Prolonged US-China trade war to hurt PH – DTI

The Department of Trade and Industry said that a prolonged trade war can slow down global economies and can eventually affect even the small players like the Philippines.

Trade and Industry Secretary Ramon M. Lopez said this as the US and China are now officially in a trade war status.

On Friday, Washington made good its promise to impose 25 percent tariffs on $34 billion Chinese imports, enacting a plan laid out by president Trump earlier this year against what he called as China’s unfair trade policies. The levies mainly affect Chinese technology such as aerospace, IT, and medical kit.

Beijing has already retaliated with tariffs on a range of products including soybeans, chemicals and some auto vehicles.

Trump also suggested to widen the list of products eventually cover $500 billion of Chinese imports.

“In the long term, the potential magnitude if it (trade war) worsens can slow down global economies and can eventually affect even the small players like us,” Lopez said.

For now, Lopez said, the products that were included in their tariff increases have little or no impact to Philippines like washing machines solar panels steel and aluminum.

“There is one exporter, Sunpower Inc., that will affected for its solar panel panel exports but our trade reps are working with US counterparts for exemption since its below deminimis level,” said Lopez stressing that these products account for less than 3 percent of US solar panel imports.

Sunpower has already submitted their position paper for exemption. Being a major exporter of solar panels, their exports will be affected by the imposition of 30 percent tariff on year 1 down to 15 percent on year four.

On steel and aluminum products, Lopez said the Philippines is not a major exporter of these items. The US imposed a 25 percent tariff on steel and 10 percent on aluminum products to address national security under Section 232 of the National Trade Act.

Lopez further noted that the Philippines still currently enjoys (General System of Preference) GSP privilege with the US, covering 3,500 product lines that enter the US market at 0 percent duty.

Moreover, the Philippines is also enhancing trade arrangements with the US under the Trade and Investment Framework Agreement (TIFA), as a step toward a possible bilateral Free Trade Agreement FTA.

Since there is no major impact on the Philippines, Lopez said the trade could even encourage affected manufacturers to shift their production activities to other countries like the Philippines.

“As we see no major impact to Philippines, we may stand to benefit if other affected manufacturers in countries affected shift their production base to the Philippines to avoid facing higher tariff rates,” said Lopez.

In the case of China, Philippines, as part of ASEAN, has an FTA with China, thus has 90 percent of product lines entering the respective markets at lower or zero duty.

China is also showing its seriousness in helping balance its global trade surplus by unilaterally cutting, starting July 1, 2018, its MFN tariffs on footwear, headgear, kitchen supplies, apparel from 15.9 percent to 7.1 percent, cosmetics from 8.4 percent to 2.9 percent, washing machine and refrigerators from 20.5 percent to 8 percent, processed foods such as aquaculture and fishery products, mineral water from 15.2 percent to 6.9 percent.

Lastly, the trade chief expressed hopes that the goodwill established by President Duterte with Pres Xi Jinping to continue to open up huge market opportunities for Philippine products to enter the China market.

“We hope the trade war won’t worsen as nobody wins in a trade war,” he said.