Japan, UK raise concerns over proposed Philippines mineral export ban

Japan and the United Kingdom raised issues about the Philippines’ export restrictions on raw minerals as proposed under Senate Bill (SB) 2826 during a recent WTO Council for Trade in Goods (Goods Council) meeting.

The Goods Council is considered one of the top subsidiary bodies of the WTO with 14 committees covering matters from agriculture to market access reporting to it.

Japan claimed that the export restriction provision of the proposed legislation is inconsistent with Article XI:1 of the General Agreement on Tariffs and Trade that stipulated that WTO member-states must eliminate all forms of quantitative restrictions except in certain conditions, a Geneva-based source told The STAR.

Quantitative restrictions are measures a country imposes to limit either its import or export of a specific item or commodity.

Some Japanese firms with investments in the Philippine mining sector, particularly in mine development and smelting projects, have raised concerns before their government, the source said.

During the meeting, Japan called on the Philippines to “reconsider” the export restriction provision under SB 2826.

One prominent Japanese investor in the country’s mining sector is Sumitomo Metal Mining Co. Ltd. that has stakes in two nickel processing plants, namely Coral Bay Nickel Corp., which it owns 100 percent and Taganito HPAL Nickel Corp. (THPAL), where it has a 75-percent stake.

Another Japanese firm Mitsui & Co. Ltd. holds a 15-percent ownership of THPAL while the remaining 10 percent stake is owned by Zamora-led Nickel Asia Corp.

The UK argued that an export restriction on the Philippines’ raw ore exports would “inevitably” disrupt global supply chains.

The UK pointed out that the global trading system would only work if every country is committed to avoiding adopting “protectionist” measures especially in critical goods like minerals.

The UK sought for clarification on the export restriction provision of SB 2826 as well as its compatibility with WTO rules, the source said.

The Philippines responded to the concerns of the two countries by explaining that the export restriction is aimed at promoting the development of the country’s mining sector, particularly toward value-adding and raising revenues for the government.

The Philippines assured Japan and the UK the government is available to further discuss their concerns about the proposed legislation.

Under SB 2826, the export of locally extracted minerals in their raw form will be prohibited for five years to allow the domestic mining industry to build up its own processing capabilities.

The provision was introduced by Senate President Francis Escudero.

The bill was approved on third and final reading by the Senate in February and is awaiting deliberations at a bicameral conference committee before a final bill is submitted to President Marcos for approval.

The counterpart bill of SB 2826 at the House of Representatives does not have an export restriction provision.

Japan and the UK are among the top 10 importers of nickel products in the world. Last year, Japan ranked third in nickel imports with $3.28 billion, while the UK placed seventh with $1.82 billion, based on International Trade Center data.

The Philippines is the world’s second-largest nickel producer behind Indonesia. The country produced 330,000 metric tons of nickel last year, while Indonesia produced 2.2 million MT, according to the US Geological Survey.

Dante Bravo, president of the Philippine Nickel Industry Association, told The STAR that the concerns raised by Japan and the UK were valid and reiterated the industry’s call to reconsider the proposed export ban on raw ores. — Jasper Emmanuel Arcalas