sir billy ppt 4

International trade policy

encompasses the government-enforced rules, regulations, taxes, and agreements that govern how goods and services move across international borders. Governments utilize trade policy to balance national economic goals—such as protecting local Industries, raising revenue, controlling domestic inflation, and preserving employment against the global efficiency gains that stem from free international trade.

While economic theory demonstrates that unrestricted free trade maximizes global welfare, individual nations often intervene in markets using specific policy instruments

tariff

is a tax or duty levied on goods when they cross a national border, usually applied to Imported goods.

Types of tariffs

Ad Valorem Tariffs

Specific tariffs

Compound tariffs

Economic Impact Of tariff

: Tariffs raise the domestic price of imported goods above world market prices.

This protects domestic producers by reducing import volume and enabling them to sell at higher prices, but it harms consumers through higher prices and reduced choices. The government also collects tariff revenue

Ad Valorem Tariff:

Calculated as a percentage of the imported good's value (e.g., a 15% duty on imported motor vehicles).

Specific Tariff

: Expressed as a fixed monetary amount per physical unit imported (e.g., $50 per ton of imported steel).

Compound Tariff

: A combination of an ad valorem tax and a specific tax.

Non-Tariff Barriers (NTBs)

are policy measures other than standard tariffs that restrict or regulate international trade. These include administrative regulations, health and safety standards, technical specifications, and cumbersome custom clearing procedures.

Sanitary and Phytosanitary (SPS) Measures

: Health and food safety standards designed to protect human, animal, or plant health.

Technical Barriers to Trade (TBT)

: Regulations covering labeling, packaging, and quality specifications.

Import Licensing

: Rules requiring explicit government approval prior to bringing goods into the country.

True

Under Executive Order No. 62

(series of 2024), the Philippine government lowered the Most

Favored Nation (MFN) tariff on imported rice from 35% down to 15% until 2028. This reduction aimed to curb rising inflation and

make the staple food affordable for Filipino families. Conversely,

higher protective tariffs continue to apply to certain manufactured

products to safeguard domestic industries

True

Importers of agricultural products in the Philippines must obtain a Sanitary and Phytosanitary Import Clearance (SPSIC) from agencies such as the Bureau of Plant Industry (BPI) for crops like onions and garlic, or the Bureau of Animal Industry (BAI) for meat. During domestic harvest seasons, regulators sometimes delay

or pause issuing SPSICs to restrict foreign supply and maintain domestic prices, effectively using administrative

procedures as a trade-restricting barrier

import quota

is a direct physical limit on the total volume or value of a specific commodity that can be imported over a designated period.

Tariff-Rate Quota (TRQ)

: A hybrid system combining tariffs and quotas. A lower tariff rate applies to imports up to a designated quantity limit (in-quota), while a significantly higher tariff rate is levied on any quantity exceeding that limit (out-quota).

Quota Rent

: The extra economic profit earned by holders of foreign trade licenses or quota allocations who import goods at cheaper world prices and sell them at elevated domestic prices.

True

The Philippines operates a TRQ system known as the Minimum Access Volume (MAV) under commitments to the World Trade Organization (WTO). Commodities

such as corn, pork, and poultry have specific MAV allocations with lower "in-quota" tariff rates (e.g., 15% for pork) and higher "out-quota" tariff rates (e.g., 25% for pork)

subsidy

is financial assistance provided by a government to domestic producers, suppliers, or exporters to lower their cost of production or keep market prices artificially low.

Forms of subsidy

: Direct cash grants, tax credits, low-interest government loans, price supports, or subsidized inputs (like fertilizer or machinery).

Impact of subsidy

: Subsidies make local producers more competitive relative to foreign rivals without raising retail prices for consumers. However, they place a burden on state finances and can distort global trade.

True

Under Republic Act 11203 (Rice Tariffication Law), the government established the Rice Competitiveness Enhancement Fund (RCEF). This allocates ₱10 billion annually From collected rice tariff revenues directly to Filipino farmers in the form of subsidized farm machinery, high-yield seeds, expanded credit facilities, and technical training to make local farming competitive against foreign exporters

Anti-Dumping Measures

occurs when a foreign firm exports goods to another nation at a price lower than its normal value in its domestic home market, or below its cost of production.

Anti-Dumping Duties

: Extra tariffs imposed by an importing country's government to neutralize the unfair price advantage created by dumping, thereby restoring fair competition.

True

Under Republic Act 8752 (Anti-Dumping Act of 1999), the Philippine Department of Trade and Industry (DTI) and the Tariff Commission investigated and imposed definitive anti-dumping duties on imported Type 1 and Type 1P cement originating from Vietnam. The Investigation established that Vietnamese producers were dumping cement in the Philippine market at prices lower than their normal home-market values, causing injury to local cement manufacturer

Strategic Trade Policy

refers to targeted government intervention designed to give specific national industries or high-tech sectors a competitive advantage in international markets. It often targets oligopolistic sectors characterized by economies of scale and high entry costs.

Policy Tools

: Subsidized research and development (R&D), preferential procurement, strategic infrastructure investments, and tax holidays

True

Through the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and incentives provided by the Philippine Economic Zone Authority (PEZA), the Philippines strategically targets growth in the IT-BPM (Business Process Management), semiconductor manufacturing, and Electric Vehicle (EV) assembly sectors. Offering tax holidays and duty-free equipment imports encourages foreign direct investment and positions the Philippines strategically within global value chains

Tariff

1. Definition

2. Primary impact on domestic price

3. Effect on domestic consumer

4. Key Philippine example

Non- tariff barrier

1. Definition

2. Primary impact on domestic price

3. Effect on domestic consumer

4. Key Philippine example

Import quotas

1. Definition

2. Primary impact on domestic price

3. Effect on domestic consumer

4. Key Philippine example

Subsidy

1. Definition

2. Primary impact on domestic price

3. Effect on domestic consumer

4. Key Philippine example

Anti dumping duty

1. Definition

2. Primary impact on domestic price

3. Effect on domestic consumer

4. Key Philippine example

Strategic- trade policy

1. Definition

2. Primary impact on domestic price

3. Effect on domestic consumer

4. Key Philippine example

Yellow pad

Study Computation