(DP 1982-13) The 1981-85 Tariff Charges and Effective Protection of Manufacturing Industries

Abstract

As a result of a four-phase review of the tariff system undertaken by the Philippine government recently, a comprehensive but gradual revision of legal tariff rates has been scheduled over the period from January 1, 1981 to January 1, 1985 aimed at reducing the overall level of "effective protection" to domestic industries and making the rates more uniform across industries. This paper describes the nature of these tariff rate changes and analyzes their impact on effective protection rates in the manufacturing sector. While a significant improvement of the tariff system would be achieved by 1985, given the scheduled tariff changes, in terms of reducing the overall effective tariff protection and the dispersion of sectoral rates around the mean value, there will be room for additional rationalization of the structure of tariffs. This would generally entail a further reduction in the protection of sectors producing consumer goods and raising those of the intermediate and capital goods sectors. Related trade and development issues are discussed in the concluding section of the paper, especially with reference to current industrial plans and policies.