International Agreement Ratification and Objectives
- The Philippines ratified the Regional Comprehensive Economic Partnership (RCEP) Agreement in November 2022.
- The RCEP aims to create a modern, comprehensive, high-quality economic partnership.
- Key objectives include:
- Gradual liberalization and facilitation of trade in goods and services.
- Elimination of tariffs, non-tariff barriers, restrictions, and discriminatory measures.
- Creation of a liberal, facilitative, and competitive investment environment.
Legal Authority to Modify Tariff Rates
- Section 1609 of RA No. 10863 (Customs Modernization and Tariff Act) empowers the President to modify import duties based on NEDA's recommendations.
- The NEDA Board endorsed the tariff modifications consistent with the RCEP commitments.
Implementation of the Philippine Schedule of Tariff Commitments
- Imported articles listed in the Philippine Schedule of Tariff Commitments (Annexes A to F) are subject to specified import duty rates.
- Duties are imposed at the time of importation as indicated in these annexes.
Applicability of Tariff Rates
- Preferential tariff rates apply to originating goods from RCEP member countries.
- These rates also apply to goods subject to tariff differentials listed in the Schedule.
- Goods must comply with the submission of Proof of Origin and all RCEP requirements for eligibility.
Determination of Origin for Goods Subject to Tariff Differentials
- Originating goods subject to tariff differentials receive preferential tariffs if the exporting Party is a RCEP country of origin.
- If the exporting Party is not the country of origin, the Party contributing the highest value of originating materials will be deemed the country of origin.
- This ensures eligibility for preferential tariff treatment.
Claims for Preferential Tariff Treatment
- Importers may claim preferential treatment based on:
a. The highest customs duty rate applied to the same goods from any Party contributing originating materials, if proof is provided.
b. The highest customs duty rate applied to the same goods from any Party. - Originating materials consideration is limited to those involved in the originating status claim.
Government's Right of Recourse
- The Philippines reserves the right to invoke trade remedy measures under domestic law, the RCEP Agreement, and other international agreements.
- This is to prevent import surges and unfair trade practices.
Legal and Procedural Provisions
- If any part of the Order is declared unconstitutional or invalid, the rest remains effective (separability clause).
- All inconsistent laws, orders, rules, and regulations are repealed or modified accordingly.
- The Order takes effect on 02 June 2023 upon publication in the Official Gazette or a newspaper of general circulation.
Summary
This Executive Order effectuates the Philippines' commitments under the RCEP Agreement by establishing a comprehensive tariff schedule that reduces tariffs on origin-verified goods from RCEP countries, formalizes procedures for claiming preferential treatment, safeguards against unfair trade practices, and ensures compliance within the Philippine tariff and trade legal framework.