THE PHILIPPINES failed to secure a favorable decision from the United States Trade Representative Office (USTR) to include locally-made travel and luggage goods on the economic giant’s list of duty free products.
The inclusion of travel goods on the US’ generalized system of preferences (GRP) could have easily hiked Philippine exports to the US by $100 million annually and generated some 70,000 additional jobs for related industries, including garments. It could have also grown the local economy by nearly 0.5 percent with more American manufacturers expanding their production facilities in the Philippines.
A GSP accreditation meant travel goods—specifically luggage, handbags, pocket goods, backpacks, sports and travel bags—manufactured in the Philippines can be exported to the US at zero duty.
Based on its annual review released last week, the USTR said it decided to “defer” the granting of the Philippines’ petition, along with that of Thailand and Indonesia. However, it approved zero duty for travel goods coming from members of the least developed beneficiary developing countries (LDBDCs) and the African Growth and Opportunity Act (AGOA).
In an interview Friday, Trade Undersecretary Ceferino S. Rodolfo said the Department of Trade and Industry (DTI) would be working with concerned local industries to review and evaluate the next steps in order to secure a more favorable decision from the USTR.
Rodolfo said a favorable decision was important for the country given its potentially significant impact on Philippine exports, job generation and the local economy.
The official said he was still hoping the USTR would not deny the country’s request, noting it only deferred on its decision.
Philippine-made luggage and bags exported to the US are currently slapped with tariffs anywhere between 4.7 and 20 percent. Despite these, the US has consistently been the Philippines’ largest export market for total travel goods, accounting for 54 percent in 2014.
Earlier, top American fashion brands Tory Burch and Michael Kors and other luxury brands backed the bid of beneficiary countries such as the Philippines to include locally made travel goods in the US’ GSP.
The Tory Burch brand earlier said it would shift its production to the Philippines in the next several years if the GSP was granted.
Michael Kors Holdings similarly noted its strong interest in obtaining GSP eligibility for textile, leather and plastic luggage, handbags, small leather goods and travel bags, saying it would enable the company to continue to offer consumers quality products at reasonable prices. The company currently has five suppliers in the Philippines: Superl Philippines Inc., Siglo Leatherware Manufacturing, FPF Corp., D’Luxe Bags Philippines Inc., and Desktop Bags Philippines Inc.
Meanwhile, the Handbag Coalition of Companies and Organizations, which includes as members brands and retailers that design, import and sell products in the travel goods category, also expressed support to the granting of the petition sought by the Philippines and other beneficiary countries.