Phl waters down Save Act by cutting no. of garment categories

MANILA, Philippines - The Philippines have agreed to water down the Save the Industries Act bill lodged before the US Congress by reducing the garment categories to nine instead of 17.

Trade and Industry Secretary Gregory L. Domingo said the categories were lessened because according to US lawmakers, there is raw data on the effective cost which states that the Save Act in its original form has a foregone revenue of $500 million. The reduction of categories has trimmed the foregone revenue in half.

On the upside, the DTI said the Philippines has the support of the executive branch of the US government for the passage of the Save Act.

The Save Act was likewise discussed during the recently concluded Asia Pacific Economic Cooperation (APEC) meeting. “We have reasonable chance of passing the bill,” Domingo said.

The Save Act is expected to save the ailing local garments industry because it will allow the duty-free exportation of Philippine-made garments which used American materials to the US. Under the 809 component of the program, US-made fabrics and yarns cut and wholly assembled in the Philippines would qualify to re-enter the United States free of duty.In addition, garments made of US spun yarn or extruded yarn formed in the Philippines may re-enter the United States at 50 percent of the most-favored nation (MFN) duty.

In a separate interview, Trade Undersecretary Cristino L. Panlilio has denied reports that the Save Act is now “dead” after it was not attached as a rider bill to some US trade agreements. The Philippines was hoping to piggyback the Save Act in one of the three free trade agreement (FTA) deals of the US.

“It (Save Act) is very much alive. In fact we have gained ground because at least five more senators are supporting it,” Panlilio said.

Panlilio said that there are just some problems in the cut-and-sew portion of the bill but it is expected to be fixed soon. He said there are moves to make the provision for third-country sourcing stricter.

“This is a landmark piece of legislation that will redound to great benefits for both our people. It will revive the Philippines’ garment industry that has been in the doldrums ever since the end of the quota regime and at the same time increase imports of US textile and export from the Philippines and other ASEAN countries of up to $3 billion in the next three years. This is definitely a win-win solution,” Panlilio said.

Should the Save Act be approved, Panlilio said that the local garments industry will be able to regain lost ground. He said that for four decades until the 1990s, garment was one of the leading exports of the country.

The Philippine garments export industry, during its peak, employed around 600,000 workers but was whittled down to 150,000 as cheaper garments are being manufactured from neighboring countries.