Philippines Modifies Import Duty Rates: Executive Order No. 62
On June 20, 2024, President Ferdinand Marcos Jr. signed Executive Order No. 62 (EO 62), which introduced modifications to import duty rates for a range of commodities. The new tariff structure will take effect in July 2024, signaling a significant shift in the country's trade policy, particularly in the agricultural sector.
Key Changes in EO 62
The most notable adjustment under EO 62 was the reduction of the rice import tariff from 35% to 15%, aimed at improving domestic supply, stabilizing market prices, and easing the financial burden on consumers. However, the order also included adjustments to tariff rates on other essential commodities, including:
Rice: Import duty reduced from 35% to 15%
Certain raw materials for food production: Reduced tariffs to lower production costs
Selected agricultural products: Adjustments made to prevent shortages and ensure food security
Other industrial goods: Revisions aimed at supporting local industries and promoting economic growth
The modifications align with the Philippine government’s broader economic strategies, including efforts to address inflation, ensure food security, and maintain the competitiveness of local industries.
Impact on the Economy and Trade
Lower Food Prices:
By reducing rice import tariffs, the government aims to stabilize rice prices, which is critical as rice is a staple food for Filipinos.
A lower tariff may increase rice imports, leading to greater supply and potentially reducing consumer costs.
Trade Relations and Supply Chain Adjustments:
The move may benefit rice-exporting countries, such as Vietnam, Thailand, and India, as the Philippines is one of the world's largest rice importers.
It could also strengthen trade ties with ASEAN partners and promote more competitive sourcing options for food importers.
Inflation Control Measures:
The order is part of a larger government effort to manage inflation, especially amid rising global commodity prices.
By ensuring a steady supply of essential goods at lower costs, EO 62 aims to mitigate price surges affecting consumers.
EO 62 marks a strategic intervention by the Philippine government to balance trade policies, consumer needs, and local industry protection. While it benefits consumers by reducing food costs, it also presents challenges for local farmers and requires long-term policy adjustments to ensure sustainable agricultural development. The effectiveness of these tariff changes will depend on how well the government implements complementary support programs for domestic producers while maintaining a competitive and secure trade environment.