TRADE Secretary Ramon Lopez is rightfully concerned that the fallout from President Rodrigo Duterte’s abrupt rejection of some 250 million euros in development aid from the European Union could hurt the substantial trade advantages that the country enjoys under the bloc’s generalized scheme of preferences.
Since December 2014, Filipino exporters have been able to sell their goods to the European bloc duty-free under the EU’s GSP+ program, a crucial advantage in terms of market access covering over 6,000 product categories. But now the arrangement is under review, and Mr. Duterte’s show of independence could affect how EU officials assess our fitness to continue under their trade program.
The EU guidelines are clear. The full removal of tariffs under GSP+ will be granted only to countries that “ratify and implement core international conventions on human and labor rights, environmental protection and good governance.”
Will President Duterte again see these conditions as foreign interference in domestic affairs and spurn our participation in GSP+? Or will the EU find that the Philippines under the Duterte administration is no longer compliant with the core international conventions on human and labor rights?
Either possibility is a recipe for disaster for Philippine exporters.
The latest data from the Philippine Statistics Authority showed export receipts from EU buyers totaled $2.401 billion in the first quarter of 2017, up 48.3 percent from $1.619 billion from the same period last year. This made the EU the second largest market for Philippine products among other economic blocs.
All this could be imperiled if our GSP+ privileges are revoked in the ongoing review.
Secretary Lopez argues that economic matters be insulated from noneconomic issues such as human rights and opposition to the reinstatement of the death penalty in the Philippines. He also says that unlike grants, the GSP+ benefits both sides.
“It’s not a grant. And they’re commercial transactions that can mutually benefit both sides,” Lopez told one network news service.
“The EU should continue to engage the country. GSP provides market access to our exporters, but it allows cheaper Philippine products for EU consumers or cheaper inputs for their manufacturers,” he said, painting the country’s participation in GSP+ as “a mutually beneficial arrangement.”
Unfortunately, what Secretary Lopez says will not change EU policies, which are reflected in its guidelines. And those guidelines say that to qualify for GSP+ privileges, we must comply with international conventions on human and labor rights, environmental protection and good governance.
Whether this constitutes interference is beside the point. It is, after all, an EU program and they can administer it as they see fit.
The President would be well within his rights to withdraw our application for GSP+ privileges, but that would be a clear case of cutting off the nose to spite the face.