One of the major policy developments in the Philippines during the
latter 1980s and early 1990s was the dismantling of trade barriers and reduction of tariffs. The percentage of total import commodity lines that were regulated dropped from 32% in 1980 and 1985 to 14.7% in 1986, 8.2% in 1990 and 2.9% in 1999 (De Dios 1997). The book tariff rates, which had 17.5% and 9.1% of all HS (harmonized system) tariff lines in tariff levels of 100% and 70%, respectively, in the late 1970s, narrowed down significantly towards the 0%-50% range by the late 1980s. Most of the tariff lines converged within the 3%-30% range by 1995 and within the 3%-10% range by 2000.
The effective rate of protection in manufacturing using book tariff rates and inclusive of the impact of duty drawback declined from 64.7% in 1983 to 45.5% in 1990 and 37.3% in 1995 (Medalla, 1998). The weighted effective rate of protection in manufacturing declined from 24.3% in 1988 to 18.2% in 1995 and 15.7% in 2000; the decline for the import substituting manufacturing industries was more drastic, from 38.4% in 1988 to 23.9% in 2000 (Medalla 1998).
The sharp drop in the incidence of non-tariff barriers and the tariff rates especially in manufacturing has transformed the Philippines from one of the more protectionist countries in the 1970s to one of the more open economies by the mid-1990s among all the East Asian countries.