European Union trade privileges hinge on Philippines rights situation – DTI

MANILA, Philippines — The state of human rights in the Philippines remains a factor in whether or not the European Union (EU) will retain the country’s trade privileges under the bloc’s Generalized Scheme of Preference Plus or GSP+, officials from the Department of Trade and Industry (DTI) told senators yesterday.

During the hearing of the Senate committee on trade and industry, chaired by Sen. Mark Villar, Sen. Sherwin Gatchalian inquired about the progress of the country’s efforts to be retained in the GSP+ to continue enjoying zero duties on nearly 7,000 items or 26 percent of the country’s exports to EU.

Gatchalian said the Department of Foreign Affairs and the DTI sought the help of the Senate, which is sending a delegation to Brussels in October to meet with their EU counterparts, given that trade between the country and the bloc is valued at two billion euros annually.

“What can we do to help? Two billion euros in terms of international trade is a very significant amount,” the senator said.

Trade Undersecretary Ceferino Rodolfo said the Philippines is the only country from the Southeast Asian region that enjoys GSP+ privileges, which may be revoked if the country does not meet certain requirements at the “political level.”

The DTI official said the agency has been regularly reporting to the EU on the technical aspects but a delegation from the bloc that visited the country earlier this year raised some concerns at the political level as part of the regular monitoring cycle.

“The (EU) delegation highlighted that there might be some issues, particularly concerning human rights… we were able to provide some responses but we are continuing our engagement,” Rodolfo said without elaborating.

He said the engagement of senators with EU legislators is “very important” in smoothing out issues.

Members of the EU Parliament earlier this year warned the government to act on the reported human rights abuses – particularly on extrajudicial killings – or lose its GSP+ privileges.

Rodolfo said the GSP+ system will end next year and will be replaced with a new system.

Meanwhile, officials also warned that the country’s ballooning trade deficit is no longer sustainable and it is making it harder for the economy to grow and create high-paying jobs.

They made the statement in response to comments made by Sen. Sonny Angara that the Philippines’ trade deficit is the highest in Southeast Asia.

“The challenge is really transforming that (DTI programs) to jobs and higher incomes,” Angara said after noting that Vietnam and Indonesia are posting trade surpluses while the country has deficit of $46 billion.

“Is this a sustainable direction for us as a country or do we want to reverse it? Especially if our goals are to create higher incomes and create more jobs for our country,” he asked.

He said the huge trade deficit showed the country was not producing enough goods that it depends on imports.

Angara said the country’s per capita has been growing over the years but only incrementally, meaning progress has not been really felt significantly by the greater segment of the population.

Rodolfo told the committee the country’s trade deficit in 2010 was only $7 billion and by 2018 to 2019, it ballooned to around $40 billion or a “deterioration” of $33 billion.

He said Vietnam is export-led in its development while Indonesia was prioritizing industrialization.

“We are growing but to fulfill the demand from this growth, we have been importing massively and the main commodities, the main drivers are rice, petroleum –  those we really need – if we exclude them, then steel, cement, petrochemicals and automotive,” Rodolfo said.

The country has been relying on dollars from remittances of overseas Filipino workers (OFWs) and revenues from business process outsourcing companies to pay for the imports, the official said.

Trade Secretary Alfredo Pascual said the thrust now of the government is industrialization to produce exportable goods and generate more high-paying jobs.

“Our real effort is industrializing the country so we can have an economy that is sustainable and inclusive,” Pascual said.

“Unless we do that, we will forever be beholden to inflows from these OFWs, we’ll be sending more people abroad to earn more dollars for importations here and that’s not sustainable,” he said.