Aerospace & Defense Exporter Alert, Jul. 2023

Market of the Month – Philippines

The Philippine’s defense market is contingent with the Armed Forces of the Philippines’ (AFP) 15-year modernization program (2013-2028), designed to protect defense modernization efforts from shifts in the country’s political climate.   The third milestone, or Horizon 3 (H3), will likely evolve to run a span of 15 years and will be divided into three phases: H3 Phase 1 (2023-2027), H3 Phase 2 (2028-2032), H3 Phase 3 (2033-2037).   

U.S.-Philippine relations are based on strong historical and cultural links and a shared commitment to democracy and human rights.  The U.S. has designated the Philippines as a Major Non-NATO Ally, and there are close and abiding security ties between the two nations. The strong relationship developed between the Philippines and the U.S. in recent years has contributed for the development of significant opportunities for U.S. defense and security equipment manufacturers and service providers to enhance the Philippines’ self-defense capabilities.  The U.S. provides an average of about $120 million per year in Foreign Military Financing (FMF) to the Philippines.  This year, due to the bump up, it will be in excess of $200 million.  The U.S. Government has expressed its intent to make available to the Philippines $100 million in additional Foreign Military Financing (FMF) to be used by the Philippine Department of National Defense (DND) to fund its armed forces modernization programs.

Foreign Military Sales (FMS) and all U.S. grant assistance are handled by the Joint U.S. Military Assistance Group (JUSMAG) Philippines.  Procurements through the Direct Commercial Sales (DCS) process require a thorough understanding of the Philippine Government procurement system.  U.S. firms interested in supplying equipment or services to the AFP need to find a local representative and conduct a capability brief to the appropriate service command.  The local representative must be familiar with the procedures, nuances, and documentary requirements of the Government Procurement Reform Act (GPRA).  Foreign companies can bid directly for large defense procurement projects.  However, a local representative is still required to monitor project development, funding source, budget release, changes in specifications, procurement schedule, and other relevant information.

Aerospace 

With the current challenges faced by the Philippines , including maritime disputes with China in the West Philippine Sea, the Department of National Defense (DND) reiterated that air power is a critical component in its joint forces, especially in territorial defense.  Enhancing the Philippine Air Forces’ (PAF) air power could be achieved through adapting to current trends and technologies including unmanned aerial systems, artificial intelligence, and space capabilities.

Defense 

The Philippine DND is a key player in the Indo-Pacific region as it continues to bolster its defense capabilities and maintain regional stability.  Under Horizon 3, the desired capabilities are focused on enhancements to C4ISTAR, air defense systems, air and surface interdiction systems, anti-tank systems and ground rocket systems, all pending approval by the Department of National Defense. 

Upcoming Events 

• U.S. Defense Industry Day targeted last week of August 2023, Manila, Philippines.
• Asia Defense & Security (ADAS) 2024, September 25-27, 2024, World Trade Center Manila, Philippines.  

Contact Information

 Meet Thess Sula, Commercial Specialist
 U.S. Commercial Service Philippines
 Thess.Sula@trade.gov

In May, U.S. Secretary of Commerce Gina Raimondo and U.S. Trade Representative Katherine Tai hosted 13 international partners in Detroit, Michigan, to advance the Biden Administration’s economic priorities in the Indo-Pacific. The Detroit ministerial meeting included the announcement of the substantial conclusion of negotiations on the IPEF Supply Chain Agreement. The Agreement would make supply chains more resilient and competitive by creating an IPEF Supply Chain Council and Supply Chain Crisis Response Network, among other innovative mechanisms, to ensure resilient, reliable, and efficient supply chains.

To learn more about IPEF and how it will advance resilience, sustainably, inclusiveness, economic growth, fairness, and competitiveness for our economy, listen to remarks at CSIS and hear from Under Secretary of Commerce for International Trade Marisa Lago and Chief IPEF Negotiator Sharon Yuan at the U.S.-Indo-Pacific Conference 2023 and view the Press Release  detailing the IPEF Supply Chain Agreement.

June 13, 2023, Secretary of Defense Lloyd J. Austin III approved a tasking memo from the Department of Defense (DoD) Foreign Military Sales (FMS) Tiger Team that highlights six key FMS pressure points and directs implementation of recommendations to improve and accelerate the Department’s institutional processes to execute FMS cases. The efforts of the Tiger Team and the Department’s commitment to improve the FMS system advance the direction of the 2022 National Defense Strategy to break down barriers to working with allies and partners. Read Full DoD Press Release.

We engage with events and trade shows to accelerate the global reach of the events.  Providing participants the assurance that the U.S. Department of Commerce not only recognizes the event, but is committed to using the event to maximize opportunities for U.S. exporters.

	NATO Procurement Webinar July 11, 2023, 10:00AM New York Speakers NATO Support and Procurement Agency Carlos Ferrer Lopez , Chief of Branch for the Procurement Directorate U.S. Commercial Service, U.S. Embassy – Belgium Ira Bel, Commercial Specialist Office of Defense Cooperation, U.S. Embassy – Belgium Sign-up for NATO Webinar Now Questions: Ira Bel
	Webinar: Saudi Arabia Defense Market & World Defense Show 2024 Wednesday, July 12, 2023 8:00 AM - 9:30 AM Speakers U.S. Embassy, Riyadh DOD and Political/Military Offices Lockheed Martin - Saudi Arabia & Africa World Defense Show Sign-up for Saudi Arabia Webinar Now Questions: Erik Hunt
	Romania & Poland Aerospace and Defense Webinar July 26, 2023, 10:00 AM, Washington, D.C.  Speakers U.S. Embassy, Romania DOD and U.S. Commercial Service General Secretary, Government of Romania Mircea Abrudean U.S. Embassy, Poland DOD and U.S. Commercial Service Lockheed Martin - Poland Sign-up for Romania & Poland Webinar Now Questions: Diane Mooney, Frantz Eyssallenne   U.S. Aerospace & Defense Trade Mission to Romania and Poland The United States Department of Commerce, International Trade Administration (ITA) is organizing a U.S. Aerospace & Defense Trade Mission to Romania and Poland, November 12-17, 2023.   The objective for this mission is to give U.S. companies an opportunity to provide aerospace and defense equipment, technology, and services to Romania and Poland, both impacted by the Russian invasion into Ukraine.   Participating U.S. firms will gain market insights, make industry contacts, solidify business strategies, and advance specific projects, with the goal of increasing U.S. exports and services in the aerospace and defense sectors.    The mission will introduce U.S. firms to aerospace and defense stakeholders in the region and assist U.S. companies in finding foreign business partners to export their products and services to Romania and Poland.  The mission will include customized one-on-one business appointments with pre-screened potential buyers, agents, distributors, and joint venture partners.  It may also include meetings with government officials and industry leaders, as well as networking events.   In Romania, companies will also have an opportunity to participate in site visits to Aerospace/Defense Production Facilities or an R&D Center.  For companies new to the market, this will be an opportunity to make initial contacts and learn more about the large defense market in Central and Southeast Europe.  More Information on Trade Mission Questions: Diane Mooney, Frantz Eyssallenne