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EU FTA talks take back seat to GSP+ audit

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Manila International Container Port (MICP)

By Janina C. Lim
Reporter

TALKS for a free trade agreement (FTA) between the Philippines and the European Union (EU) have taken a back seat to monitoring of the country’s commitments under a preferential trade arrangement it bagged from the bloc in December 2014, according to a source from the European Commission (EC).

“There is no decision on whether, and when, to hold the next round of trade negotiations,” a source from the EC, the EU’s executive branch that proposes legislation and implements decisions and treaties — said in a recent e-mail.

Meetings to establish the scope of FTA talks started in 2013. The first round of FTA negotiations took place in May 2016 while the second and last round was held in February the following year.

The last round saw progress in services and investment; sanitary and phytosanitary issues; as well as trade and sustainable development.

At the same time, both sides cited the need for clarification and further talks on issues like rules of origin; customs and trade facilitation; government procurement; intellectual property rights and dispute settlement, among others.




“The European Commission and the government of the Philippines are currently focusing on implementation of the commitments undertaken by the government of the Philippines regarding the special incentive arrangement for sustainable development and good governance under EU’s Generalized Scheme of Preferences (GSP+) requested by and granted to the Philippines,” the EC source explained.

Under the EU GSP+, 6,274 local products enjoy zero-tariff entry to the EU on the condition that the country observes 27 core international conventions that cover human and labor rights, as well as environmental protection and good governance, among others.

The EC’s 2018 GSP assessment report noted progress in the country’s enforcement of its commitments on gender equality, trafficking in persons, labor rights, health, education, social-economic rights, the fight against corruption and protection of the environment.

However, extrajudicial killing amid the government’s war on illegal drugs was flagged “a serious concern,” as well as proposals to reintroduce the death penalty and reduce the age of criminal responsibility. The 2019 GSP report is slated for release later this year.

Ceferino S. Rodolfo, undersecretary for the Trade department in charge of its Industry Development and Trade Promotion Group, had said these concerns were raised anew at the third EU GSP+ Monitoring Mission late last year but expressed confidence of positive overall assessment.

“[In t]he last visit of some members of [the European] Parliament, there was openness to pursue the talks,” Mr. Lopez said in a mobile message over the weekend, referring to a December 2018 meeting wherein the Philippines proposed resumption of FTA talks.

In a recent e-mail, Franz Jessen, ambassador of the Delegation of the European Union to the Philippines, said “the next round will take place when the conditions are right and at a mutually agreed time.”

For Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr., exporters have not maximized GSP+ privileges.

“Our problem is not in the markets but our capacity, especially of our agriculture, to produce. I’m not much worried about [FTA negotiations with EU],” Mr. Ortiz-Luis said in a phone interview on Sunday.

“The products sa GSP+ di natin nate-take advantage fully. Meron mga ibang markets na open sa atin (There are EU markets that remain open to us).

Senen M. Perlada, director of the Export Marketing Bureau of the Department of Trade and Industry, said that while full utilization of the EU GSP+ is desirable, non-tariff issues remain.

“There are considerations on the part of GSP+ beneficiaries such as competitiveness issues, capacity to supply, and of course the attitude of the importers…” Mr. Perlada said in a mobile phone message yesterday.

“We have no hard [GSP utilization] targets, but I think hitting at least an 85% utilization by 2022 would be a good accomplishment.”

Mr. Jessen said the country’s GSP+ utilization has been on a “steady increase”, noting that 25% of the €7.2-billion Philippine exports to the bloc in the 11 months to November last year were covered by the preferential scheme.

In order to increase the Philippines’ use of GSP+ privileges, Mr. Jessen suggested a focus on improving the quality of the country’s agricultural exports as well as boosting Philippine trade missions to the EU.

Preliminary data from the Philippine Statistics Authority show Philippine merchandise exports to the EU actually falling by 8.2% to $8.824 billion last year, accounting for 13.1% of total shipment of the country’s goods, from $9.607 billion in 2017.

Imports from the bloc grew 25.8% to $8.359 billion last year from $6.644 billion in 2017.

That yielded a $464.79-million merchandise trade surplus in favor of the Philippines.