Tuna exports to EU in peril

The country’s biggest tuna canneries are worried about losing their biggest market because of international politics after majority of lawmakers in the European Union (EU) voted to use trade to express their dissent over the worsening state of human rights under the Duterte administration.

The Tuna Canners Association of General Santos City said its backup plans were not enough to fill the absence that the EU would leave, if the bloc decides to stop a conditional trade perk that has allowed zero tariff entry for more than 6,000 product lines—including tuna—since late 2014.

The trade concession is called the Generalized Scheme of Preferences Plus or simply the EU GSP+. The Philippines entered this arrangement knowing well the conditions attached to it. After all, the GSP+ is more than just a trade tool.

It is also a way for the EU to encourage developing countries like the Philippines to pursue sustainable growth since this perk is tied to how the beneficiary commits to international conventions on human rights, labor rights, environmental protection and good governance.

But with COVID-19 already posing a strain on production, the group said it hoped the Philippines would keep the GSP+.

“The impact of COVID-19 is felt across the value chain, forcing companies to review their financial projections, supply contracts, buyers’ contracts, business models and production practices. Adding the possibility of losing GSP+ privilege would be a burden to us,” the group said.

The GSP+ has significantly benefited many Philippine exporters, including tuna canneries, since they could now compete with other markets that also sell to the EU duty free. EU is the group’s largest market— a feat that was possible only because of the GSP+.

From accounting for only 25 percent of the group’s demand before the GSP+, EU became its biggest market both here and overseas. In 2019, EU accounted for 65 percent of the group’s demand, buying $240 million worth of tuna cans.

However, this also meant the Philippines had more to lose than the EU in terms of trade especially since the latter had other options it could buy tuna from. The group said the Philippines accounted for only 7 percent of the tuna imports of the EU.

The same is true for the rest of Philippine exports. In 2019, the Philippines accounted for only 0.4 percent of EU imports, according to data from the European Commission. On the other hand, data from the Philippine Statistics Authority showed that the EU was the fourth largest export market of the Philippines in 2019 accounting for nearly 12 percent or $8.2 billion.

“Since we started hearing about the possibility GSP+ discontinuation, some of the things we have started doing is diversifying our products and businesses,” the statement read.

“However, this cannot offset the volume that we are presently serving in Europe. We definitely expect a drop in our market share if GSP+ is removed. This can reduce the jobs generated in both agriculture and manufacturing sectors,” said the group, which currently has 12,000 direct workers, and even much more if indirect workers were also considered.

Six canneries make up the association—General Tuna Corp., Philbest Canning Corp., Ocean Canning Corp., Seatrade Canning Corp., Celebes Canning Corp., and Alliance Select Foods International, Inc.

This is the third time that the EU Parliament called on the European Commission to temporarily remove the GSP+ in the Philippines under the Duterte administration, with the last two resolutions filed in 2017 and 2018 over similar concerns over human rights.

But this time, the latest resolution, voted by majority of EU’s lawmakers, alleged more abuses under the current administration from the reported murder of red-tagged activists, fatal blows against media freedom and the move to reinstate death penalty in the Philippines.

Even European businesses don’t want the Philippines to lose its GSP+.

“The removal of the GSP+ will put at risk thousands of jobs generated in both the agriculture and manufacturing sectors. Revoking the preferential trade arrangement in the midst of a pandemic will also exacerbate the economic situation of the country,” said Nabil Francis, president of the European Chamber of Commerce in the Philippines.

Trade with the EU will already suffer even without this threat. He cited a report by the International Trade Centre, which said that the Philippines might lose $300 million and $175 million worth of industrial export and imports from the EU, respectively, due to supply chain disruptions brought about by the pandemic.

“We fervently hope that the removal of the GSP preferences by the EU countries will not push through,” Francis Lim, president of the Management Association of the Philippines, said in a statement.

“It will increase the number of the unemployed among our countrymen at the time when they most need jobs. Our economy will suffer more damage especially given the contraction we are already experiencing with the pandemic,” he said.

“Our government should not take the matter lightly for the sake of our people. We hope it will be discussed and addressed by both parties in a mutually satisfactory manner,” he added.

The government, however, does not seem worried. In a previous interview, Trade Secretary Ramon Lopez said that the main agency that has a say in the GSP+ is the EU commission, not necessarily the EU Parliament.

“So far, we are able to explain objectively the Philippines’ side on issues that are raised and we don’t see any reason why our GSP+ privilege will be withdrawn,” he said. INQ