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By Elijah Joseph C. Tubayan

Human rights issue could have wider PHL-EU trade impact

Posted on April 18, 2017

THE REPERCUSSIONS of human rights concerns in the Philippines on the country’s trade with the European Union (EU) could spill beyond the GSP+ scheme, the bloc’s envoy to the Philippines signaled last week.

This picture taken on October 29, 2016 shows police officers investigating a crime scene where two alleged drug dealers were gunned down by unidentified men in Manila. -- AFP
“With regard to the Philippines, we are very concerned about... the extra-judicial killings that have been carried out,” EU Ambassador to the Philippines Franz Jessen said in an e-mail when asked if such concerns could affect ongoing talks for a prospective bilateral free trade agreement (FTA).

“In that context, our focus right now is on the ongoing GSP+ monitoring exercise, as well as on reviewing the outcome of the Universal Periodic Review of the United Nations Human Rights Council,” Mr. Jessen added.

“We will then carefully consider what implications the findings might also have for the EU’s trade engagement with the Philippines.”

The EU has been vocal about its concerns over the mounting body count attributed to the current administration’s bloody war on the narcotics trade, and sent a team to the Philippines in late-January to ascertain the government’s compliance with 27 international conventions on human and labor rights, environmental protection, and good governance.

That was the prime condition for EU’s grant in 2014 of additional tariff perks to select countries under the Special Incentive Arrangement for Sustainable Development and Good Governance under the General Scheme of Preferences (GSP+).

The European Commission, EU’s executive branch, will report to the European Parliament in January 2018 on compliance with such international pacts by GSP+ beneficiaries Armenia, Bolivia, Cape Verde, Kyrgyzstan, Mongolia, Pakistan, Paraguay, and the Philippines. It will be the second such report after the one submitted last year.

Costa Rica, Guatemala, El Salvador, Panama, and Peru ceased to be GSP+ beneficiaries in January 2016, as they benefit from preferential market access under bilateral trade agreements, while Georgia stopped getting such perks last January, according to the EU Web site.

Mr. Jessen said that initial findings of the EU mission that conducted the checks are now being discussed with the Philippine government.

“The negotiations are at a very early stage. The second and latest round took place in February and, for the moment, the next round has not been scheduled,” Mr. Jessen replied when asked if FTA talks were similarly at risk.

Sought for comment on rumors last week that FTA negotiations had stalled, Trade Secretary Ramon M. Lopez, who had joined Mr. Duterte in his Middle East trip, replied in an interview: “’Di totoo. May isang reporter na nag-pickup n’on na in-interpret yata na dahil wala pang date ’yung third meeting, na parang wala na daw ’yung FTA (That is not true. There is a reporter who picked up that rumor and seemed to have interpreted the lack of a date for a third meeting to mean that there will not be any FTA).”

Undersecretary Ceferino S. Rodolfo, who is in charge of the Trade department’s Industry Development and Trade Policy Group, said in a mobile phone reply that the second round of FTA talks “went well, but the two sides did not discuss nor agree yet on the dates and venue for the third round.”

Asked for a Philippine response should the EU cancel FTA talks due to the drug war, Mr. Lopez said: “’Di natin isa-sacrifice ’yung kampanya natin sa drugs dito just to get that; but of course gusto natin i-keep ’yon (We will not sacrifice the anti-drug campaign just to get the FTA; but of course we would want to keep such a pact.”

Ang argument naman natin sa kanila o appeal natin sa kanila: the more they should help the Philippines in economic development para they create jobs... (Our argument or appeal to the EU is that the more they should help the Philippines in economic development so that more jobs will be created...),” the Trade chief said.

President Rodrigo R. Duterte railed against the EU almost as soon as he took office at noon of June 30 last year, after the bloc started raising concerns over the new government’s bloody anti-drug campaign. The EU last month summoned the Philippine ambassador to the bloc for “an explanation for the recent, unacceptable comments of President Duterte.” Mr. Duterte has also subjected to tirades the United States, under former president Barack H. Obama, and the United Nations, among others, for voicing similar concerns.

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

For Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr., local businesses relying on EU markets should be able to shift to nearer markets like China and Japan.

“Our priority is to follow the government even if it will cost us because, at the end of the day, we have to keep our integrity,” Mr. Ortiz-Luis said in a telephone interview last week when sought for his views on the matter.

Hindi naman ganun kalaki ‘yung pinaguusapan na hindi mare-recover (What we won’t be able to recover in markets will not be that big), so I don’t think we should change our laws or we should change policies,” he added.

“It may be an opportunity loss; so be it.”

Philippine Statistics Authority (PSA) data showed the EU accounting for 12.06%, or $6.788 billion, of the Philippines’ total merchandise export sales last year, down 5.65% from $7.186 billion that, in turn, was 12.22% of the total in 2015. The same data showed that Philippine merchandise imports from the bloc fell 4.1% to $6.422 billion (7.9% of the total) last year from $6.695 billion (9.4%) in 2015.

“We feel that... Japan and China can easily cover that difference. Even if there is 10-20% loss from the EU, hindi ganon kalaki ’yun (It’s not that big),” Mr. Ortiz-Luis said.

PSA data show Japan as the top market for Philippine merchandise exports last year, accounting for a fifth of the total at $11.647 billion, though down 5.3% from 2015.

Hong Kong was the third destination after the United States (15.4%) with 11.7% at $6.582 billion, up three percent, while China came fourth with 11% at $6.188 billion, edging up 0.2% from 2015. -- with Ian Nicolas P. Cigaral