MANILA, 26 September 2020 – The Department of Trade and Industry, together with the Philippine GSP+ inter-agency team, has finalized and submitted the country’s fourth technical report to the European Commission on 15 September 2020. The technical report provides updates regarding the country’s implementation of the 27 international core conventions on human rights, labour rights, environmental protection, and good governance.

DTI Secretary Ramon Lopez said, “The Philippines has always been working closely and fully cooperating with the EU Commission – the main EU institution in-charge of implementing the GSP+ scheme. We have an inter-agency working group in place that attend to the regular monitoring visits and respond accordingly to various issues if and when they are officially raised by the EU Commission. The EU Commission has a mechanism in place and process to follow to verify issues before sanctions are imposed.”

The statement was issued after the European Parliament passed a resolution on the Philippines, which includes the recommendation to temporarily withdraw GSP+ preferences. “We were informed about the EU Parliament resolution…So far, we are able to explain objectively the Philippines side on issues that are raised and we don’t see any reason why our GSP+ privilege will be withdrawn.  It is precisely helping address poverty and attendant social and economic issues, and helping MSMEs in many parts of the country, by allowing greater EU market access for Philippine products” Secretary Lopez added.

This is not the first time that the European Parliament approved resolutions that called for the withdrawal of the country’s GSP+ preferences. Similar resolutions have been passed in 2016, 2017, and 2018. Likewise, the Philippine GSP+ inter-agency team has successfully engaged the EU through a biennial dialogue mechanism for three times since becoming a GSP+ beneficiary in 2015. Currently, the fourth cycle of the dialogue, which covers the years 2020 and 2021, is ongoing.

In this regard, the DTI and the inter-agency working group has been actively engaging the EU to pursue constructive collaboration on the implementation of the 27 international core conventions, including on areas to be improved and strengthened. With the continued engagement of the government in the dialogue mechanism, the European Commission has maintained the GSP+ beneficiary status of the country.

Equally important, through the dialogue mechanism, the Philippines has been able to highlight positive developments in labor rights and environmental protection, among others. Notable examples include the ongoing push to end contractualization (ENDO); the Joint Department Order of DTI and the Department of Labor and Employment on the guidelines for the issuance, suspension or revocation of certificates of accreditation for garments firms that are availing the GSP preferences; and the closure of Boracay for six months in order to rehabilitate the island. These are just examples of how the country has not only remained steadfast in its commitments to the international conventions, but have in fact gone beyond these commitments. While Philippine industries may become less competitive in the short-term, the government hopes to sustain these reforms in the long run.

Additionally, the Philippines has consistently showcased the benefits being enjoyed by both Philippine and EU companies through GSP+. The scheme has been helping the Philippines generate employment and spur countryside development, particularly focusing on MSMEs and small export-support communities. These investments cut across a range of industries including electronics, processed food, apparel, craft goods, travel goods, and home appliances.

The scheme has been benefiting EU firms as well, as they invest in production facilities in the Philippines not only to export products to EU under GSP+ rates, but also to take advantage of the large and growing Philippine domestic market and the country’s network of FTAs, including those with ASEAN. GSP+ is mutually beneficial and produces win-win outcomes for both sides. Philippine exporters are able to access the EU market at zero duty and earn export revenues. When EU imports GSP+ products, these provide more competitive inputs for EU manufacturers and quality products for EU consumers.

Since the successful application of the Philippines to the GSP+ in 2014, the Philippines has enjoyed greater market access to the EU that led to a boost in exports. From about EUR5.3 billion in 2014 (under the regular GSP), Philippine exports to the EU have increased to EUR7.6 billion in 2019. For 2019, the estimated worth of Philippine products eligible for GSP+ preferences amounted to EUR2.7 billion, of which EUR1.95 billion were able to use GSP+ preferences. This reflects a GSP+ utilization rate of about 72%. The top GSP+ exports of the Philippines for 2019 include: crude coconut oil, vacuum cleaners, prepared or preserved tunas, spectacle lenses, new pneumatic tires, bicycles, electro-thermic hair dressing apparatus, prepared or preserved pineapples, relays, and activated carbon. Among the beneficiaries, the Philippines is the second biggest user of GSP+ preferences after Pakistan. The Philippines is likewise the only country in ASEAN to benefit from the scheme. ♦

Date of Release: 28 September 2020