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<img loading="lazy" src="https://cdn.kahimyang.com/resources-29/laurel-langley.webp"  alt="Senator Jose P. Laurel shakes hands with U.S. Assistant Secretary of State Walter S. Robertson as James M. Langley smiles in the background. in December 1954" />
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Senator Jose P. Laurel shakes hands with U.S. Assistant Secretary of State Walter S. Robertson as James M. Langley smiles in the background in December 1954.
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<p>
The event, however, was the culmination of a longer process of negotiation and legislative approval rather than a single act of approval on September 6. The principal negotiations had been concluded in December 1954, when Philippine Senator <a href="/articles/3336/jose-p-laurel-leadership-law-and-governance" class="news_link"><strong>José P. Laurel Sr.</strong></a> and American representative <strong>James M. Langley</strong> signed a Final Act of Negotiations recommending revisions to the existing 1946 Philippine–American trade arrangement. After the Philippine Congress and the U.S. Congress provided the necessary authority for the revision, the final agreement was formally signed on September 6, 1955 by <a href="/articles/3265/the-diplomatic-brilliance-of-carlos-p-romulo" class="news_link"><strong>Carlos P. Romulo</strong></a>, acting as Special and Personal Envoy of Philippine President Ramon Magsaysay, and James M. Langley, Special Representative of U.S. President Dwight D. Eisenhower. 
</p>
<p>
The agreement entered into force on <strong>January 1, 1956</strong>, and remained effective until <strong>July 3, 1974</strong>. 
</p>
<h2>
The Background: Philippine Independence and the Bell Trade Act
</h2>
<p>
To understand the importance of the Laurel–Langley Agreement, it is necessary to look back to the circumstances surrounding Philippine independence.
</p>
<p>
The Philippines became an independent republic on July 4, 1946, following nearly five decades of American colonial rule. Independence, however, did not immediately mean complete economic independence. The devastation caused by the Second World War left the country heavily dependent upon American reconstruction assistance, investment, and access to the United States market.
</p>
<p>
At the same time, the economic relationship between the two countries was governed by the <strong>Philippine Trade Act of 1946</strong>, more commonly known as the <strong>Bell Trade Act</strong>. The law established a transitional economic arrangement between the newly independent Philippines and the United States.
</p>
<p>
Among its most significant features was a period of preferential and largely duty-free trade between the two countries. The Bell Trade Act also required the Philippines to grant Americans parity with Filipinos in certain areas involving the exploitation of natural resources and the operation of public utilities. These provisions became highly controversial because many Filipinos believed that they limited the economic sovereignty of the newly independent republic. The American Congress had approved the Bell Trade Act on April 30, 1946, and its provisions became a central issue in Philippine debates over the meaning and limits of independence. 
</p>



