TM 416C

TOPIC 1 – FLEXIBLE CLAUSE AND PROMOTION OF

FOREIGN TRADE

By: Arnold S. Librado, LCB

 FLEXIBLE CLAUSE

A. Increase, reduce, or remove existing rates of import

duty including any necessary change in classification.
The existing rates may be increased or decreased to
any level, in one or several stages, but in no case shall
the increased rate of import duty be higher than a
maximum of one hundred percent (100%) ad valorem;
 FLEXIBLE CLAUSE

B. Establish import quotas or ban imports of any commodity, as

may be necessary; and

C. Impose an additional duty on all imports not exceeding ten

percent (10%) ad valorem whenever necessary: Provided, That
upon periodic investigations by the Commission and
recommendation of the NEDA, the President may cause a
gradual reduction of rates of import duty granted in Section
1611 of this Act, including those subsequently granted
pursuant to this section.
 MOST FAVORED NATION (MFN)

The MFN treatment is a non-discrimination

principle of WTO wherein Members are
forbidden to discriminate “like products”
originating from other Members by imposing
an equal treatment to all WTO Members.
 MOST FAVORED NATION (MFN)

The Philippines imposes 15% MFN tariff on

plastics from Japan as well as 15% MFN tariff
on plastics coming from the European Union
(EU).
 MOST FAVORED NATION (MFN)

Exceptions:

1. Free Trade Area Agreements from countries that applies only

to goods traded within that region. (ATIGA AND ASEAN FTA
RATES)

2. Generalized System of Preferences (GSP) where developed

countries can give developing and least developed countries
lower tariffs on their products without lowering their own
tariffs. (US-GSP, EU-GSP)
 MOST FAVORED NATION (MFN)

The Philippines imposes 15% MFN tariff on

plastics from Japan as well but 0% ATIGA
tariff on plastics coming from the ASEAN
countries.
 PROMOTION OF FOREIGN TRADE

A. Enter into trade agreements with foreign governments or instrumentalities

thereof; and

B. Modify import duties, including any necessary change in classification and

other import restrictions as are required or appropriate to carry out and
promote foreign trade with other countries; Provided, That in modifying
import duties or fixing import quota, the requirements prescribed in
subsection (a) of Section 1608 of this Act shall be observed; Provided,
However, That any modification in import duties and the fixing of import
quotas pursuant to the various trade agreements the Philippines has
entered into, shall not be subject to the limitations of aforesaid subsection
(a) of Section 1608.
 ASEAN TRADE IN GOODS AGREEMENT
(ATIGA)
The ATIGA is an agreed preferential tariff
applied to goods originating from and traded
between ASEAN Member States. It provides
product schedule for tariff reduction or
elimination of each Member State.
 ASEAN TRADE IN GOODS AGREEMENT
(ATIGA)
The Philippines imposes 0% ATIGA tariff on
electronic parts from Indonesia but 5% MFN
tariff on electronic parts from US.
 ASEAN TRADE IN GOODS AGREEMENT
(ATIGA)
Eligibility for Concessions:

1. The product is an ASEAN product (Wholly Obtained) or it

satisfied the 40% local content (Value Content) or Change in
Tariff Classification.

2. The product is covered by a Certificate of Origin (Form D).

3. The tariff on the product of the exporting Member State is at

the rate of 20% or below.
 ASEAN TRADE IN GOODS AGREEMENT
(ATIGA)
Example No. 1:

An exporter in Laos exported to the importer in the Philippines

10 piglets. The goods are originating.

Laos: 40% MFN rate, 1% ATIGA rate

Philippines: 30% MFN rate, 0% ATIGA rate

Applicable Duty Rate:

 ASEAN TRADE IN GOODS AGREEMENT
(ATIGA)
Example No. 2:

An exporter in Singapore exported to the importer in the

Philippines 100 cartons of tomatoes. The tomatoes are
originating and covered by CO Form D.

Singapore: 5% MFN rate, 5% ATIGA rate

Philippines: 10% MFN rate, 0% ATIGA rate

Applicable Duty Rate:

 ASEAN TRADE IN GOODS AGREEMENT
(ATIGA)
Example No. 3:

An exporter in Malaysia exported to the importer in the

Philippines 5 MT of wood charcoal. The article is originating and
covered by CO Form D.

Malaysia: 15% MFN rate, 25% ATIGA rate

Philippines: 3% MFN rate, 5% ATIGA rate

Applicable Duty Rate:

 ASEAN TRADE IN GOODS AGREEMENT
(ATIGA)
Example No. 4:

An exporter in Myanmar exported to the importer in the Philippines

an antique about 150 years old. The article is originating and covered
by CO Form D but column 9 states “Except KH, LA and MM”

Myanmar: 20% MFN rate, 3% ATIGA rate

Philippines: 7% MFN rate, 0% ATIGA rate

Applicable Duty Rate: