By Dexter Barro II
Apr 2, 2025 04:00 PM
The country’s leading business groups and foreign chambers are urging the Marcos administration’s chief economic manager to defer the implementation of an inter-agency pre-border inspection policy, warning that it may discourage trade to the Philippines.
In a March 26 letter addressed to Department of Finance (DOF) Secretary Ralph Recto, the government was called on to reconsider Joint Administrative Order (JAO) No. 001-2025, which embodies the “digital integrated system for pre-border technical verification (PTV) and cross-border electronic invoicing (CEI).”
The letter was signed by the Joint Foreign Chambers of the Philippines (JFC), together with Makati Business Club (MBC), EU-ASEAN Business Council, Federation of Indian Chambers of Commerce (Philippines), and US-ASEAN Business Council. JFC groups American, Canadian, European, Japanese, and South Korean firms in the country, along with the Philippine Association of Multinational Companies Regional Headquarters Inc. (PAMURI).
Manila Bulletin found this joint letter made public on MBC’s website on Wednesday, April 2.
Introduced by the government last year, the PTV and CEI system seeks to streamline inspections and monitoring of international trade transactions.
To recall, PTV refers to testing and inspection of all commodities by a conformity assessment company accredited by the government prior to export to the Philippines.
Meanwhile, CEI refers to a system used by a registered foreign exporter to create electronic invoices on a single electronic platform controlled by the government.
President Ferdinand “Bongbong” Marcos Jr., under Administrative Order (AO) No. 23, created these mechanisms in a bid to expedite the inspection of imported goods entering the country.
JAO 001-2025 lays out the specific roles and rules to carry out the implementation of Marcos’ AO 23. This was finalized in January this year.
The JAO was signed by the heads of the DOF, the Department of Agriculture (DA), the Department of Trade and Industry (DTI), the Department of Energy (DOE), the Department of Health (DOH), the Department of Environment and Natural Resources (DENR), the Department of Information and Communications Technology (DICT), the Bureau of Customs (BOC), and the Philippine Drug Enforcement Agency (PDEA). It was also signed by representatives of the Philippine Chamber of Commerce and Industry (PCCI) and the Chemical and Pharmaceutical Industry Organization of the Philippines Inc.
When the order was still being drafted, business groups already submitted a letter to present their key concerns in the proposed policy.
While some of their concerns were addressed, JAO 001-2025 still failed to resolve critical issues, particularly on compliance costs.
The March 26 letter noted that these costs, incurred through pre-inspection and electronic invoicing requirements, could negatively impact the cost of doing business in the country, making it less competitive in global trade.
“We seek clarity on how the DOF intends to regulate these costs to ensure they are not passed directly to importers and, ultimately, to consumers,” it said.
Shifting the burden of verifying imports abroad is a huge concern for businesses, as this leaves them little control over cost management, since sellers may pass higher costs onto importers.
The business groups said the DOF should provide clear guidelines on cost-control measures to prevent these “undue financial burdens.”
They underscored the need to protect consumers from potential price increases resulting from the new requirements.
Under JAO 001-2025, exporters that failed to subject their shipment to PTV or CEI will face a first offense of 30 percent of the dutiable value of the goods; a second offense imposing 50 percent; and a third offense that revokes accreditation.
The letter stressed that this “oppressive and confiscatory imposition of fines and penalties” is a clear violation of the constitutional guarantee against the deprivation of property without due process of law.
“If these penalties are to be imposed indiscriminately on the importer even if the source of the violation came from PTV and CEI and even if the goods are declared truthfully and there are no findings of misdeclaration, undervaluation, and/or misclassification, then these penalties may be reasonably argued as being oppressive and confiscatory,” it said.
Additionally, the creation of another regulatory layer was criticized for raising concerns about necessity, efficiency, and redundancy, given the existing safeguards present in the BOC.
The business groups said there is no justification for introducing a parallel system of inspection and verification that only risks “delays, inefficiencies, and unnecessary costs.”
“We seek a clear explanation for why existing mechanisms are deemed insufficient and how this new requirement aligns with the government’s commitment to trade facilitation and ease of doing business,” they added.
In a March 31 report by the Office of the United States Trade Representative (USTR) submitted to US President Donald Trump, the Philippines’ PTV and CEIS system were flagged as barriers to trade.
These new trade mechanisms were cited as an indication that the country “may have the intention” of utilizing pre-shipment inspection for tariff classification or customs valuation.
The USTR said this signals compliance issues under Article 10.5 of the Trade Facilitation Agreement (TFA) under the World Trade Organization (WTO), which discourages members from requiring pre-shipment inspections.