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US-Philippines Trade Relations: Allies Since Spanish Occupation
The Beginning of A Long Lasting Friendship

The Philippines is an independent republic in the western Pacific about 800 kilometers off the coast of mainland Southeast Asia. The land was occupied by the Spaniards for almost four centuries when the United States helped it gain its independence in June 12, 1898 under the presidency of Emilio Aguinaldo. The people of the country were influenced by a merge of Malay origins and other Western and Eastern occupations.

The Philippines is more of an exporter of raw materials and an importer of manufactured goods. Rice and corn are the staple food crops, the latter being eaten by Cebuanos as replacement for the former. These two crops occupy 80% of the republic's agricultural lands while other commercial crops such as coconuts, sugarcanes, bananas, pineapple, abaca, tobacco, coffee and cotton also leads the economy of the entire nation.

The land area is unevenly distributed with 70% of all its peasants found landless. Large landowners exercise a significant portion of economic and political power thus; majority of the population relies upon the work given by these cronies in government. It is too sad to note that there are a lot of economic fallbacks which had hurt hundreds if not thousands or millions of its inhabitants. Poverty is a crucial problem faced by the government and the people as well.

Industry provides about 25% of the country's gross domestic product (GDP). The processing of agricultural products accounts for almost 50% of all industrial production, followed by electronic and electrical equipment, petroleum refining, chemicals and textiles. Industry is primarily concentrated in the capital city of Manila. Copper, nickel, gold and chromium are mined for export while coal was primarily produced for domestic purposes. Fishing and forestry as well as tourism and remittances are found vital in its economy.

Since its alliance with the United States around 110 years ago, these two nations have already been good trading partners all along. As evidence to this, the 14 Philippine Governments that passed relied upon what the US could offer. More than trading, their friendship flourished in their fight against terrorism. Until now, the US plays a major role in the Philippine government's efforts to make the terrorists Abu Sayyaf fall into their hands.

Major Trade Between the Two Nations

Democratic principles shared by these two nations made their trade prosper. The US had even established a naval base in Clark and Subic supported by several more institutions and companies in the area. The Philippines' foreign trade with US occupies a large portion and in 2006, 16% of its imports came from the US while 18% of the country's exports were bound for US.

For the year 2008, the seven-month period ending July gathered a statistical data amounting to US exports to the Philippines of $5.79 billion. The Philippines, on the other hand exported a total amount of $5.91 billion to US. Data for 2006 reflected the following information:

  • Philippine Exports to US. Out of the $9.7 billion exports of the Philippines to US, semiconductors and related devices were found on top of the charts constituting 25.3% of the total equivalent to an amount of $2.5 billion. Other pertinent products found in the top ten are: cotton household furnishings and clothing; computer accessories peripherals and parts; non-cotton household furnishings and clothing; automotive parts and accessories; furniture and other household items; electric apparatus; household items; fish and shellfish; and goods returned then re-exported. The latter gained a total amount of $232.5 million forming 2.4% of the total.
  • Philippine Imports from US. The $7.6 billion total imports of the Philippines from the US were topped by semiconductors with $4.3 billion equivalent to 56.8%. The top ten was completed by: wheat; measuring, testing and control instruments; telecommunications equipment; electric apparatus; computer accessories; other industrial machines; animal feeds; minimum value shipments; and vehicle parts and accessories. These vehicle parts and accessories gained an income of $105 million equivalent to 1.4% of the total.
  • Fastest-Growing US Exports to the Philippines. The highest percentages of US exports to the Philippines were seen in the potentials of other commercial vehicles which gained a sales equivalent of $1.4 million or an increase of 1,192%. Other products in this arena are: civilian aircraft; military vehicles; unmanufactured agricultural items; and cookware cutlery and tools. The last set earned for themselves a hefty $14.2 million, up by 256% from 2005.
  • Fastest-Growing US Imports from the Philippines. The highest percentage of sales of Philippines exports to the US were apparently motivated by computers which earned $88 million or 417% up from 2005. Other products seen in the category are: automotive tires and tubes; marine engines and parts; specialized mining and oil processing equipment; and miscellaneous material. The last product is comprised of hair and waste materials which summed up to $2.9 million, up by 135% from 2005.
Trade Agreements Between the US and the Philippines

