The Philippine Economic Zone Authority (PEZA) is now trumpeting the country’s EU-GSP+ privilege as key attraction for foreign investors to locate in the country.
PEZA spokesperson Elmer San Pascual told reporters that the EU-GSP+ has now become an important point in all of the agency’s investment promotions efforts abroad.
“The EU-GSP+ privilege accorded to the Philippines is now included in all the sales pitches of Director General Lilia B. De Lima,” San Pascual said.
Under the EU-GSP+, over 6,000 Philippine made products are entitled to zero-duty when exported to the 27-EU countries.
“So, we are trying to inform them of this privilege because this will make their exports more competitive versus other products from other ASEAN countries,” San Pascual said.
For instance, bicycles and parts are among the products under the EU-GSP+ that are entitled to zero-duty.
Already, bicycle parts maker Shimano will be among the first beneficiaries of this export privilege. Shimano is producing only a few bicycle parts for exports to EU, not the entire bicycle yet.
“But the EU-GSP+ can help us to have more under the Shimano lines that could be produced here for exports to EU or they can produce everything here including the assembly of the entire bicycle unit,” he added.
PEZA locators, which have been focusing on the American and Asian markets for the longest time, will now have the competitive advantage to export to EU.
In addition, PEZA is also targeting companies in China that are exporting to EU. These companies are now relocating outside of China because of the increasing cost of doing business there.
Once these companies relocate to the Philippines, they will also be entitled to zero-duty when they export to EU.
The Philippines has a five-year window to maximize the benefits from the EU-GSP+ as the country’s strong economic performance could hasten its graduation from this zero-duty export privilege sooner.
According to Trade and Industry Undersecretary Adrian S. Cristobal Jr. a country beneficiary of the EU-GSP+ has a total of 10 years to avail of the zero-duty privilege on 6,274 products under the program.
But one of the criteria of staying in the GSP+ list is that the country must be below the category of low middle income as the EU provides that only developing countries or the low middle income are qualified for this privilege.
The World Bank categorizes the Philippines under a low income category or under $3,000 per capita.
“The GSP+ scheme is giving us ten years to benefit, but for us we'll probably be able to avail of this privilege for 5 years because at the rate our economy is growing, we'll reach $4000 sooner than we think,” Cristobal said.
With this scenario, Cristobal has stressed the urgency to really make the most of the years where Philippine products can still enjoy the zero- duty privilege.
“That's why we're mobilizing the government agencies and the private sector because we have 4-5 years to really take advantage of this scheme,” he noted.
He also expressed hope for the Philippines and EU to forge a free trade agreement so that a zero-duty or favorable tariff rates on the country’s exports to the EU becomes a more permanent arrangement.
On the first year of the EU-GSP+ implementation alone, the program is expected to create 200,000 jobs in certain sectors in the country and additional 600 million euros in exports revenues over a two-year period.
“So, we should really hit the ground running this year to achieve this target,” he said.
As a result, the DTI has accelerated its information awareness campaign as well as on the monitoring compliance of 27 international treaties and conventions for the Philippines to continue enjoying the privilege.
The DTI information campaign has targeted those already in the regular EU-GSP scheme and those new exporters under the EU-GSP+ program.
The DTI has already mobilized the entire department including the regional operations group, promotions and policy group.
The sessions are not limited to information campaign and technical knowledge and monitoring, but also in rules of origin, knowledge on the kind of standards on the products.
Already, the EU has committed Trade Related Trade Assistance to help the Philippines fully benefit from the EU-GSP+ program.
On monitoring, Cristobal said the DTI has an inter-agency task force from various agencies to ensure they get reports on compliance on 27 international treaties and conventions from various agencies in a timely manner because failure to that could be suspension or removal of the tariff preference.
“This is unilateral,” he said on the part of the EU to remove the country’s privilege for failure to comply with these conventions and treaties.