On 26 January 2023, the Philippine Strategic Trade Management Office (STMO) issued an announcement (Announcement No. 2023-001) to exporters emphasizing the need to properly classify their goods under the National Strategic Goods List (NSGL) prior to registration with the STMO.
The message (that exporters should be classifying their goods before registering with the STMO and applying for licenses) was perhaps less surprising than the emphasis. The STMO made an appeal to exporters to “take this necessary step to avoid the burden of complying with unnecessary regulations”.
This is a fairly common challenge in developing countries, including Southeast Asia, where exporters rely on enforcement authorities to discharge their compliance obligations and, in some cases, even to classify their commodities. It gives them a false assurance of endorsement and expert input which they may themselves lack. And if unsure, err on the side of safety and apply for a license. Right?....Well, not really.
While rarely so explicitly expressed by the bureaucracy, this announcement suggests a shift in attitude by policymakers and enforcement authorities who have made it unambiguous that the buck stops at the exporter. In other words, the exporter must ensure they understand and comply with the regulations. When exporters submit licensing requests for goods that are not controlled by “erring on the side of caution”, this strains the Authorities’ resources and distracts them from focusing on other core activities. This is also a waste of resources for businesses themselves. The focus should be on ensuring you have adequate controls to determine whether or not the goods are controlled.
In the words of Announcement No. 2023-001, “take this necessary step to avoid the burden of complying with unnecessary regulations”.
With a rapid acceleration of integration and trade facilitation efforts across ASEAN and a keen emphasis on trade costs, there are signs that enforcement authorities are becoming more sophisticated and expect economic operators to take more ownership of their compliance obligations. But as compliance needs have grown, so has the sophistication of professional capability to support them. Tradewin’s professional services are now available across Asia Pacific, Europe, and North America. Reach out to us to discuss how we can assist you with export compliance.