Just like any other trading countries in global business, the Philippines and the US were founded on the ground of various treaties on investment. This was done in order to strengthen the commercial as well as the cultural, social and environmental ties between them. The evident pacts accorded to trade are:

  • Free Trade Agreement (FTA) with the US. The Republic of the Philippines is in continuing pursuit of free trade with the US. With the consensus taken from non-government organizations (NGO's), it is most likely that this trade could be realized. Despite the end of President Bush's term this year, the Philippine government is still taking measures to promote comprehensive trade with their strongest trade partner. Aside from the NGO's, the private sector are now being consulted as well. This is to point out the particular issues they want tackled under the FTA. The proposed FTA consists of three phases namely: the two parties must agree on common products like textile; granting of additional concessions on more sensitive products; and coverage of more comprehensive products and services. While there are still oppositions coming from militant groups, the FTA is currently on the works.
  • Agricultural Cooperation. The agricultural secretaries of both nations - Ed Schafer for the US and Arthur Yap for the Philippines - signed a memorandum of agreement (MOA) promoting agricultural trade and investment in the two countries. The primary objective of the cooperation extended to the help of science and technology when it comes to advance agriculture, productivity and natural resource management sustainability. Food safety regulations, rural development, biotechnology, product distribution and marketing were specifically covered.
  • Philippine Pork and Poultry MOU. This particularly addresses the Philippine Government's imposition of tariff rate quotas gravely affecting fresh, chilled and frozen pork and poultry. Both governments agreed to adhere to World Trade Organization's (WTO) Agreement on Import Licensing Procedures. The trade impositions of the Philippines should be in accordance with the mechanisms of the procedures without further distortion and trade restriction.
Conflicts Between the Two Nations

While the two countries agreed to adhere to the pacts they have established and will establish, several militant groups were doing protests here and there. The US government has long been a partner of the Philippines. Without the former, independence of the republic may have not been achieved. Some individuals, however, find US as a threat to the Philippine territory. Protest rallies have always been seen to occupy the lot to where the US embassy stands. Some of the notable disparities are:

  • On The Visiting Forces Agreement (VFA). The preamble of the VFA specifically stresses the reaffirmation, recognition, and consideration of the international and regional security in the Pacific. Furthermore, the US military troops may visit the Philippines from time to time to support military exercises. The primary effect of the VFA was seen on the US's retention of the right to protect their military personnel accused of any crime in the Philippines. One of the tragedies behind this pact is the Subic Rape Case which was sensationalized by a lot of people. Some believed that due this, the VFA was one-sided giving prejudice to the right of Filipino constituents.
  • On The Abu Sayyaf Kidnappings. There were Americans which were kidnapped by the Abu Sayyaf's. Some of the notable individuals under these kidnappings were American couples Martin and Gracia Burnham. They were captives of the group from May 27, 2001 to June 7, 2002. In the attempt of the Philippine government to save the Burnham's and other victims, Martin Burnham was killed by the hostage-takers.
The Hope That the Future Brings

The FTA between the US and the Philippines is not yet sealed and other issues still need to be resolved. The tragedies may even lead to better ends for both nations. In their struggle to provide comfort and bliss to one another, there is no room for outrageous feelings and no militant group could cause too much commotion to the foregrounds of the friendship of these two nations.

Notably, it has been more than a century since US and the Philippines found their way to each other's arms. Not a single event, whether personal or trade-related could keep them away. The global trade stature of the Philippines is well-supported by the US and vice versa. Hatred is never a hindrance amidst the humiliation and threats. The future generations of these two countries will surely share the good effects of this alliance.

US-Philippines Trade References

Note: Trade statistics, industry links, economic projections and global business resources on this page have been compiled from hundreds of trade related websites, government guides and resources on the Internet. We provide this valuable information for industrial suppliers, manufacturers, exporters and importers seeking to enter or expland business opportunities in the Philippines.

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Much of the Philippines economic stability depends heavily on the performance of two major trading partners, the US and Japan. Major industries include textiles, pharmaceuticals, chemicals, wood products, food processing, electronics assembly, petroleum refining, and fishing.

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