DTI sees tuna exports most vulnerable to loss of GSP+

Posted on January 19, 2017

EXPORTS to the European Union (EU) can survive the loss of a preferential trade arrangement that allowed the tariff-free access of over 6,000 products, but some agricultural products may be more vulnerable than others, a Department of Trade and Industry (DTI) official said.

A man carries his fresh catch, a massive tuna, in General Santos City. -- BW FILE PHOTO
Senen M. Perlada, director of the DTI Export Marketing Bureau, said yesterday that the effect of losing Generalized System of Preferences Plus (GSP+) status may differ for each product covered, but tuna and coconut oil will be most affected.

GSP+ offers economic benefits to Philippine trade in exchange for compliance with a set of key international conventions. Attempts to reimpose the death penalty and extraordinary measures to fight crime is fueling speculation, however, that GSP+ status may be at risk.

Should this risk materialize, Mr. Perlada said that it is “no cause of alarm.”

“I think we can cope in the sense that we are really looking at 20% to 25% of tariff lines and they are not necessarily in fact the biggest exports we have to EU,” he told reporters on the sidelines of a forum yesterday.

“Even if we do not have EU GSP+, we still have GSP regular.”

The regular GSP covers a total of 6,209 Philippine products, 2,442 of which are subject to zero duty while 3,767 have reduced tariffs. In comparison, GSP+ grants 6,274 other products zero duty.

GSP is a “non-reciprocal” arrangement, he said, which meant that the Philippines would only have to follow technical requirements such as origin criteria and procedures in order to be eligible for benefits.

The GSP+, on the other hand, asks for the country’s compliance to 27 international conventions on human and labor rights, environmental protection and good governance as well as their implementation.

Should EU choose to remove GSP+ status, tuna exporters would still fall under the regular GSP with reduced rates, he said. However, this would lead to a 20.5% tariff which would have otherwise been zero.

“Tuna will be affected because without EU GSP+, tariff on tuna would be more than 20%. The GSP+ is really a win for our tuna exporters.”

Coconut oil, which is “a big export to EU,” will be slapped with a 3.5% tariff rate under the regular GSP.

“But remember, the Philippines is one of the world’s largest suppliers, if not the world’s largest, of coconut oil.”

While the GSP+ covers around a quarter of overall products exported to the EU, Mr. Perlada said that utilization rate is at least 60%.

While he said the data was still based on 2015 figures, he said that the received anecdotal data that the more exporters are using the GSP+, especially since more investors are coming to the Philippines to take advantage of the zero duty privilege.

“Based on anecdotal information from exporters at tsaka sa EU, it’s gaining traction, because remember one of the things that we forget is that there are also investments in the Philippines for the EU GSP+,” he said, referring to investments in the manufacture of bicycles and bags.

“The Philippines is an attractive investment destination for companies that are exporting to the EU. The idea is to be able to hurdle the rules of origin and if we are able to hurdle that and other requirements, we’d be able to gain access.”

An EU monitoring team is due in the Philippines this month to check the country’s compliance with GSP+ requirements.

The Philippines ratified in 1986 the United Nations International Covenant on Civil and Political Rights (ICCPR), which binds parties to ensure basic freedoms like expression and religion, as well as freedom from cruel punishment.

In 2007, the country did the same with ICCPR’s Second Optional Protocol that committed signatories to support efforts to abolish the death penalty.

More than a decade has passed since the death penalty was abolished through Republic Act No. 9346, enacted in June 2006.

With the government intending to bring back capital punishment, local and international groups have noted that this would put the Philippines in breach of the optional protocol, which has no opt-out mechanism.

Members of Congress and the Commission on Human Rights (CHR) have cited the risk to GSP+ status as one of the main reasons for opposing the death penalty.

Department of Trade and Industry Secretary Ramon M. Lopez, however, said earlier this month that GSP+ status could be sacrificed if it stood in the way of bringing back capital punishment. -- Roy Stephen C. Canivel