THE European Commission’s (EC) proposal to extend the European Union (EU) Generalised Scheme of Preferences (GSP) will open opportunities for the Philippines, which aims to become an export powerhouse by 2028, according to the Department of Trade and Industry (DTI).

On July 4, 2023, the EC announced through an Explanatory Memorandum that it is proposing to extend the validity of the current GSP Regulation for an additional four years or until December 31, 2027.

“Given the prevailing uncertainties about the time it will take to complete the legislative process on the new GSP Regulation, it is proposed to extend the validity of the current GSP Regulation until 31 December 2027,” the Explanatory Memorandum of the EC read.

The EC, which is responsible for drawing up proposals for new European legislation, among others, said in the document it is “necessary” to ensure continuity in the operation of the scheme beyond December 31, 2023 or the expiry date of the GSP.

“The consequences of any discontinuity for GSP would be that all imports under GSP would revert to standard most favoured nation treatment, except for those from least developed countries which would be covered by the Everything But Arms (EBA) regime, with significant economic shocks for companies in the EU and in beneficiary countries,” the memorandum noted.

The EC also emphasized that the new GSP Regulation “should apply as soon as possible,” stressing that this “temporary prolongation” of the existing scheme should end.

In a statement on Wednesday, the DTI said, “The proposed extension comes at an opportune time and is expected to open a multitude of opportunities for the Philippines.”

The Philippines’s Trade and Industry Secretary Alfredo E. Pascual described the GSP extension as a “significant boost” for the country’s exporters.

“It will enable them to maintain their competitive edge in the EU market and expand their trade volumes. This development reinforces our commitment to strengthen our trade relations with the European Union,” Pascual added.

The GSP is a preferential trade arrangement that imposes reduced or zero tariffs on exports to the EU market from developing countries, including the Philippines.

With the proposed extension until December 2027, the DTI said the Philippine exporters can continue to benefit from “enhanced market access and reduced trade barriers” when exporting their products to EU member states.

DTI also stressed that the GSP’s extension will provide “stability and predictability” for Philippine businesses, allowing them to plan and invest for the long term.

“It also serves as an incentive for European companies to explore partnerships and invest in the Philippine market, fostering economic growth and facilitating employment generation,” the Trade department said in a statement on Wednesday.

Moving forward, the DTI said, in collaboration with other government agencies, it will “actively” engage with Philippine exporters and provide support in maximizing the benefits of the GSP extension.

Pascual also underscored the importance of raising awareness among local businesses about the GSP scheme and its potential advantages.

According to the European Union, the GSP consists of three arrangements: the Standard GSP, GSP+ and the Everything But Arms (EBA).

The Standard GSP is for low- and lower-middle income countries, providing for a reduction or full removal of customs duties on two thirds of EU tariff lines.

Meanwhile, the GSP+, of which the Philippines is among the beneficiaries, is the special incentive arrangement for sustainable development and good governance, which reduces tariffs to 0 percent for broadly the same tariff lines as Standard GSP. According to the EU, this arrangement is granted to vulnerable low- and lower-middle income countries that implement 27 international conventions related to human rights, labor rights, protection of the environment, and good governance.

The third arrangement is the EBA, a special arrangement for least developed countries (LDCs), providing them with duty-free, quota-free access to the EU market for all products except arms and ammunition.

Source: https://businessmirror.com.ph/2023/07/06/ec-move-to-extend-eu-gsp-bodes-well-for-phl-says-dti/