History of Tariff, Tariff Administration & Policy, and the Philippine Tariff Commission

Etymology & Global Origins of the Tariff

• "Tariff" traces back to the city of Tarifa (southern tip of the Iberian Peninsula, across the Strait of Gibraltar).

  • Name of the city in turn came from "Tarif Iban Malik" (Berber general).

  • Port of Tarifa among the first known to charge for port use; sailors later equated the place-name with taxes on trade.

• Diffusion of the word:

  • Most European tongues adopted cognates: tariffe (Italian), tarif (French/German), tarief (Dutch), тариф (Russian).

  • Spanish exception: uses "arancel" (from Arab al-inzál, a military tax). "Tarifa" in Spanish normally means a price list.

• Antiquity of customs duties:

  • H. Asakura (former WCO official) points to Palmyra, Syria implementing the first customs tariff in AD\ 136.

Philippine Trade & Tariff Chronology

Pre-Spanish Era

• Long before 1521 (Magellan), Filipinos traded with China, Japan, Siam, Cambodia, India, Burma, Sumatra, Java, etc.

• Medium of exchange:

  • Mainly barter (local crops, forest produce, handicrafts vs. foreign commodities).

  • When price was fixed: paid in gold or metal bells (Chinese in origin).

• Chinese chroniclers Chao Ju-Kua ( 1209\text{–}1214 ) and Wang Ta-Yuan ( 1349 ) attested to Filipino honesty in trade.

Spanish Colonial Period

• Almojarifazgo: a uniform 3\% duty on both imports & exports applied once Spain acquired the islands.

  • Manila Customhouse founded by Gov. Guido de Lavezaris ( 1573\text{–}1574 ); notwithstanding, almojarifazgo not collected in 1582 (per Viceroy of Mexico’s report).

• Selected tariff milestones

  • 1606 – Duty on Chinese goods increased to 6\%.

  • Progressive port liberalisation:

  • Port openings: Zamboanga 1833, Cebu 1842, Iloilo & Sual 1855, Legazpi & Tacloban 1874.

Junta de Valoraciones & Junta de Aranceles

• Junta de Valoraciones ( 1734 ) — permanent board for goods valuation; abolished 1782.

• Junta de Aranceles ( 1828 ) — new tariff board aiming:

  1. Increase revenue

  2. Protect agriculture & arts

  3. Expand foreign commerce

• Tariff of 1832 (took effect 1\ Jan\ 1832):

  • Goods from Spain/Mexico: 15\% ad valorem, collected in three tranches:

  • 5\% at vessel departure.

  • 10\% on Manila arrival (wine excepted).

  • Additional 5\% before next voyage.

  • Goods from other countries: 3\% except China (6\%).

  • Asiatic exports to Mexico: 10\% ad valorem.

  • Four-tier import matrix based on origin & flag: (a) Spanish goods/Spanish ships → lowest rate; (b) Spanish goods/foreign ships; (c) Foreign goods/Spanish ships; (d) Foreign goods/foreign ships.

• New Tariff of 3\ Mar\ 1891 (effective 1\ Apr\ 1891)

  • Broad duty reductions & enlarged free list; Spanish merchandise duty-exempt.

  • Remained valid under U.S. Military Government until 15\ Nov\ 1901.

American Occupation & Early U.S. Administration

• 13\ Aug\ 1898 – Manila captured by U.S.; Exec. Order of Pres. William McKinley ( 12\ Jul\ 1898 ) imposed tariffs as military contributions in U.S.-held ports.

• Tariff Reform Program – post-war continuous review of PH tariff system to align with economic needs, shifting trade patterns & technology.

Philippine Tariff Commission (TC)

Legal Basis & Mandate

• Current authority: Republic Act 10863 – Customs Modernization & Tariff Act (CMTA), signed 30\ May\ 2016, effective 16\ Jun\ 2016.

• Performs governmental & quasi-judicial functions; evolved from PD 1464 ( 1978 ) roles.

Core Functions under CMTA

1. Adjudicate trade-remedy cases (anti-dumping, safeguard, CVD).

2. Conduct tariff impact studies on competitiveness & consumer welfare.

3. Administer tariff schedules & nomenclatures (Harmonised System alignment).

4. Issue advance rulings & settle disputes on tariff classification.

5. Provide independent analysis to the President/Congress on tariff & non-tariff measures.

6. Analyze product composition & classifications for dissemination to relevant agencies.

7. Review & evaluate trade agreements for consistency with national policy.

8. Hold public consultations & hearings on matters within its jurisdiction.

• Attachment: TC is an attached agency of NEDA (National Economic and Development Authority).

