Philippine garment exporters push against EU trade threat - Just Style
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Philippine garment exporters push against EU trade threat

By admin-demo 06 Nov 2020

The garment industry in the Philippines is preparing to petition the European Commission, asking it not to consider calls for the country to lose its duty-free access to European Union (EU) markets – but to offer concessions instead.

Philippine garment exporters push against EU trade threat

The garment industry in the Philippines is preparing to petition the European Commission, asking it not to consider calls for the country to lose its duty-free access to European Union (EU) markets – but to offer concessions instead.

The move follows a resolution adopted by the European Parliament in late-September urging the European Commission to temporarily withdraw the Philippines’ Generalised Scheme of Preferences Plus (GSP+) benefits because of human rights abuses.

MEPs acted over what they regard as “the seriousness of the human rights violations” committed by the administration of President Rodrigo Duterte, who infamously encouraged extra-judicial killings of suspected drug dealers.

In a report to the European Council and European Parliament in February, the EU’s High Representative for Foreign Affairs and Security Policy noted that challenges remain in tackling anti-union discrimination and violence within the Philippines. It said the country needed to do more to reduce the reliance on short-term contracts and combating child labour.

Access to GSP+ can be suspended if a country breaches a wide range of human rights conventions – such concerns, for instance, led to Sri Lanka losing this status in 2010 (it was restored in 2017).

Speaking to just-style, Robert Young, executive member of the Philippine Export Development Council and trustee for the textile, yarn and fabric sector of the Philippine Exporters Confederation (Philexport), said the clothing sector would resist a loss of GSP+ status.

It is planning a communique to the European Commission, which would have to propose such a move. Young says this will also request an easing of origin rules that have prevented the Philippines’ clothing sector making the most of this trade status.

The industry lacks local backward linkages, preventing it from purchasing enough fabrics and yarn locally to clear GSP+ origin hurdles.

“It is heartbreaking to see that garment makers have no way of replacing imported inputs with locally-made inputs, and we are thus preparing a petition for the EU Commission,” Young adds.

The GSP+ programme grants the Philippines the benefit of exporting more than 6,000 products to any of the 27-EU member countries at zero tariff. Products on the list include textiles, garments, headwear, footwear, furniture and chemicals.

Young says the Philippines only exported apparel worth EUR100m (US$117m) to the EU market in 2019, a performance that it needs to improve to better cope with the Covid-19 pandemic.

Latest data by the Philippine Statistics Authority paints a bleak picture, with the volume of industrial output from the country’s apparel and footwear sector dropping by 35.7% year-on-year in August – much deeper than the overall industrial output contraction of 13.8%. Textile output declined by 25.1%, which would impede the clothing sector’s ability to meet local input rules associated with GSP+.

“Engaging constructively”

A European Commission spokesperson suggests the EU executive was open to suggestions on resolving the concerns over GSP+ and improving its operation. 

She told just-style the Philippines is “engaging constructively” in the GSP+ monitoring process, which will be followed up in the next joint monitoring mission to the Philippines planned by the Commission and the European External Action Service, when Covid-19 conditions allow. 

“The EU’s current policy focuses on actively pursuing the GSP+ monitoring process, that is, an open dialogue with the Philippines on our areas of concern and how to progress to alleviate these concerns, rather than to initiate a process to withdraw GSP+ preferences,” the spokesperson says.

“During the current pandemic we also pursue our broader dialogue through all possible means,” she adds, noting that the Service’s High Representative Josep Borrell discussed the potential trade problem with [Philippines] foreign minister Teodoro Locsin at a virtual ministerial meeting between ASEAN (Association of Southeast Asian Nations) and the EU on 12 September.

Earlier this year unions said over 20,000 workers in the Philippines’ textile, garment and leather goods sector had been laid-off due to the Covid-19 pandemic.