<p>
The economic arrangements established in 1946 were intended to be transitional, but by the early 1950s it had become increasingly clear that they required revision. Philippine leaders argued that the existing system gave the country insufficient flexibility to develop its own industries and establish a more independent trade policy.
</p>
<h2>
Negotiating a New Agreement
</h2>
<p>
Formal negotiations to revise the 1946 trade arrangement opened in Washington in September 1954. The Philippine delegation was led by Senator José P. Laurel Sr., while the American side was represented by James M. Langley.
</p>
<p>
On December 15, 1954, the two delegations signed a <strong>Final Act of Negotiations</strong> containing their recommendations for revising the existing agreement. This preliminary settlement became popularly associated with the names of the two principal negotiators and was subsequently known as the Laurel–Langley Agreement. 
</p>
<p>
The Final Act still required authorization and implementation by both governments. In the Philippines, <strong>Republic Act No. 1355</strong>, approved on June 18, 1955, authorized the President of the Philippines to enter into a revised agreement with the United States based upon the Final Act of Negotiations. The law also recognized that the existing trade arrangement had been temporarily extended to allow the two governments time to negotiate a mutually acceptable revision. 
</p>
<p>
In the United States, Congress subsequently enacted legislation authorizing President Eisenhower to enter into the revised agreement. According to the U.S. Department of State's historical record, the necessary American legislation was enacted on August 1, 1955.
</p>
<p>
With the necessary authority secured, representatives of the two countries formally concluded the revised agreement in Washington on September 6, 1955.
</p>
<h2>
The Formal Signing on September 6, 1955
</h2>
<p>
The agreement signed on September 6 was officially titled:
</p>
<div class="article-comment">
<p>
<strong>"Agreement (with Protocol and Exchange of Notes) Revising the Agreement Between the Republic of the Philippines and the United States of America Concerning Trade and Related Matters During a Transitional Period Following the Institution of Philippine Independence."</strong>
</p>
</div>
<p>
Carlos P. Romulo signed on behalf of the President of the Republic of the Philippines, while James M. Langley signed on behalf of the President of the United States. 
</p>
<p>
The agreement represented a revision - not a complete abandonment - of the postwar Philippine–American economic relationship. Its purpose was to establish a new transitional framework that would gradually reduce the special trade preferences that had characterized the earlier arrangement.
</p>
<p>
The revised agreement was scheduled to take effect on January 1, 1956 and to expire on July 3, 1974. 
</p>
<h2>
A Gradual End to Preferential Trade
</h2>
<p>
One of the most important features of the Laurel–Langley Agreement was the gradual elimination of preferential tariff treatment.
</p>
<p>
Under the revised arrangement, the Philippines would progressively increase the duties imposed on imports from the United States. The schedule provided for Philippine customs duties on American products to rise from 25 percent of the regular Philippine duty during 1956–1958, to 50 percent during 1959–1961, 75 percent during 1962–1964, and 90 percent during 1965–1973, before reaching the full rate in 1974.
</p>
<p>
The purpose of this gradual schedule was to provide both economies with time to adjust to the eventual end of the preferential trading system.
</p>
<p>
The agreement also provided for the progressive reduction and eventual termination of special preferences enjoyed by Philippine exports in the United States. By July 1974, the transitional preferential trade relationship established after independence was to come to an end.
</p>
<p>
This provision was particularly significant because the Philippine economy had long been closely tied to the American market. Major Philippine exports - including sugar, coconut products and abaca - depended heavily upon preferential access to the United States. The eventual removal of these preferences therefore presented both an opportunity for greater economic independence and a challenge to industries that had become accustomed to the American market.
</p>
<h2>
Greater Flexibility for Philippine Economic Policy
</h2>
<p>
The Laurel–Langley Agreement gave the Philippine government greater room to shape its own economic policies than had been available under the earlier Bell Trade Act framework.
</p>
<p>
The revised agreement permitted the Philippines to move toward a more independent tariff system and included provisions relating to import taxation and restrictions. These changes were important to Philippine policymakers who wanted greater authority to protect developing domestic industries and manage the country's balance-of-payments problems. 
</p>
<p>
At the same time, the agreement did not immediately create complete economic separation from the United States. Instead, it established a lengthy transition extending until 1974.
</p>
<p>
This gradual approach reflected the reality that the Philippine and American economies remained deeply interconnected. The United States was still one of the Philippines' most important markets, while American capital and commercial interests continued to play a major role in the Philippine economy.
</p>
<h2>
The Question of Parity Rights
</h2>
<p>
One of the most controversial issues inherited from the Bell Trade Act involved so-called <strong>parity rights</strong>.
</p>
<p>
Under the postwar economic arrangements, American citizens and business enterprises had been granted rights comparable to those of Filipinos in certain areas involving natural resources and public utilities. These provisions had been incorporated into the Philippine constitutional and legal framework as part of the conditions associated with the earlier economic settlement.
</p>



How the Laurel–Langley Agreement Changed Philippine Trade

Discover how the 1955 Laurel–Langley Agreement changed Philippine–American trade and helped redefine the Philippines' economic independence.


September 6, 1955: the Laurel-Langley Agreement was approved by both the American and Philippine governments