Trade Insights for Importers of Goods from the Philippines by Sarita Jackson

Trump to Visit the Philippines Next Week: Trade Insights for Importers of Goods from the Philippines

On November 13-14th, President Trump will conclude his trip throughout the Asian region with a visit to the
Philippines. He will meet with Philippine President Rodrigo Duterte and attend the U.S.-Association of Southeast
Asian Nations summit. According to a November 8th Inside US Trade report, Trump will “continue his call for ‘fair and reciprocal treatment,’ [a senior administration] official said. That includes, the official added, ‘fully embracing an international trading system, which is rules-based and respects high standards; achieving fair and equitable trade relationships through the removal of unfair trade barriers; and the reduction of chronic trade deficits and adherence to market-based growth.’” Against this backdrop, what opportunities exist for U.S.-based importers purchasing goods from the Philippines? What should exporters from the Philippines know about finding buyers and
competing in the U.S. market?
They should understand tariffs/customs duties, or taxes placed on goods imported from another country. (Tariff and duty are used interchangeably in this piece.) Since the United States and the Philippines do not have a bilateral
trade deal that eliminates duties on the majority of goods traded between the two countries, this piece focuses on
those programs that create opportunities for goods from the Philippines to enter the United States duty-free.
Beyond looking at such programs, it is also important to understand the kind of research data that will help both an
exporter and importer, regardless of industry, to take advantage of such programs.
For this reason, the blog post is organized into the following sections: 1) the types of programs that offer goods from
the Philippines special access to the U.S. market; 2) names of key importers from the Philippines; 3) top goods and
services that the United States imports from the Philippines; and recommendations for developing a competitive
import/export strategy.

U.S.-Philippines Trade Policy (Tariffs and Special Access Programs)
The United States and the Philippines have not signed a bilateral free trade agreement, which would allow for the
easier flow of goods and services between the two countries. Goods, for example, could be traded between the two
countries duty-free. Without such a deal, any good entering the U.S. market from the Philippines will face duties,
which, in turn, adds to the cost of that same good. For instance, as discussed below, electrical machinery and equipment (HS 85) is the number one U.S. import category from the Philippines. Specific commodities, such as wires and cables, face duty rates that can range from 3.5% to 5.3%, with a few duty-free exceptions. However, special access programs provide substantial benefits to goods imported from the Philippines. Unfortunately, these long-standing programs receive little attention and many importers are unaware of their existence. Consequently, these importers miss out on opportunities to save on the cost of importing. One such program is the Generalized System of Preferences (GSP). The GSP provides duty-free treatment to specific products from eligible countries. Since the Philippines is a beneficiary of the GSP, items, such as wires and cables, enter the United States duty-free, thus giving exporters from the Philippines somewhat of a competitive edge. Furthermore, importers from the Philippines can reduce their transaction costs. In July 2017, the United States expanded the program to include travel goods from the Philippines, which originally faced duties ranging from 6 to 20%. 1/6

The next focus is for exporters from the Philippines to gain insight into who is actually buying certain goods from the country and for importers to be able to identify other firms selling similar products in the U.S. market. The following section offers insight into U.S. importers of a specific commodity from the Philippines.
U.S. Importers of Goods from the Philippines (Firm-level)

In December 2016 alone, more than 1,000 shipments ordered by various companies located all throughout the
United States came from the Philippines. Three companies–Sumitomo Electric Wiring Systems, Lear, and Roper
Corporation–account for the top 10 dollar values of the import of electrical machinery and equipment. Sumitomo
represents a 51% share of the top 10 dollar values. (Figure 1).
Figure 1: Companies Representing Top 10 Import Values of Electrical Machinery and Equipment from the
Philippines (December 2016) (US$)
Each company reported a shipment on different days in December 2016. These shipments accounted for the top 10
dollar values of imports, as noted above. Some of the values were represented by the same companies, as in the
cases of Sumitomo Electric Wiring Systems and Lear (Table 1).
Table 1: Top 10 Importers of Electrical Machinery and Equipment from the Philippines (US$)
2/6
U.S. Imports from the Philippines (Country-level)
This section highlights the demand for goods and services from the Philippines. Businesses gain from knowing
which goods and services from the Philippines are growing in the U.S. market.
This year, the United States mainly imported manufactured goods from the Philippines. The top three imports
include electrical machinery and equipment, machinery and mechanical appliances, and knit apparel and clothing
accessories (Fig. 2). The imports have increased in each of these three categories between March and August
2017, which demonstrates the increased demand for these items from the Philippines within a six month period.
More importantly, these figures show growth, although the United States is now under a new administration with a
different approach to international trade than the previous one.
Figure 2: U.S. Top Three Imports from the Philippines (Goods) (March-August 2017) (US$thousand)
3/6
From 2014 to 2016, electrical machinery and equipment showed import growth. Machinery, mechanical appliances,
etc. and apparel and clothing accessories demonstrated a decline in imports (Fig. 3).
Figure 3: U.S. Top Three Imports from the Philippines (Goods) (2014-16) (US$thousand)
Other commodities have demonstrated quicker growth rates reaching a little over 90% growth from 2014 to 2016.
Two examples of the high import growth rate include mineral fuels and footwear (Fig. 4). 4/6
Figure 4: Goods Among U.S. Fastest Growing Imports from the Philippines (2014-2016) (US$thousand)
Services are also a key component of international trade. The United States has seen significant growth in terms of
the import of various types of services, especially commercial services, from the Philippines in recent years (Table
1).
Table 1: U.S. Imports of Services from the Philippines (2012-2016) (US$thousand)
5/6
Although this piece focuses more on goods, it is still useful to speak to the opportunities presented for service
providers. Recommendations
So what then of this information? The early stages of building a competitive strategy requires understanding how to
translate this information into a formula that is strictly applicable to one’s company, product, or service.
Well, here are a few easy next steps for firms looking to import from the Philippines into the United States or export
from the Philippines to the United States:
Gather international trade data highlighting the shifts in U.S. imports of your specific product (agricultural or
manufactured);
Conduct an analysis into how to take advantage of special access programs that offer duty-free treatment
on particular goods from the Philippines entering the U.S. market;
Identify the key importers and exporters of goods (agricultural or manufactured) and analyze their
performance over a period of time;
Collaborate to turn research data into a customized competitive strategy;
Join personalized strategy sessions. GRIIT provides detailed market information, tips, resources, and training information in its free monthly newsletter. Subscribe quickly and easily at www.griit.org.
Sources: All data are based on statistics collected from the World Trade Organization (WTO), United Nations (UN),
and U.S. Customs.
© copyright 2017 – All rights reserved
GRIIT Blog: Internationa

