US’ FTA rebuff dampens optimism of garment exporters

MANILA  -The recent statement of a US trade official thumbing down the prospect of a free-trade agreement (FTA) between Washington and Manila has dampened the optimism of a major group of local exporters, losing what would have been a significant boon to their business.

“The statement of the US government not being keen on the granting of the FTA and GSP renewal is dampening the group’s optimism,” Foreign Buyers Association of the Philippines (Fobap) Robert Young said in an email sent to the Inquirer.

To recall, US Trade Representative Ambassador Katherine Tai had told local press earlier this week that the United States is currently not considering traditional FTAs as the “appropriate” framework to address trade challenges and opportunities of today.

https://business.inquirer.net/396657/ph-looks-to-other-venues-to-deepen-us-trade

Young, whose trade group is composed of buyers and exporters of apparel and hard goods such as furniture and handicrafts, said that the United States remained their biggest export market to date.

Philippine garments and textile industry exports are valued at about $1.5 billion yearly, according to Young, with key export markets being the United States and countries in the European Union.

The sector is expected to grow at a modest 10 percent this year, with the relocation of some garment producers in China to other Asian countries, which include the Philippines, seen as driving the growth.

With a US-Philippines FTA now highly unlikely, local export groups will miss out on the possibility of enjoying tariff reductions and wider market access, staple arrangements often seen in such bilateral trade pacts.

“However, regarding the GSP, we are still hoping that with the priority assistance and moral suasion of our Philippine government trade officials, it will be renewed by US Congress in due time,” Young said further.

The Fobap official said that even American businesses were looking forward to its renewal, citing a report from the Washington-based East West Center that US companies importing from the Philippines paid $120 million in extra tariffs under the GSP framework that expired in December 2020.

Philippine exports to the western country under the GSP framework totaled about $1.6 billion in 2020, according to the Department of Trade and Industry, with the Southeast Asian country ranking fifth among GSP users after Thailand, Indonesia, Brazil and Cambodia.

The Philippines’ major GSP products include tires, bags, insulated electric conductors, sugar, non-alcoholic beverages and hair dryers, among others.