ALTHOUGH the Philippines’ inclusion in the European Union’s Generalized Scheme of Preferences Plus (EU-GSP+) means it has an edge over other countries in the tariff lines, the Department of Trade and Industry wants exporters to know that it is in the quality of their goods that ensures their products are successfully traded in this region.
In yesterday’s information session, Export Development Bureau Director Senen Perlada said that it is important for exporters to also ensure their products pass European standards.
‘Just gravy on steak’
“The EU-GSP+ is just gravy on the steak. Ultimately, it is the quality that will determine your marketability. While we can take advantage of these preferential trading agreements. We should not put all our eggs in there,” Perlada said.
The EU has three types of GSP arrangements–the regular GSP, the GSP+ and the Everything But Arms (EBA) arrangement. Before its inclusion into the GSP+, the Philippines was already a beneficiary of the regular GSP, which offers zero duties for selected non-sensitive products and a 3.5 percent reduction for sensitive items. This covers 66 percent of EU product lines.
Although already in the regular GSP, which covered 6,209 products and only 2,442 were at zero tariff, the Philippines being a beneficiary of the GSP+ means it has a special incentive arrangement for sustainable development and good governance and offers zero tariffs for 6,274 products.
The position puts the Philippines at an advantage over other countries, especially among top Association of Southeast Asian Nations (Asean) economies, as it is the only Asean member among the 13 countries given GSP+ privilege.
Thailand, along with China, was removed from the regular GSP this year after reaching an income level classified as upper middle. Indonesia and Vietnam are among the 29 countries under the regular GSP. Laos, Myanmar and Cambodia, considered among the least developing nations, are under the EBA, which means 99 percent of their products can be exported to the EU at zero tariffs excluding arms and ammunition.
Maria Teresa Borja of the Philippine Trade and Investment Center based in Brussels, Belgium said the Philippines had to meet the EU’s vulnerability criteria and ratify 27 core international conventions on human rights, labor, environmental protection and good governance. The EU will constantly monitor the country’s implementation.
In 2013, Philippine exports under the GSP reached over a billion euro at 63.5 percent utilization rate. Perlada said exporters can use the country’s status to negotiate with buyers.
The EU market consists of 823 million with a total consumer expenditure of $12.6 trillion. Although this is an aging population, Perlada noted that they are affluent and spend 90 percent of their income. They are also highly connected technologically.
Perlada said that knowing this helps exporters market their goods in Europe.
Exporters present during the forum, however, raised other concerns, most of which were government policies that they felt made it difficult for them to conduct business.
Most of these complaints were government regulations and requirements and poor coordination among government agencies. They asked that government agencies simplify these processes and decentralize accreditation requirements.
PhilExport Cebu executive director Fred Escalona also noted the very strict market entry requirements of the EU, saying some exporters that are ISO 9000 compliant and have passed many international certifications are still unable to penetrate the European market.
However, he believes that things are slowly turning around and that those who are able to find trading partners in Europe are able to sustain their relationship.