THE potential loss of tariff advantages offered by the European Union (EU) could harm crude coconut oil and garment exports, business leaders said.
The loss would have a “huge impact” on the Philippine agriculture export sector, which mostly uses indigenous materials, Philippine Food Processors & Exporters Organization, Inc. President Roberto C. Amores said at an online conference Thursday.
The European Parliament last week asked the European Commission to start the process for temporarily withdrawing GSP+ or Generalized Scheme of Preferences Plus, privileges enjoyed by the Philippines, after the government failed to improve the human rights situation.
GSP+ is an incentive agreement under which 6,274 Philippine products enjoy zero-tariff entry to the European Union provided the country adheres to 27 core international conventions that include human and labor rights, environmental protection, and good governance.
“We are exporting a very huge chunk of our crude coconut oil to the European market, and we’re already having problems with the competitiveness of our agri-products — which includes coconut oil — on cost, because of competition from cheaper and more competitive products like palm oil and soy bean oil,” Mr. Amores said.
He added that the removal of GSP+ could impact profits in the coconut oil and canned tuna industries.
The loss of trade perks will also harm the garment industry, Philippine Chamber of Commerce and Industry President Benedicto V. Yujuico said.
“Once the subsidy or the preference is taken out, it means that the buyers will have to pay 15-20% more… and that might mean a lot of the factories might be closing. A lot of our garment workers will be out of jobs,” he said.
PCCI Industry Committee Chairman Ferdinand Ferrer said that the Philippines is one of two countries in ASEAN that enjoys GSP+.
“It is very attractive for manufacturers, especially the white goods and electronics to have that advantage. Revoking it will put us at par with the other ASEAN countries, where some have lower labor rates. So there is a lot of advantage in maintaining the GSP+” he said.
White goods are large home appliances.
European legislators in the resolution cited Philippine human rights issues, including President Rodrigo R. Duterte’s war on drugs that has killed at least 8,663 people.
They also raised concerns about the detention of opposition Senator Leila M. de Lima and the convictions of Rappler founder Maria A. Ressa and former researcher Reynaldo Santos, Jr. for cyber libel.
Trade Secretary Ramon M. Lopez had said that he is confident that the trade perks will be retained, noting that the European Parliament had raised the same concerns before.
The Management Association of the Philippines on Wednesday asked the government to take the matter seriously, noting that the removal of tariff perks would hurt various industries and worsen unemployment.
Goods exported under GSP+ preferences usually account for around a quarter of total Philippine exports to the EU each year, significantly lower than the leading beneficiary countries such as Bangladesh and Cambodia, whose utilization rates top 90%.
In 2018, Philippine use of GSP+ compared with all eligible exports was 73.1%.
“We are not even utilizing the total amount of GSP+ that we’re allocated. So it’s something that we should work together with the government — improve on the utilization,” Mr. Ferrer said. — Jenina P. Ibañez