Ph exports of ‘strategic’ goods surged to $4.5B in ’21

The Philippines last year exported $4.5 billion worth of goods that could be used by the military, shipped mostly to the United States, a huge jump from only $3.6 million in 2020, when the Department of Trade and Industry (DTI) started authorizing these exports under a 2015 law.

These are called “strategic goods,” or products that, for security reasons or due to international agreements, are considered to be of such military importance that their export is either prohibited altogether or subject to specific conditions, according to the Strategic Trade Management Act (STMA).

In essence, these goods are regulated so that they would not be used to develop weapons of mass destruction. The STMA was passed in 2015, but its implementing rules and regulations were only passed in 2017. The DTI office in charge of these exports only started accepting applications for an authorization to export last July 2020.

Asked about the huge difference between the 2020 and 2021 figures, DTI-STMO explained that it was because the agency only started issuing export authorizations in the middle of 2020.

In October 2019, the DTI-STMO said it began accepting applications for the registration of firms that intend to engage in cross-border strategic goods trade. This is a separate process from issuing export authorizations.

The DTI’s Strategic Trade Management Office (STMO) said in a statement on Monday that information security systems, equipment, and components accounted for 98 percent of the overall export revenue, while semiconductors and integrated circuits accounted for the remaining 2 percent.

This included $650,000 worth of new investments in “intangible transfers of technology,” which DTI said was a subset of strategic goods.

These include nuclear energy contracts won by business process outsourcing companies which provide services to firms and corporations in other countries. Some 60 percent of the strategic goods went to the United States, followed by Japan (21 percent), Singapore (5 percent), South Korea (4 percent), and China (3 percent).

“We are pleased that through the efforts of DTI and its partner agencies in the National Security Council – Strategic Trade Management Committee (NSC-STMCom), we have been able to leverage our strategic trade regulatory regime in order to convince more manufacturers to engage in strategic goods export,” said DTI Secretary Ramon Lopez.

“This is in line with the Strategic Trade Management Act’s mandate of promoting economic growth by facilitating trade and investment in strategic goods while also meeting the country’s international obligations to implement effective measures aimed at preventing the proliferation of weapons of mass destruction and their delivery systems,” Lopez added.

Currently, the DTI-STMO said it had issued 13 export authorizations and registered 46 companies that intend to engage in or are currently engaged in cross-border trade of strategic goods.

In 2021, DTI said the Philippines was named the most improved country in the implementation of Strategic Trade Controls as stated in the 2021/2022 Peddling Peril Index (PPI), with the country moving from 86th to 49th position in 2021. The report assesses 200 nations based on their strategic trade control adoption, implementation, and enforcement.