Managing the ASEAN Economic Integration Process in the Philippines: Trade Liberalization and Facilitation

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1 Managing the ASEAN Economic Integration Process in the Philippines: Trade Liberalization and Facilitation Erlinda M. Medalla, PIDS Fellow DPRM September 17, 2012

2 Outline Brief overview of Philippine trade policy Some Trade Indicators AFTA commitments related to trade Tariff Commitments Philippine trade facilitation measures Findings from the survey/questionnaire Conclusion and Recommendations

3 Pre-1980 Open up Unilateral Up to 2000 Doldrums RTAs ASEAN central

4 The direction of Philippine trade has shifted away from the US and EU to Asia, ASEAN in particular, during the past 30 years.

5 The direction of Philippine trade has shifted away from the US and EU to Asia, ASEAN in particular, during the past 30 years.

6 AFTA Trade Commitments Zero tariffs for substantially all trade by 2015 ASEAN Target: 30 minute turnaround time Customs Modernization Establishment of NSW

7 Source: Tariff Commission On Tariffs EO 850 was passed in December 2009 which brought down tariffs on imports from ASEAN, to 0 % in 2010, except for a short sensitive list of products AHTN Product description 2010 CEPT (%) Rice in husk- suitable for sowing Husked brown rice- Thai Hom Mali rice other Fragrant rice- Thai Hom Mali Other semi or wholly milled rice Parboiled rice Glutinous rice other Broken rice Cane sugar Beet sugar Containing over 65% by dry weight of sugar Containing over 65% by dry weight of sugar other 38

8 On trade facilitation Towards the ASEAN Target: 30 minute turnaround time Customs modernization National Single Window ASEAN Single Window

9 Philippine Trade Facilitation Reforms Customs Reforms Customs modernization computerization --risk mgt/post-entry audit computerization improvement program Broader Trade Facilitation One-Stop Shop Export Documentation Center (OSEDC) Automation in economic zones National Single Window (NSW) Revised Kyoto Convention Customs modernization since 1996 through computerization, selectivity system (red, green, yellow), post-entry audit Simplified export procedures through OSEDC automated export documentation in PEZA, Subic, Clark NSW: integrate 40 government agencies, initial focus was 10 which account for 70% of permits & clearances

10 National Single Window Preparatory stage & process analysis: completed Process simplification & harmonization, cross border data exchange: on-going System up & running for 27 government agencies: electronic submission of application form, status of application viewable in the dashboard, notification via of application status, final approval via e-means Next step: Link between NSW and OGAs NSW stages Score Preparatory Measures (30%) 17% Implementation of the NSW business processes and technical components (60%) 55% Live Implementation (10%) 10% Total Score 82% NSW Phase 2 soon to be launched Declaration processing, rationalization, simplification & harmonization Link NSW and OGAs ASW integration including manifest processing

12 Review of progress: Survey/questionnaire Two sets of survey/questionnaire The questionnaire for government officials aims to gather information on aspects of ASEAN customs development and integration and the implementation of NSW and ASW. To help assess the progress made in trade facilitation efforts of the government, the MTR also included a survey of private sector firms to determine if they have perceived improvements in customs procedures and processes.

13 Review of progress: Findings from survey/questionnaire Responses of BOC officials to the questionnaire on customs modernization reveal that the Philippines has implemented electronic transactions in most key customs processes. The exceptions are in electronic export declarations and electronic certificate of origin. According to BOC, the NSW portal is now implemented in the major seaports and airports and coverage for all is targeted by Currently, there are 38 OGAs linked to the NSW. A total of 50 OGAs are envisioned by BOC to be linked to the NSW by Of around 10,000 registered, around 25 % use the NSW portal.

Review of progress: Findings from survey/questionnaire Perception of customs procedures becoming fully automated rose by more than 50 percent for all customs procedures in 2011 compared with the

14 Review of progress: Findings from survey/questionnaire Perception of customs procedures becoming fully automated rose by more than 50 percent for all customs procedures in 2011 compared with the previous year for main customs processes. Perception of improvement higher for SMEs The highest perception is in payments of taxes and duties (22 out of 28 who answered), followed by import declarations (16 out of 34). Highest perception of non-automation is in support documentations (14 out of 33 who answered), followed by export declarations (13 out of 25 who answered). These responses are consistent with the findings from the questionnaires for government officials which indicated the same areas of improvements and limitations.

15 Perception of degree of automation of procedures: All respondents

16 Availability of electronic/online services Availability Yes No Yes No a. Ability to track and trace clearance status electronically b. Ability to electronically look up tariffs and regulations c. Ability to compute tariffs on imports d. Ability to download forms e. Ability to electronically submit forms and supporting documents f. Electronic payment on customs duties / taxes g. Ability to receive decisions electronically through one portal h. No need to submit paper documents i. 24 hour a day, 7 day a week service j. Online help k. Secure guarantee / surety bond

17 The degree of satisfaction on the following import and customs services a. Submission of documents for clearance (import / export declarations; supporting documents) Number of respondents Not Satisfied Satisfied Highly Satisfied Not Applicable b. Express consignments c. Obtaining Certificates of Origin (e.g., CEPT Form D) d. Payment of customs duties / taxes e. Obtaining certificates, permits, licenses from: f. Agriculture (Sanitary / Phytosanitary, etc) g. Health i. Getting Duty Drawback / Temporary Admission j. Tariff Classification k. Customs Valuation l. Inspection and Release of Goods m. Port Operations n. Transit Procedures

18 Conclusions and Recommendations On the whole, the results from both the questionnaire for government officials and the firm survey show improvements in trade facilitation in terms of customs modernization and reforms to implement the National Single Window. There are improvements in the degree of automation of procedures, especially in import declaration as lodgement of import entries are now done electronically, and similarly for payments of taxes and duties. However, there are still large gaps in many important areas: NSW and OGA link in export declaration, support documentations (Packing List, Bill of Lading, Manifest, Airway Bill, Invoice), and inspection and release of goods.

Conclusions and Recommendations Fast track completion of NSW phase 2 Harmonization and standardization (softwares, systems, etc) Linkage between NSW and OGAs Should be

19 Conclusions and Recommendations Fast track completion of NSW phase 2 Harmonization and standardization (softwares, systems, etc) Linkage between NSW and OGAs Should be supplemented with intensive information dissemination Improve and strengthen the Risk Management System that links directly with the information and database of the NSW and BOC

20 Concluding Remarks Trade Liberalization Tariffs : delivered commitments Trade facilitation Reforms undertaken toward NSW and ASW In managing its ASEAN integration Helped kept the country open Adoption of NSW means of good governance, not just compliance with ASW commitments Regulatory impact: mid to long term serious reforms in business processes & customs management

Asean Economic Community

1 2 Asean Economic Community 3 Bangkok Decleration 4 ASEAN Established in 1967 August 8 th Initial objective To promote regional peace and stability Members and Year of entry ASEAN-6 CLMV 1997 1967 1997