Philippine Coconut Roadshow comes to Los Angeles

An article from the Asian Journal Newspaper. Coconut products are becoming more and more popular in the US Market.

 

Leaders and members of the Philippine coconut industry launched a coconut roadshow on Friday, September 8 at the San Gabriel Hilton Hotel in San Gabriel, Los Angeles.

The show was the first out of four being held throughout the United States meant to share the outlook of the Philippines’ booming coconut oil industry that was recently threatened by a report by the American Heart Association (AHA) report.

Sponsored by the Philippine Coconut Authority (PCA), the United Coconut Association of the Philippines (UCAP), and the Philippine government, around 20 coconut industry companies and organizations came together to promote coconut products for both food and non-food markets.

Key speakers at the lunch panel included Virgin Coconut Oil of the Philippines (VCOP) founding member Marco Reyes, and United Coconut Association of the Philippines (UCAP) President Dean Lao, Jr.  Renowned Filipina chef Cecilia de Castro also made an appearance.

Booming coconut oil industry

Coconuts have been picking up a lot of momentum in the West, most recognizably through coconut water, which has been flaunted by celebrities and influencers boasting its health benefits.

According to the Asian and Pacific Coconut Community (APCC), coconut water exports from the Philippines almost doubled from 647,000 litres to 1.8 million litres between 2008 and 2010.  In 2015, the numbers soared to 61 million litres.

As the popularity of coconut water increases, many have ventured into coconut’s other forms.  Coconut oil, specifically, has become increasingly popular and was the focus of the event.

“Coconut oil is the most versatile oil,” said Reyes, mentioning its use in food, health care, and personal care.

As the world’s largest producer of coconut oil, the Philippines has been seen a positive outlook on the trend with its biggest markets being the United States and Europe who have seen coconut oil consumption in both food and non-food markets.

The UCAP and the VCOP predict Philippine coconut production to be at 2.244 million metric tons (MMT) in copra terms, or 1.29 MMT as coconut oil in 2017 — that would be a 9.3 percent increase from their 2016 estimate of 2.052 MMT.

Key drivers for the coconut oil industry were its health benefits and its ability to cater to the “green and wellness” movements.

Health benefits ranged from improving memory and brain function, improving digestion and reducing stomach problems, and boosting metabolism.

Lao gave the example of coconut oil use in personal care which has been fueled by the trend of using natural products free of synthetic ingredients.

The beverage market saw a move from sodas to fruit juices, but since the latter tend to be high in sugar, the market for different flavored waters has opened up, he added.

“All health and wellness trends point to coconut,” said Lao.

On the issue of fair trade, Reyes said, “Coconut oil allows more participation with farmers.” Many coconut products from the Philippines are acquiring the Fair Trade logo which Reyes explained allowed portions of the product prices to go to farmers.

The internet and demographic shifts were also said to be key drivers.  Google searches for coconut oil specifically have spiked up since 2010 as have the number of coconut health-related searches.  According to Reyes, the trends coincided exactly with export shipments.

Countering AHA claims

Amidst the current industry boom, the American Heart Association (AHA) released a report in June on the linkage between saturated-fat consumption and heart disease based on the analysis of data and studies over many years.  The study startled many who saw coconut oil as being healthy.

Touching on coconut oil’s health reputation, the study mentioned that 72 percent of the American public rated coconut oil as a “healthy food”, while only 37 percent of nutritionists did.

The study stated that coconut oil is 82 percent saturated fat, a percentage much higher than fats and oils like butter, lard, and beef.  It also reported that multiple studies found that coconut oil increased LDL, a cholesterol known to be a cause of heart disease.

