MOST Filipino export enterprises have not taken advantage of their privileges under Free Trade Agreements (FTAs), negotiators have hammered out.
In the case of the 15-year old Asean Free Trade Area (Afta), the main culprit is lack of information at firm level on what the privileges are available to them.
This was one highlight of the findings made by a team of Asian Development Bank (ADB) researchers led by Ganeshan Wignaraja and his two Filipino associates, Dorothea Lazaro and Genevieve de Guzman, after surveying 156 exporting companies in the electronics, food and machine parts industries in the country.
In what the research team called as the first comprehensive firm level study of the business impact of FTAs in the Philippines, the ADB discovered that only 28 percent or less than one third of the surveyed companies are actually using their perks, especially low tariffs, under Afta.
The 28 percent rate of usage in the Philippines was considered by the researchers as better than expected but it was much lower than the 45 percent usage rate in China. China joined the Afta only in 2001.
Given the right information on how to ride on those trade agreements, most exporters, however, said they are more than willing to use them.
What surprised the research team was the fact that the surveyed enterprises said that lack of information was behind their not taking advantage of the provisions of the free trade pact signed by 10 Asean members.
Since then, the Asean free trade bloc has expanded to include China, Japan, South Korea, India and only this year, Australia and New Zealand.
"The country's only bilateral FTA -- the Japan-Philippines Economic Partnership Agreement (Jpepa) -- took four years to negotiate and two more years to take effect after it was signed in 2006," the ADB team noted.
While negotiating these agreements took scarce time and resources, the ADB observed, limited attention has been hitherto given to evaluating the impact of FTAs on business activities in the Philippines, the ADB research team further observed.
It found though that close to half of the surveyed exporters want to use the free trade pacts in the future, given the right information on how they will go about it.
Responding to the findings, a team from the international trade group (ITG) of the Department of Trade and Industry (DTI) told the researchers and representatives of export groups that the government has lined up a whole-year program to reach out to exporters across the country, to tell them what they can get out of the expanding trade agreements their negotiators have forged, and how the exporters could benefit from those pacts.
The ADB found that enterprises belonging to the automotive parts manufacturing group were the heaviest users of the Afta privileges, followed by food exporters, particularly the smaller producers. Another surprise to them was the minimal use by the electronics industry of perks under Afta.
They surmised that the high use of after perks by the automotive industry was driven by the high tariff difference between a non-user and a user of the Afta tariff privileges.
Recent consultations by Philexport with embattled exporters indicated that what they clamor for today is the market access privileges opened by the new trade agreements, particularly with India, China, New Zealand and Australia, more than the lower tariffs to goods that are already sold to the trading partners.
This clamor was anchored on the continued depressed market in the United States, the country's biggest export market. (Abe P. Belena/Philexport)