THE Department of Trade and Industry (DTI) is set to sign a joint order with the Department of Labor and Employment (DoLE) that will highlight the country’s insistence on compliance with global labor standards in the textile industry.

“DTI and DoLE will issue a joint department order on the certification of labor standards compliance for garments and textile industry exporters who will take advantage of [trade] preferential schemes,” said Ceferino S. Rodolfo, Trade undersecretary and managing head of the department’s investment promotion arm Board of Investments.

Mr. Rodolfo told reporters the move is in effect targeted towards the Generalized System of Preferences Plus (GSP+), a preferential tariff scheme that allows the Philippines to export more than 6,200 products to the European Union’s (EU) member countries tariff-free.

He said the joint order should be issued before the end of July as it had been prepared and was awaiting the signature of DTI Secretary Ramon M. Lopez and DoLE Secretary Silvestre H. Bello III.

On Tuesday, Mr. Lopez and Mr. Rodolfo, along with Philippine Special Envoy to the EU Edgardo J. Angara met in Makati City with members of the EU Parliament led by Soraya Post “to freely exchange views on the political and economic fronts” of the Philippine-EU relations.

Mr. Rodolfo said the joint order will require garment and textile exporters to the EU using GSP+ to first secure certification from the government agencies that they are compliant with local labor regulations.

“We’re self-imposing this,” he said, adding that no other country enjoying the same preferential treatment is issuing certification that their export goods were not produced in sweatshops and those who made them were paid the right wages. It will state that no child workers were employed by the exporter.

He said the scheme will certify that union-busting is not practiced by the exporter and that their workers have a right to self-organization.

“We want to take the offensive and highlight [that in the Philippines] workers are being treated decently,” he said.

Mr. Rodolfo said the department was awaiting a response from the EU on the country’s report regarding four issues identified by the bloc: the extrajudicial killing of journalists, Lumad rights, the rights of political prisoners and labor rights.

“We have gone over and beyond these international commitments,” he said.

Separately, the Trade department said in a statement on Tuesday that Mr. Lopez during the meeting “stressed that President Rodrigo R. Duterte’s anti-drug campaign and state efforts to apprehend illegal drug elements have always been anchored on the tenets of human rights and the rule of law.”

He also pointed out that majority of Filipinos “feels safer today and approves of the President’s leadership.

“The meeting also touched on the need for EU to engage the Philippines through the GSP+ as it is precisely a meaningful program assistance developed by EU to help a trade partner institute socioeconomic reform resulting from greater trade and economic activities. Such also increase income in rural communities, as well as in areas experiencing conflicts.”

Mr. Lopez also urged the EU to maximize its economic relations with the growing Philippine domestic market and its free trade access to the Association of Southeast Asian Nations and its dialogue partners. — Victor V. Saulon

By Melissa Luz T. Lopez,
Senior Reporter

THE sustained strength in monthly remittances will keep the current account in a modest deficit this year, as the money inflows help offset the wider trade gap as the Philippines adopts more aggressive spending plans.

DBS Bank and ING Bank N.V. Manila said in separate market commentaries that the remittance inflows will help shore up the Philippine economy against expectations of a wider trade deficit this year, and allow the economy to keep the current account close to balance.

Cash remittances from Overseas Filipino Workers (OFWs) hit $2.31 billion in May, up 5.5% from a year earlier and reversing a 5.9% decline in April, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

Money sent home by OFWs also grew by 4.5% to $11.346 billion in the five months to May, remaining on track to hit the central bank’s forecast of a fresh high of $28 billion for 2017.

Remittances totaled a record $26.9 billion in 2016, up 5%.

The current account measures money flows derived from trade in goods and services. A deficit meant more goods and services entered against outflows.

The Philippine Statistics Authority reported that the trade deficit widened to $2.753 billion in May, from $2.24 billion a year earlier, as imports grew 16.6% to outpace the 13.7% increase in exports.

BSP Governor Nestor A. Espenilla, Jr. has said that the external position remains “very manageable” despite being in deficit, with robust remittance inflows helping fuel further economic growth to support strong domestic consumption.

“Indeed, while foreign remittances are still trending at circa $2.3 billion per month, the trade deficit has moderated to a monthly pace of about $2 billion,” DBS Bank said in a report published yesterday.

“This is important not only for the positive impact it has on personal consumption growth, but also as a counter to the widening trade deficit.”

The BSP expects the Philippines to incur a $600 million current account deficit this year or 0.2% of gross domestic product (GDP), which if realized would reverse a $601-million surplus posted in 2016.

The central bank’s latest estimate factors in the uneven global growth prospects, which would weigh on trade and capital flows. In announcing the fresh estimates last month, BSP Deputy Governor Diwa C. Guinigundo cited developments in the United States — particularly the pace of the Federal Reserve’s interest rate hikes and protectionist policies from President Donald J. Trump — as key risks that could affect the Philippine economy.

The current account was in deficit by $318 million in the first quarter, equivalent to 0.4% of GDP. The analysts expect this trend to be sustained, as the government’s infrastructure spending push would require more capital goods imports.

With the steady stream of remittances, DBS Bank expects the current account balance to post a deficit equal to 0.3% of GDP this year.

For his part, ING Bank senior economist Jose Mario I. Cuyegkeng said OFW remittances and receipts from the business process outsourcing (BPO) industry will likewise cushion the sustained double-digit growth of imports of goods.

“Structural inflows (which have OFW remittances as one of two components) had allowed the economy to post years of current account surpluses and escape from an economic structure of twin deficits,” Mr. Cuyegkeng said yesterday.

ING sees a 4% annualized growth in remittances — matching the BSP’s forecast — alongside a 10% rise in BPO revenue.

“We expect this combination to allow the economy to post a more balanced current account to around 0.2% of GDP,” Mr. Cuyegkeng added.

Inflows from the BPO sector hit $5.5 billion during the first quarter, up 9.9% from a year earlier, according to latest central bank data.