Chief Officials (CMTA §1600)

• Must be natural-born Filipino citizens, of good moral character, with expertise in tariff & trade.

• During tenure: prohibited from practicing other professions, managing or holding interest in enterprises affected by TC functions.

Staffing & Reports

• All employees appointed by Chairperson per Civil Service Law (CMTA §1601).

• Annual & technical reports due to the President & Congress every first Monday of December (CMTA §1604).

Powers of Access & Compulsion (CMTA §1605)

• Unfettered access to relevant documents from producers, importers, distributors.

• May summon witnesses, administer oaths, and issue subpoena duces tecum.

• May solicit assistance from any government entity which must cooperate fully.

Sworn & Verified Statements (CMTA §1606)

• TC may order sworn testimony.

• TC may compel any importer/producer/manufacturer to submit under-oath price statements for goods sold in PH.

Rule-Making Power (CMTA §1607)

• TC adopts its own Implementing Rules & Regulations (IRR).

  • e.g., Commission Order 2017-01 (Advance Ruling on Tariff Classification);

  • Commission Order 00-01 (Revised rules for dumping investigations).

Official Seal (CMTA §1602)

• Symbolism:

  • Wheel of Progress encircling:

  • Agricultural sector

  • Trade & industry sector

  • National aspirations for sustained economic growth

Flexible Clause (CMTA §1608)

• Delegates to the President (upon NEDA recommendation) authority to:

  1. Increase tariff rates (capped at 100\% ad valorem).

  2. Reduce or eliminate tariffs.

  3. Change commodity classifications.

  4. Establish import quotas or ban importation entirely.

  5. Levy an across-the-board additional duty up to 10\% ad valorem.

• Procedural safeguards:

  • TC investigation & public hearing of stakeholders.

  • Findings sent to NEDA within 30 days post-hearing.

  • Orders take effect 30 days after Presidential promulgation (immediate for the 10\% provisional duty).

  • Power usable only while Congress is not in session; Congress may revoke via joint resolution.

  • NEDA to craft implementing rules.

Promotion of Foreign Trade (CMTA §1609)

• Objectives: market expansion, employment generation, peso purchasing-power improvement, international goodwill.

• Presidential Powers:

  1. Negotiate trade agreements with foreign governments.

  2. Modify import duties, classifications, & restrictions to operationalise such agreements.

• Conditional application: Concessions apply only to goods grown/produced/manufactured in the partner country, direct or indirect routes.

  • President may suspend concessions if partner’s acts defeat PH objectives.

• Safeguards & Process:

  • No authority to write off foreign debt owed to PH.

  • Public notice before negotiations; TC gathers stakeholder input (DTI, DA, DOF, DENR, DFA, BSP, others).

  • TC assesses: (a) injury/threat to domestic industry; (b) reasonableness of wholesale prices.

  • NEDA evaluates TC report → sends recommendations to the President.

  • President may adjust, suspend or withdraw concessions, impose quotas/restrictions to protect consumers & industry.

  • Domestic producers must maintain prices at NEDA-recommended levels; unauthorized hikes trigger automatic liberalised competing imports.

• Does not impede existing/future preferential or executive trade agreements.

• TC & NEDA to issue joint procedural guidelines.

Evolution of Philippine Tariff Laws & Institutional Setup

Key Take-Away Connections & Significance

• Tariff policy intertwines with state revenue, industry protection, and foreign policy—a continuum from Spanish almojarifazgo to the flexible clause under CMTA.

• Institutional evolution of the Tariff Commission mirrors governance shifts: colonial rule, post-independence nation-building, martial-law centralisation, and modern regulatory transparency under CMTA.

• Modern mandates (advance rulings, trade-remedy adjudication, FTA review) align the TC with WTO norms and ASEAN commitments—critical for a globally integrated Philippine economy.

• The Flexible Clause & Foreign-Trade Promotion sections empower quick Executive action yet embed checks (TC/NEDA, public hearings, congressional revocation) balancing agility with accountability.