Corruption in Philippines courts a trade barrier – US

MANILA, Philippines - The prevalence of corruption in the Philippines – including in the judiciary – has remained a significant barrier to trade with the United States, a report by the Office of the US Trade Representative (USTR) shows.

“Corruption is a pervasive and longstanding problem in the Philippines. Both foreign and domestic investors have expressed concern about the propensity of Philippine courts and regulators to stray beyond matters of legal interpretation into policymaking, as well as about the lack of transparency in judicial and regulatory processes,” the USTR said in its 2017 National Trade Estimate Report on Foreign Trade Barriers.

“Concerns also have been raised about courts being influenced by bribery and their improperly issuing temporary restraining orders to impede legitimate commerce. The United States will continue to urge the Philippines to address these issues,” the agency said.

The USTR said reports of corruption and irregularities in customs processing likewise persist, including in the valuation process. The report also cited customs officials seeking payment of unrecorded facilitation fees.

“In particular, despite a firm commitment to the United States from the Bureau of Customs to use transaction values to assess duties on imports, as provided for in the WTO Customs Valuation Agreement, importers have reported that the Bureau of Customs continues to use reference prices for valuation of meat and poultry,” the USTR said in its report. “Traders have reported that reference prices are frequently well above the transaction prices, which has the effect of imposing an artificially high tariff.”

According to the USTR, trade barriers can be broadly defined as government laws, regulations, policies or practices that protect domestic goods and services from foreign competition, artificially stimulate exports of particular domestic goods and services, or fail to provide adequate and effective protection of intellectual property rights (IPR).

The report indicated that despite significant improvements in the Philippine IPR environment in recent years, US rights remain concerned about the continued availability of pirated and counterfeit goods in the Philippines, slow investigation of IPR-related cases by the Department of Justice and judicial inexperience in handling IPR enforcement cases, both civil and criminal.

“US rights holders report some concerns, including increasing online piracy, counterfeit drugs and weak provisions in patent law that may preclude the issuance of patents on certain chemical forms unless the applicant demonstrates increased efficacy,” the USTR said. “The United States has also been monitoring the development of new regulations related to geographical indications.”

Meat handling, import clearance

Also included among barriers to trade are the country’s meat handling rules and import clearance system.

For meat handling rules, the Philippines currently maintains a two-tiered system for regulating the handling of frozen and freshly slaughtered meat for sale in local wet markets.

“Under this system, the Philippines imposes more burdensome requirements on the sale of frozen meat, which is primarily imported, than it does on the sale of freshly slaughtered meat, which is only from animals raised domestically. The United States continues to press the Philippine government to remove the unscientific requirements placed on frozen meat,” the USTR said.

As far as import clearance is concerned, the Department of Agriculture requires importers to obtain a sanitary and phytosanitary permit prior to shipment of any agricultural product and to transmit the permit to the exporter.

The USTR said such requirement adds costs, complicates the timing of exports and prevents the transshipment to the Philippines of products intended for other markets.