There's a lot of noise and worry about the 17% tariff Trump has imposed on Philippine imports. Many people are understandably upset. But it goes both ways. In the USA there is a lot of noise and worry about the conditions of doing business in the Philippines.
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| https://mb.com.ph/2025/4/1/us-flags-corruption-as-major-trade-barrier-in-philippines |
The Office of the United States Trade Representative (USTR) has flagged corruption and a flurry of other barriers to trade with the Philippines that the US government seeks to dismantle, in a report released just days before President Donald Trump’s announcement of reciprocal tariffs.
In its 2025 National Trade Estimate (NTE) Report on Foreign Trade Barriers, published on March 31 (US time), the USTR identified the “pervasive and longstanding” corruption in Philippine national and local government agencies.
The Bureau of Customs (BOC), in particular, received a scathing acknowledgment over its “various corruption issues.”
While it recognized the BOC’s modernization efforts to address corruption and efficiency problems, the USTR said reports of corruption and irregularities are still widespread.
It noted that this is prevalent in the valuation process and inspection and testing of certain products, which only leads to undue and costly delays and inconsistent assessment of fees.
The report acknowledged the introduction of pre-border technical verification (PTV) last year, which aims to streamline inspections and monitor international trade transactions through a pre-export inspection by a conformity assessment company accredited by the Philippine government.
PTV, which is set for its first phase of implementation in May, was tagged by the USTR over concerns related to increased inspection and logistics costs, delayed movement of goods, and deviation from standard industry practices.
The supposed susceptibility of inspection agents to corruption in the country of export was also brought up.
The implementation of PTV, alongside cross-border electronic invoicing (CEI) as an integrated package, could indicate that the Philippines “may have the intention” of utilizing pre-shipment inspection for tariff classification or customs valuation.
The USTR said this signals compliance issues under Article 10.5 of the Trade Facilitation Agreement (TFA) under the World Trade Organization (WTO), which discourages members from requiring pre-shipment inspections.
The newest NTE report, submitted to President Trump and the US Congress, also called out issues in the Philippines’ judicial and regulatory processes.
It stressed that both foreign and domestic investors expressed concerns about the supposed “lack of transparency” when it comes to court and regulatory decisions.
The slow prosecution and conviction of cases were also flagged, particularly with issues related to intellectual property (IP) protection.
While the Philippines has made significant progress since its removal from the watch list under the Special 301 Report, the USTR noted that the country still lags in its enforcement activities.
“Stakeholders report issues with online piracy and sales of counterfeit goods, including apparel, shoes, watches, jewelry, perfume, and electronics,” it said.
The USTR pointed out that such complaints about counterfeiting and piracy are apparent in the continued inclusion of Greenhills Shopping Center on the Notorious Markets List.
On the agriculture front, the report highlighted several sanitary and phytosanitary barriers to trade, including import permits, local government regulations, and cold chain regulations.
Trade and investment barriers in services, foreign ownership, and government procurement were likewise cited.
Raising these issues before the US government could put additional pressure on the Philippine government, as it risks facing economic consequences from a Trump administration known for its aggressive stance on trade.
The report was released only two days before the so-called “Liberation Day” on April 2—the day when Trump is expected to announce a number of massive tariffs.
So far, it is uncertain how the latest NTE report will impact Trump’s tariffs.
However, USTR Ambassador Jamieson Greer mentioned in the 397-page report that the US government is working diligently to address “unfair and non-reciprocal practices.”
“No American President in modern history has recognized the wide-ranging and harmful foreign trade barriers American exporters face more than President Trump,” he said.
The Philippine government, through Trade Secretary Cristina Roque, recently pointed to the minimal trade deficit with American goods, noting that this could potentially shield the country from reciprocal tariffs.
Based on USTR data, American goods trade with the Philippines was $23.5 billion in 2024, with a US trade deficit of $4.9 billion.
In a March 31 report, debt watcher Moody’s Ratings said that, in general, “emerging markets (EMs) are exposed to choppy waters from the churn of US policies and its potential to reshape global capital flows, supply chains, trade and geopolitics.”
Since Asia-Pacific is integrated into global trade, Trump’s tariffs would pose a threat to regional economic growth, Moody’s said.
In the case of the Philippines, the debt watcher forecasted annual gross domestic product (GDP) growth of six percent this year and next year, at the lower end of the government’s target range of up to eight percent.
“The Philippines and Vietnam are benefiting from looser global financial conditions and some trade redirection from China, among other factors,” it said.
This is probably the most important sentence in the whole article:
While the Philippines has made significant progress since its removal from the watch list under the Special 301 Report, the USTR noted that the country still lags in its enforcement activities.
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