The Market Monitor Minding the Nation's Business
The United Coconut Associations of the Philippines (UCAP) sees the 20% tariff imposed by the US government to the Philippines as a ‘wake-up call that underlines the need for market and product diversification.
UCAP underscored the current heavy reliance of the Philippines on the US and European Union markets, which collectively account for over 60% of industry exports.
UCAP called for increased production of higher-value products, such as coconut milk, coconut water, virgin coconut oil, oleochemicals, surfactants, cosmetic derivatives, MCT oil, coconut boards, activated coconut carbon, coconut nectar vinegar and coconut aminos, among others.
Despite the tariff, UCAP said the Philippines remained competitive, as the 20% tariff is lower than the duties imposed on Indonesia (32%), India (26%) and Sri Lanka (30%). While Vietnam has the same 20% tariff, UCAP said that Indonesia and India were the Philippines’ biggest rivals in the coconut market.
Reduced demand
Still, the tariff is expected to decrease demand and eventually affect the volume of the country’s coconut exports.
UCAP said, “If this higher tariff persists, what will happen is it will dampen economic activity in the USA, as a whole. American consumers will buy less coconut products due to the higher prices.”
Though optimistic that the tariff can still change with the Philippines planning to negotiate and offer concessions, UCAP said it was in constant contact with the Philippine Coconut Authority and the Department of Trade and Industry. They already submitted position papers pushing for lower tariffs.
“After all, the Philippines is a long-time colony of the USA, and we are a crucial strategic geopolitical partner of the USA in the Southeast Asia region,” it said.
“Strengthening and growing our exports to the USA, particularly coconut, will go a long way in further strengthening the USA-Philippine relationship.”