EU move hurts small firms
EU is among the largest trading partners of the Philippines. The year after qualifying for the GSP+, Filipino exports to the EU expanded by 27 percent
Amid a European Union (EU) Parliament’s threat to revoke trade privileges to the Philippines over its claim of a worsening human rights situation in the country, European Chamber of Commerce (ECC) President Nabil Francis warned it will be small Filipino companies that will absorb the strongest impact from it.
Implementing the sanctions will aggravate the situation of low-income sectors, its members and the country’s economy, according to Francis.
In an interview, Francis said the ECC is strongly calling for the retention of the GSP+ perks to the Philippines.
“EU is among the largest trading partners of the Philippines. The year after qualifying for the GSP+, Filipino exports to the EU expanded by 27 percent,” Department of Trade and Industry (DTI) data showed.
The removal of GSP+ will put at risk thousands of jobs generated in both the agriculture and manufacturing sectors,” according to Nabil, who heads the group of more than 200 predominantly European businesses with local operations.
The ECC reiterated that EU’s proposed revocation of tariff benefits in the midst of a pandemic will also exacerbate the economic situation of the country.
“The International Trade Center has estimated that the total export and import loss of the Philippines from EU trading partners could reach $300 million and $175 million, respectively, from pandemic-induced supply chain disruptions,” Francis told the Daily Tribune.
The ECC in its July survey said 91.8 percent of its members have significantly been affected by the pandemic and that a cancellation of the GSP+ rating will impose a new burden to its members.
“The Chamber’s membership roster widely varies in terms of industry and company size. A considerable number of them are GSP+ beneficiaries. Among the top Philippine exports to the EU are agricultural oil products, electrical machinery, processed meat and fish, optical products, processed vegetables, fruits and nuts,” Francis emphasized.
Investor confidence among the European-Philippine business community remains dampened due to the uncertainties based on a recent study conducted by the ECCP, according to Francis.
6,274 goods affected
In a 17 September decision, the EU legislative assembly ruled “given the seriousness of the human rights violations in the country, calls on the European Commission, in the absence of any substantial improvement and willingness to cooperate on the part of the Philippine authorities, to immediately initiate the procedure which could lead to the temporary withdrawal of GSP+ preferences.”
GSP+ status covers 6,274 locally-made products, including those manufactured by the micro, small and medium enterprises (MSME).
The EU Commission has a mechanism in place and process to follow to verify issues before sanctions are imposed.
The country’s largest group of exporters believes the looming withdrawal of EU incentives, if itis pursued, will not be abrupt and may take two years before it is enforced.
In a radio interview, Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. expects the EU to reconsider since European businesses will also suffer from the imposition.
“It might take two years before the revocation may take effect. If they take you out, they will give you a chance to prepare. We are all affected. But I’m confident this will be solved. We are often threatened but there are counters within the EU that defend us,” Ortiz-Luis said.
His statement jibed with that of DTI Secretary Ramon Lopez who said the EU Commission has a mechanism in place and process to follow to verify issues before sanctions are imposed.
20% exports affected
“Of course, it’s alarming because nine percent of our exports go to European Union. I think, in 2019, we had 8 billion euro in trade. And out of that, we enjoyed a GSP preference for some 1.9 billion euro,” Lopez, stating EU’s threat to suspend Manila’s Generalized Scheme of Preferences Plus (GSP+) status will affect up to 20 percent of exports to EU, said.
“We will lose an opportunity. It is not that easy to develop a market. And if you cannot find a replacement, of course, companies will be affected, especially during this pandemic, they will find it hard to get back on their feet. If the status will be removed, many jobs will be affected,” Ortiz-Luis indicated.
The tuna industry, which is one of the major exports of our country, is one of the industries that expects a severe blow from the looming sanction.
“The industries of coconut, marine products, semiconductors, and leather goods might take a hit, especially the tuna industry. And these are big companies,” Ortiz-Luis added.