In a recent report, the United Nations Economic and Social Commission for Asia and the Pacific (UN Escap) described the Philippines as having “imposed the highest number of NTMs (non-tariff measures) on environmental goods” in 2019, which was reported by some local media last week. While a careful reading of the report in question shows that the situation is not as alarming as reports on it suggest, it does raise concerns that there are unnecessary and perhaps unintentional restrictions that should be examined.
The âAsia-Pacific Trade and Investment Report (Aptir) 2021â published by UN Escap focused on the flows of âenvironmental goodsâ among the 53 member countries of the commission, using data from 2019. The Philippines plays a tiny role in this trade, accounting for only 2 percent of total imports and virtually no exports.
The list of what are referred to as âenvironmental goodsâ is quite long; the Asia-Pacific Economic Cooperation (APEC) forum, for example, endorses 54 Harmonized System (HS) codes as classifications for environmental goods, each of which can apply to dozens or even hundreds of individual items. In general, environmental goods with respect to trade are those intended for âsustainableâ purposes, such as recycled or renewable organic materials for construction or manufacturing, components of renewable or low-carbon energy systems, pollution control or waste treatment equipment, and many more. .
Non-tariff measures applied to environmental goods, as described in the UN Escape report, include non-automatic licenses (i.e., and fees.
Compared to the rest of the regional group, the Philippines has the lowest tariffs on environmental goods, averaging less than 4 percent. This figure is considerably lower than the regional average of 5.78 percent, as well as below the APEC target of 5 percent or less.
However, the Philippines is by far the toughest on NTM enforcement, with imports of environmental goods subject to more than four NTMs on average, three times the regional average of 1.18.
As Aptir points out, most of these obstacles are likely unintentional, the result of environmental goods “getting caught up in” broader measures applied to many types of imports, rather than being specifically targeted. . The effect, however, is the same; imports of environmental goods face higher costs and more red tape, with no obvious benefits.
In recent years, the Philippines has made significant strides in adopting policies that promote environmental sustainability. Some measures have been taken to encourage the development of renewable energies, significant efforts have been made for the rehabilitation of the environment in parts of the country and even smaller and less visible initiatives such as the basic government mandate of conservation of energy and water measures have also had a positive impact.
The positive momentum created by these policies has also led to greater public awareness and a greater demand for durable solutions, which in turn has created new opportunities for economic growth – something everyone will agree is vital as the country struggles to recover from two year-old coronavirus pandemics. NTMs, even if they were originally applied for a reasonable purpose and were not intended to harm environmental goods, only unnecessarily dampen this momentum.
UN Escap recommends that environmental goods receive the same treatment as certain essential goods during the Covid-19 pandemic, i.e. exempt from most tariffs and benefit from ‘expedited’ import treatment to avoid NCDs that are not absolutely vital to public health, safety or security.
It’s a good start, but it’s an implicitly temporary fix. What this would give, however, is time for the government to review and better coordinate trade policy and customs procedures with environmental and energy policy. Anything that encourages investment in the expansion of renewable energy, sustainable infrastructure and conservation will benefit the country in the distant future and should be a priority.