Philippine exports to Europe may spike by as much as 20 percent in the first year alone should the new trading scheme with the European Union (EU) gain approval, said the general manager of the European Chamber of Commerce in the Philippines (ECCP).

“The increase in exports to Europe could be about 20 percent in year one, 25 percent in the second year and over 30 percent in year three,” said Martial Beck, vice president and general manager of European Chamber of Commerce in the Philippines, to the BusinessMirror. 

Beck said the preferential trading scheme will allow more Philippine products to enter the regional bloc, duty-free. 

This figure is higher than the modest 12-percent export growth cited earlier by the Trade Undersecretary Adrian S. Cristobal, who said the trade bureau’s estimates are conservative. 

The Philippines has enjoyed benefits from the previous European Union-Generalized Scheme of Preferences (EU-GSP), for almost a decade. 

The scheme entailed the duty-free entry of 2,442 products while 3,767 products enjoyed reduced tariff rates, accommodating 6,029 products in total. 

The EU-GSP’s expiration in December of 2013 compelled the Philippines to apply to its more expansive successor, the EU-GSP+. 

The revised trading scheme will expand the access of 6,274 products to the EU, notably to textiles with 1,125 product lines, agriculture with 918 lines and fisheries with 292 lines, all of which will be subject to zero duty. 

Cristobal confirmed in December the country’s application. 

He cited a more modest export growth of 12 percent for Philippine products entering the EU at zero duty under the new GSP+, plus job generation of 270,000. 

An earlier report said the new trading scheme will particularly benefit tuna and garments in the manufacturing sector. 

Based on the Department of Trade and Industry’s (DTI) estimates, per product sector the highest projected increases will be in the following areas: animal or vegetable fats and oils (€231.2 million); prepared foodstuffs (€151.2 million); textiles and garments (€79.7 million); footwear, headwear, umbrellas (€28.5 million); and chemical products (€17.1 million). 

Beck said that while the Philippines’s application is still currently being reviewed by the EU, the earliest that the GSP can be in effect for Philippines exporters is in September 2014. 

“The result of the application is not certain yet, but we have informed the DTI that the earliest possible time for GSP+ is September or October, as the Philippine government completed the application process in February and the EU needs at least 6 months to process the application,” Beck said. 

To this end, Beck said a forum will be organized by the ECCP and the European Union Delegation, scheduled to be held in April, to apprise Philippines exporters of the benefits of the EU GSP+. 

The National Statistics Office reports that as of January 2014, exports to EU member-countries enjoy a 10.6 percent share of total merchandise exports, valued at $463.63 million, a 5.8-percent increase from $438.36 million recorded in January 2013.

The 2011 data from European Union statistical board, Eurostat, showed the Philippines’s utilization rate of the older GSP scheme has been on a steady climb, with the average utilization rate improving to 63 percent in 2011 from 60 percent in 2010.

The Philippines’s utilization rate was ahead in 2011 of Vietnam (55 percent) but still behind Malaysia (67 percent), Thailand (69 percent) and Indonesia (74 percent).

Source: Business Mirror, 26 March 2014