing over 60% of the country’s total output or gross domestic product.
From an employment perspective, workers in export-oriented sectors in 2024 were overall earning by about 50% more than the national average.
“The growth in higher-paying jobs linked to trade has contributed to a burgeoning middle class, which now accounts for over 40% of the population,” WTO said in the report summary.
Policy improvements were also reflected in new laws relating to taxes, liberalization of foreign ownership in various sectors, including aviation.
For MSMEs, stronger support were delivered through various export-related programs, fiscal incentives and domestic preferences. Specifically, the Tatak Pinoy (Proudly Filipino) Strategy identified nine priority sectors eligible for domestic preferences over a 10-year period. The new Public-Private Partnership Code also includes provisions for domestic preferences.
READ: DTI forms supply chain & logistics ‘guild’ to assist MSMEs
The WTO also cited efforts to streamline customs procedures and strengthen engagement between the government and the private sector through the Customs-Industry Consultative and Advisory Council.
High logistics cost
On the other hand, logistics and trade costs remained high partly due to the challenges of navigating an archipelagic geography as well as regulatory inefficiencies.
WTO said logistics costs account for 27% of retail prices of goods. According to data from the United Nations Economic and Social Commission for Asia and the Pacific–World Bank, trade costs in the Philippines are 20% higher than the average among members of the Association of Southeast Asian Nations.
“These elevated costs are largely attributable to inadequate infrastructure and regulatory inefficiencies,” WTO said. “Also, as a net importer of energy and food, the Philippines remains susceptible to external shocks impacting the supply of essential commodities. Import price pass-through heavily weights on domestic inflation dynamics.”
READ: WCO, WTO sign pact to enhance customs, trade cooperation
