Philippines may get zero duty for selected exports to EU

The Philippines may export more apparel, leather and fish products to the European Union under the EU’s updated trade preference scheme that aims to support less developed economies.

The revised generalized system of preferences or “GSP+” will take effect on Jan. 1, 2014.

“The Philippines has been added to the GSP+ for the first time, Trade Undersecretary Adrian Cristobal Jr. said in an interview. “We will be providing updates soon.”

In a 2011 study on the effects of the revised GSP, the Philippines is expected to neither gain nor lose from the trade arrangement. Some local firms agree, expressing interest in exploring opportunities even though these may be “limited.”

Imelda Madarang, CEO of Fisherfarms Inc., said fish exporters to the EU would be limited to tuna and a few other marine products. They would also have to deal with nontariff issues such as phytosanitary standards and accreditation rules.

“We will have to organize our fishery sector to really take advantage of opportunities,” Madarang said.

Fino Leatherware Inc. president Dr. Rommel Bautista said actual transactions may also be “affected” by the economic conditions in the EU and the tendency of traders to seek very low prices for Philippine products. Improving consumption in the Philippines amid a growing economy has helped the business expand even without presently exporting to the EU, he said.

“For now we are more focused on the domestic market. We are opening more stores,” Bautista said.

The recently legislated rules in the EU will enable three new countries—Pakistan, the Philippines and Ukraine—to apply for zero duties to be charged on their exports to the integrated market under the “GSP+” incentive scheme, according to an EU statement.

EU data show that the European bloc has become the Philippines’ largest single export market in the five years to 2011, accounting for about 17 percent of total exports. Following the EU is the Asean, with a share of 17.2 percent, the United States with 16.8 percent, and Japan with 15.6 percent.

Philippine exports to the EU grew 40 percent to 5.4 billion euros in 2010 from about 3.8 billion euros in 2009. Philippine imports from the EU grew by more than 26 percent in 2010 to over 3.7 billion euros from 2.9 billion euros in 2009.

The GSP+ removes tariff preferences for EU imports from countries where per capita income has exceeded $4,000 for four years, reflecting the fact that many GSP beneficiaries, including Russia, Brazil and Saudi Arabia, now compete with the EU on equal footing in the world market.

The update will reduce the number of countries that enjoy preferential access to EU markets from 176 to around 75. It will also reduce the total value of imports that qualify for EU preferences from 60 billion euros in 2009 to about 37.7 billion euros in 2014, thus creating room to increase preferences for the remaining beneficiaries.