At the end of the paragraph on coconut oil read, “We advise against the use of coconut oil.”

This startled many coconut devotees, and advocates immediately began defending coconut oil with counter studies.  Reyes said the AHA report was very selective and missed out on a lot of important information.

For example, while saturated fats do tend to raise LDL cholesterol, many studies point out that variations in their chemical structures can create different cardiovascular effects.  They further point out that coconut oil contains lauric acid which also raises HDL, a “good” cholesterol.

It’s also been noted that the AHA has been recommending a reduction in dietary saturated fat to reduce risks of cardiovascular diseases, yet heart disease continues to be America’s number one leading cause of death.

This isn’t the first time the coconut industry has experienced the backlash.  In the 1980s, a media campaign targeted coconut oils and other tropical oils as being responsible for heart attacks due to their saturated fat content.

“It’s actually a rehash of that same advisory,” said Reyes to the Asian Journal.

The anti-tropical oil campaign encouraged food companies to consequently begin replacing tropical oils with partially hydrogenated oils which contain trans fats, something that is widely avoided today.  As trans fats were found to be bad, they were removed from processed foods and food companies went back to using tropical oils.

“The main difference today, is that we have more information now,” said Reyes, mentioning AHA’s relationship with Big Pharma.

The AHA has been outed before for connections with big pharmaceutical companies, including those that make and market statins which are drugs prescribed to help lower cholesterol.

According to a report by the Huffington Post, AHA received $21,570 from statin maker AstraZeneca in 2010 to run a course on “emerging strategies with statins.”

Reyes also stated the fact that coconut oil has long been used throughout history as a food ingredient in many countries around the Pacific.  His presentation dated coconut usage all the way back to the Ayurvedic period in 5000 B.C.

Coconut consuming countries have had very little incidences of diseases like cancer, diabetes, and heart disease prior to the introduction of the Western diet, he said.

“We’re as passionate now as we were before on our coconuts,” said Reyes.  “But we understand that this is something still new to non-coconut producing countries like America and Europe.”

The roadshow will continue until September 22, and will visit Florida, Colorado, and Baltimore. (Rae Ann Varona/AJPress)

“The Filipino-American. That’s a market, a community & an opportunity. Yes! 3.5 million of them and still growing.


Very glad to have connected with the Filipino-American Chamber of Commerce of Greater Nevada. Please read the newsletter from FACCGN.

Filipino American Chamber of Commerce of Greater Nevada
Source, Ship and Sell Event, June 29, 2017, 9am to 12:30 noon
Asian Culture Center, Las Vegas,NV
Discover how to effectively Source, Ship and Sell Philippine Products to the USA.
This highly informative event was produced by the Pangasinan Brotherhood-usa, in collaboration with the Philippine Consulate Office of Los Angeles, Filipino American Chamber of Commerce of Greater Nevada (FACCGN), EC Ferrer CHB, Inc & APCL, Provenance Holdings Corporation dba Planet63 and Luna Design
International, Ltd.The event was attended by 30 participants from the different sectors of trade and government from retailers, manufacturers, small business owners, e-commerce practitioners, community advocates and trade service professionals.

Gracing the event was the Honorable Adelio Cruz, Consulate General of the Philippine Consulate in Los Angeles who did a presentation of the current and future economic and trade prospects under the Duterte Administration and the exponential benefits of a continually expanding Filipino-American trade. There were key topics coming from expert resources with Ferdinand B. Soriano talking about Product Sourcing in the Philippines, Eddie C. Ferrer on US Customs & Freight Forwarding, and Olive Enriquez discussing Product Packaging & Social Media Marketing Strategies. A keynote was delivered. The Welcome Remarks & Purpose was delivered by Mellie Soriano of PBUSA
and Christian Bato, from the Office of Nevada Senator Catherine C. Masto. These were the key highlights we learned from the presentations:
The Top 10 exported products from the Philippines Up and coming products and services from the Philippines (Products and BPOs) Simple overview of how to efficiently ship your products from the Philippines
You got the product…how do you sell it or market it using design, social media marketing and digital marketing?

“The Filipino-American.

That’s a market. That’s a community. That’s an opportunity. Yes! 3.5 million of them and still growing.” How to create your own eCommerce site. Product sourcing using online directory product portal “www.planet63.com”. In summary, the seminar offered a “nuts and bolts” presentation of how to find those products, sell and ship from the Philippines to the USA with the US exporters who want to market to the Philippines and importers who wants to make it easy to import the right way. In a nutshell, in the age of online retailing and the easing of geographic and cultural barriers, this Seminar fulfills its basic goal to help navigate the growing digital commerce terrain and at the same time, promote Philippine products and develop the Filipino-American entrepreneurs and trade. We thank the sponsors (Philippine Long Distance Telephone), ad cooperators, notably Mr. Ferdinand Soriano of Planet63, Eddie Ferrer, Consul General Adelio Cruz, the Asian Culture Center, FACCGN, presenters and attendees for making this a success.
By:
Olivia Enriquez
Luna Design/FACCGN
Photo credits:
Jose Enriquez
Luna Design Intl