Electronics boost seen with removal of EU tariffs

ELECTRONICS investments and exports could enjoy a boost this year with the European Union poised to eliminate tariffs on several high-tech goods by June 30 in compliance with a World Trade Organization (WTO) ruling.

The EU committed to the timetable to settle complaints against its practice of slapping duties — contrary to an international treaty — on imported flat panel monitors, multifunction fax machines and TV set top boxes.

A local official claimed this would encourage more investors to put up factories in the Philippines and also increase demand for electronic components — the country’s largest export earner — with EU tariffs to be slashed well ahead of the holiday shopping season.

“The United States of America and the European Union wish to inform you that… we have agreed that the reasonable period of time for the European Union to implement the recommendations and rulings of the Dispute Settlement Body… shall be nine months and nine days from the date of adoption of the recommendations and rulings,” a January 6 WTO communiqué released on behalf of the two members stated.

“Accordingly, the reasonable period of time expires on 30 June 2011,” it added.

The EU was ordered in August 2010 to “bring the relevant measures into conformity with its obligations” when the bloc lost a case filed by the US, Japan and Taiwan. The EU was found to have violated the International Technology Agreement which requires zero tariffs on high-tech goods. The EU did not appeal the panel decision, which was later adopted as formal ruling by the WTO membership.

The Philippines signed onto the dispute as a third party, claiming in its position papers that it was the 10th largest electronics supplier to the EU.

With EU barriers set to be lowered in June, the country is expected to enjoy more electronics industry investments and export sales, an official at the Clark Freeport said.

“We manufacture components that go into those [products affected by the WTO ruling],” said Bernardo F. Angeles, Jr., Clark Development Corp. assistant vice-president, in a telephone interview late last week.

“We wanted those tariffs out. This will encourage consumers to buy electronics in time for Christmas,” Mr. Angeles said.

The free port authority expects to record a 10%-15% growth in investment pledges to P30.508 billion this year, with the bulk to involve manufacturing.

The Semiconductor and Electronics Industries in the Philippines, Inc., meanwhile, has projected 2011 electronics export growth of 10% or roughly $33.3 billion from year-ago levels. –JESSICA ANNE D. HERMOSA, Senior Reporter, Businessworld