Several industries, products seen 'likely to suffer' if EU scraps PH tariff privileges

ABS-CBN News

Posted at Sep 24 2020 05:33 PM

European Union flags flutter outside the European Commission headquarters in Brussels, Belgium Aug. 21, 2020. Yves Herman, Reuters/File Photo

MANILA - Several members of the Philippine Chamber of Commerce and Industry on Thursday said the agriculture, garments, manufacturing and electronics industries, among others, could suffer if the tariff incentives granted to the Philippines by the European Union is withdrawn. 

The EU Parliament earlier called for the review of the Generalized Scheme of Preferences Plus (GSP+) citing alleged human rights abuses and a "deteriorating level of press freedom" in the country, which could lead to a suspension of the perks.

Under the Generalized Scheme of Preferences Plus (GSP+) program, the Philippines can enjoy duty-free entry of over 6,000 products to the EU. The Philippines in return must commit to uphold good governance, labor and human rights, among others. 

The Philippines is exporting "huge" amounts of crude coconut oil to the European market, PCCI director for Agriculture and Fisheries Roberto Amores said during a virtual briefing. Exports of canned tuna could also be affected, he said.

Some 6,000 products currently enjoying zero tariffs could also suffer, adding that tariff hikes could be between 15 to 20 percent, Amores said.

"It will be a huge impact for the Philippine export sectors, especially agriculture where we use 70 percent indigenous materials," he said.

"We are already having problems with our competitiveness, due to more competitive cost products like palm oil and soy bean oil...It is a big issue that we should take seriously. Our government should take a positive position to prevent this from happening," Amores added. 

Revoking tariff perks can also affect the Philippine garments industry that ship their products to the EU, said PCCI president Benedicto Yujuico. 

Shops may close and workers might lose their jobs, he said.

"Once the subsidy is taken out, it means the buyer will have to pay 15 to 20 percent more just for the duties. That might mean a lot of the factories will be closing, and a lot of our garments workers will be out of jobs," Yujuico said. 

The manufacturing industry could also suffer a blow if in case the tariff perks are removed, said PCCI member and chairman of semiconductor exporter EMS Perry Ferrer.

The Philippines is one of the two countries in the ASEAN that enjoys GSP+ privileges, Ferrer said.

"So it is very attractive for manufacturers, especially the white goods and electronics, to have that advantage. Revoking it would put us at par with other ASEAN countries where some have lower labor rights. So there is a lot of advantage in maintaining the GSP +," Ferrer said. 

Trade Secretary Ramon Lopez earlier said there was "no reason" for the EU to remove the perks since the Philippines has been "fairing well" in the monitoring of compliance for granting the GSP+ privileges.

The country has been able to explain issues every year, Lopez said, adding that the recent resolution is the 3rd or 4th similar move the EU Parliament has raised.

PCCI's Yujuico said it was unlikely for the EU to remove the perks, however, it should not be taken for granted.

Lopez earlier said the current Philippine exports to EU is about 7.3 billion euros, 2.7 billion of which are eligible for GSP+. 

--with a report from Warren de Guzman, ABS-CBN News