The current MFN tariff structure has 15 tariff levels:  0%, 1%; 3%; 5%; 7%; 10%; 15%; 20%; 25%; 30%; 35%; 40%; 45%; 50%; and 65%.  The higher tariff rates are levied on vegetables (at 25%); motor vehicles and environmental waste (at 30%); and on sensitive agricultural products such as rice, live animals (except live bovine animals), pork, goat meat, poultry meat, potatoes, coffee, maize and sugar (at 35% to 65%).

Under the ASEAN Harmonized Tariff Nomenclature, or AHTN, the Philippines has a total of 11,059 tariff lines.  Of this number, half have rates of duty ranging from 0% to 3% (Chart 1).  Tariff lines dutiable at 5% to 10% comprise 29%.  The remaining 21% are the high-tariff lines with rates of duty of 15% and above.

      Chart 1.  Frequency Distribution of MFN Tariff Rates:  Percentage Shares

Above 20%

(6%)

15%

(13%)

20%

(2%)

0%

(4%)

1%

(22%)

3%

(24%)

5% & 7%

(16%)

10%

(13%)

 

Table 2.  Average MFN Tariff Rates:  2002 - 2004
Sector	Year	Simple Average Tariff (%)	Trade - Weighted Average Tariff (%)
AGRICULTURE	2002	12.18	10.17
(HS Chapters 1 – 24)	2003	11.04	8.64
	2004	11.85	8.43
MINING	2002	2.84	2.91
(HS Chapters 25 – 26)	2003	2.84	2.83
	2004	2.47	2.79
MANUFACTURING	2002	5.04	3.04
(HS Chapters 27 – 97)	2003	5.43	3.23
	2004	6.94	3.31
OVERALL	2002	6.03	3.78
(HS Chapters	2003	6.19	3.72
	2004	7.51	3.78
Note:  Tariffs were weighted using trade data for the year except for 2004 where averages were calculated using 2003 imports levels as weights; based on the tariff adjustments as of E.O. 300 (s. 2004).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due to higher tariffs for certain sensitive agriculture products, the average tariffs over 2002-2004 for the agriculture sector are significantly higher than the mining and manufacturing averages and are even greater than the average overall.  On the other hand, average tariffs for the manufacturing sector have increased over the period.  The tariffs for the agriculture sector currently range from 0% to 65%, for mining - 1% to 5%, and for manufacturing - 0% to 30%.   

Effective rates of protection (EPRs) measure the net protection on value added received by domestic producers. The EPR takes into account the protection on outputs as well as  the penalty from the protection of inputs.  A positive EPR tends to show that an industrial activity is protected while a negative EPR implies that the activity is not conferred with incentives but rather penalized.  Contrary to their divergent average MFN tariffs, the estimated EPRs for the agriculture and manufacturing sectors are largely equal implying that, on average, these sectors benefit to the same degree from the current tariff structure (Chart 2).

   Chart 2.  Average Tariffs and Effective Protection Rates
 

11.85

14.38

2.47

0.36

6.94

15.18

7.51

14.36

0

2

4

6

8

10

12

14

16

AGRICULTURE

MINING

MANUFACTURING

OVERALL

Simple

Average

Tariffs(%)

EPR (%)