Source: California taken by Sarita Jackson

There have been talks about U.S. interest in trade talks with the Philippines starting this month. (News reports indicated that the United States and the Philippines were going to enter into trade talks in September.) We will see what happens this month. However, another area to follow this month is the emphasis on improving trade in agriculture between the United States and the Philippines.

Currently, the two food products that the United States imports from the Philippines are fruit and nuts with a dollar value of $158 million and cane or beet sugar, $105 million, according to statistics collected from the U.S. Department of Commerce.

The top U.S. food exports to the Philippines are wheat ($555 million) and soybean oil cake ($376 million).

There are three key things that agricultural producers should look for should the two countries move toward a bilateral trade agreement.

  1. Tariff rates – Trade deals increase market access by lowering and, eventually, eliminating tariffs on eligible goods. U.S. tariff rates on fruits and nuts range from free to as high as 29.8 percent. Since the Philippines is a beneficiary of the Generalized System of Preferences, which offers lower tariff rates to eligible developing countries, it currently benefits from tariff-free access to the U.S. market. A trade deal would add access to U.S. producers in the Philippines and make the access more permanent.
  2. Tariff Rate Quotas (TRQs) – With many trade agreements, some agricultural products go through a phase-out period before having access to another market. TRQs are trade instruments that protect producers for a period of time by allowing imported goods to benefit from lower tariff rates provided that they fall within the quantitative limit on those imports. Any goods that enter a market that exceed the limit will face a higher tariff rate.
  3. Sanitary Phyto-sanitary Standards – SPS standards are regulatory standards designed to promote food safety, as well as sets standards for plants and animals. Food exporters should become familiar with the SPS standards to ensure that their products can successfully access and compete in the markets of the United States or the Philippines.

In sum, the United States and the Philippines are moving toward enhancing economic integration. Remaining knowledgeable of the details focused on removing tariff and regulatory barriers to trade allows exporters to position themselves to successfully access either market–United States or Philippines.

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GRIIT Blog: International Trade Examiner

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