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Gov't urged to raise import tariffs to protect local industries

abs-cbnNEWS.com | 07/03/2009 3:44 PM

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MANILA - The government should increase import tariffs to as high as the World Trade Organization (WTO) would allow in order to protect domestic production, a group said.

In a statement, multisectoral group Fair Trade Alliance (FairTrade) called on the Arroyo administration to raise tariffs for all industrial and agricultural goods based on the Philippines' maximum WTO bindings, except for raw materials used by local industries.

Under the WTO, a tariff binding rate refers to a fixed level negotiated between trading partners beyond which tariffs may not be increased.

According to FairTrade Lead Convenor Wigberto Tanada, Philippine WTO binding rates are at least twice the country's actual tariffs for industry (6 percent). Given this, he said the government has every right to increase tariffs up to the country's maximum binding rates.

"The point is that there are flexibilities available in our trade agreements which can be used to arrest the country's financial distress and counter falling receipts from exports," Tanada said.

Merchandise exports fell 35.2 percent to $2.803 in April, the 7th consecutive month of year-on-year declines for the country. The government has earlier projected a 13 to 15-percent drop in export earnings this year from a 2.86-percent drop in 2008, as demand from main markets such as the United States continue to decline due to the global economic crisis.

While the government may reduce tariffs on products not locally made or without every substitutes to 1 or zero percent, Tanada said it should raise tariffs for imports that compete with locally-manufactured products.

This, he said, will not only protect the local industry but also provide more jobs and revenues for the country.

"The upward recalibration of tariffs will help preserve local jobs in these crisis periods, and will also help raise the utilization of domestic production capacities," he said.