Phl revises bill to help local garment sector

MANILA, Philippines - The Philippines will have to remove two to three sections of the “cut and sew” portion of the Save the Industries Act to reduce the waived duties of the United States to $200 million, a ranking government official said.

In an interview with reporters, Trade and Industry Undersecretary Cristino L. Panlilio said that some US legislators are asking for the reduction of the waived US duties stemming from the Save Act.

According to Panlilio, originally the waived duties amounted to $330 million. That amount was trimmed down to $230 million per year.

An additional $30 million in waived duties, however, must still be cut, Panlilio said.

To do so, Panlilio said, they would have to remove two to three sections in the cut and sew portion.

In a separate interview, Garments and Textile Development Board (GTDO) Director Thelma Murillo said US Congressman Daniel Inowe had requested to water down the bill to reduce the foregone revenues of the United States.

Murillo said that Inowe had requested that the 17 categories under the Save Act be trimmed down to nine.

Murillo said they have not lost hope on the bill, even if it has been pending before the US Congress for years

The Save Act is intended to revive the ailing local garments industry as it will allow the duty-free exportation of Philippine-made garments-- using 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.

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 cut the foregone revenue of the US in half.

Domingo believes that this was done to justify the measure.

Panlilio 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 with 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 admitted though that there are 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 up to $3 billion in the next three years. This is definitely a win-win solution,” Panlilio said.