MALACAÑANG welcomed on Saturday the Philippines’s recent inclusion to the European Union’s (EU) Generalized System of Preferences Plus (GSP+), which would allow the country to export about 6,274 tariff lines under zero duties at least by Christmas Day.
Palace Spokesman Edwin Lacierda said this development would further open up trade between Philippine and European companies, thereby allowing more investment opportunities both ways.
“We certainly welcome [it], and we thank the EU for allowing us to have a greater opportunity for trade and exchange with them. And we see this as a positive development and, again, an affirmation of the changes that have been happening in the country,” he said in a radio interview.
Trade Secretary Gregory L. Domingo, who announced the news in a news briefing on Friday, considered it a “very good Christmas gift” by the EU to the Philippines.
“At the very least, we stand to potentially gain an added €611.8 million in exports to the EU during the first year that this arrangement will take effect,” Domingo was quoted as saying in a report.
The scheme could reportedly create over 200,000 jobs in the country, especially in the agriculture and manufacturing sectors. The Philippines is only the 14th country to be granted GSP+ privilege by the EU and the lone beneficiary of such in Southeast Asia.
The EU is the Philippines’s fourth-largest trading partner in 2013, with total bilateral trade registered at $12.8 billion. It ranks fourth as an export market for the country’s products, accounting for 11.56 percent of total Philippine exports.
Early last week the European Parliament completed the last stage in the process to grant the Philippines GSP+ that will provide duty-free entry to the EU for some of the most important Philippine exports, including processed fruits and foodstuffs, coconut oil, footwear, fish and textiles.
EU Ambassador to the Philippines Guy Ledoux said, “This is very good news for the Philippines, as it will bring tariffs to zero percent for two-thirds of tariff lines, including strategic products that the Philippines is already exporting to the EU. This will immediately translate into savings of tens of millions of euros per year in foregone customs duties.
“Apart from giving a dramatic and immediate advantage to Philippine exports, the EU concession significantly improves the attractiveness of the Philippines as a destination for new agricultural and manufacturing facilities for products that will now enjoy duty-free access to the EU. This gives the Philippines a comparative advantage and represents very tangible EU support to the Philippine strategy to increase exports and investments, and diversify its industry.
“The bottom line is more jobs for Filipinos in the Philippines.”
The Philippines is already a beneficiary to the EU’s Generalized Scheme of Preferences (GSP). Total exports to the EU that were eligible under GSP in 2013 amounted to €1.69 billion, or 33 percent, of total exports to the EU. Actual utilization was around 64 percent, or €1.08 billion, but this figure is set to rise as a result of GSP+.
The greatest benefit that is likely to be gained from GSP+ is the attraction of new industrial investments in sectors where relatively high tariffs are being slashed to zero under GSP+.
These include established Philippine exports that are labor intensive, such as pineapple juice (currently 28.5 percent); garments (currently 5 percent to 9 percent); preserved fruits (currently 6 percent to 9 percent); tuna (currently 20.5 percent); fruit jams and jellies (currently 20.5 percent); and footwear (currently 11.9 percent).
The EU provides GSP+ preferences to create economic benefits that will help the Philippines to assume its responsibilities under core
international conventions on human and labor rights, environmental protection and good governance.
The EU, which is also a party to these conventions, will keep under review their effective implementation by the Philippines, as well as its cooperation with its monitoring bodies.
The EU has granted trade preferences to developing countries through the Generalized Scheme of Tariff Preferences (GSP scheme) since 1971. It is part of its common commercial policy in accordance with the general provisions governing the EU’s external action.
The special incentive arrangement for sustainable development and good governance (GSP+) provides additional tariff preferences when exporting to the EU to developing countries, which are vulnerable, owing to a lack of diversification and insufficient integration within the international trading system.
The GSP+ scheme supports these countries to assume the special burdens and responsibilities resulting from the ratification of 27 core international conventions on human and labor rights, environmental protection and good governance, and their effective implementation.
Article 9(1) of Regulation (EU) 978/2012 of the European Parliament and of the Council (“GSP Regulation”) establishes the conditions for benefiting from the GSP+. The GSP+ currently covers 13 beneficiaries: Armenia, Bolivia, Cape Verde, Costa Rica, Ecuador, El Salvador, Georgia, Guatemala, Mongolia, Pakistan, Panama, Paraguay and Peru.
Recto Merceme