The Philippines may lose up to 36,000 jobs to China, equivalent to roughly 70 percent of the workforce employed by local travel goods manufacturers, should the United States deny the country’s request to include this sector in the generalized system of preferences (GSP).
This was according to comments submitted by the Confederation of Garment Exporters of the Philippines (Congep) to the Office of the US Trade Representative.
Congep corporate secretary Maritess Jocson-Agoncillo, who attended the hearing in Washington DC last month, explained that based on 2015 figures, the Philippines produced approximately 12 million pieces of travel goods.
Industry figures, she said, would show 6,000 workers producing 2 million pieces a year, which meant approximately 36,000 workers are employed by the industry producing for these 28 lines covering the travel and luggage goods sector.
“Industry estimates peg the total workforce at 50,000. Should the Philippines not be granted GSP status for the 28 lines, production will shift back to China and 36,000 jobs, or 70 percent of our current workforce, will be lost,” Agoncillo said.
“Granting the GSP-status to the Philippine travel goods sector will truly realize the goal of promoting economic development at the grassroots level. Not granting the GSP status will destabilize the existing travel goods industries and cause real economic damage to the Philippine industry and workers,” she noted in a brief.
It can be recalled that the Philippines has been lobbying for the inclusion of travel goods under the US GSP.
For the Philippines, an inclusion does not only mean that travel goods manufactured here can be exported to the US at zero duty.
This move could also readily hike Philippine exports by as much as $700 million, generate some 70,000 additional jobs for related industries including garments, and could grow the local economy by nearly 0.5 percent during the duration of the GSP program.
“If duty free is granted to all GSP countries, Congep predicts a 30 percent shift in the short term from non-GSP countries, mainly China. The shift will be more evident for higher tariff items, such as plastic sport and travel bags, which have a duty rate of 20 percent. We foresee a major shift from China for higher tariff lines. US importers and buyers would maximize the tariff preference savings and move the production from China into GSP member countries,” Agoncillo said.
“However, tariff savings alone will not determine where the shift will occur. Travel goods companies will move to a country with an existing capacity and necessary skills set in its manufacturing industry. The Philippines has the capacity and skills required to produce the specific product category and serve as a basis for future growth. There is no learning curve or need for massive infrastructure or supply chain investment,” she added.
Based on the post-hearing brief, the Philippines exported last year a total of $426.1 million worth of goods under Chapter 42 of the US Harmonized Tariff Schedule (HTS), which covered articles of leather; saddlery and harness; travel goods, handbags and similar containers.
Of the amount, exports to the US accounted for 65 percent, equivalent to $275.563 million.
Exporting to the European Union under its own general scheme of preferences-plus program was also important, but the US remained the country’s top export market, Agoncillo said.