DTI sees tuna exports most vulnerable to loss of GSP+
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.
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.